Securities Act of 1933: S Mended Through Approved Pril

SECURITIES ACT OF 1933
[AS AMENDED THROUGH P.L. 112-106, APPROVED APRIL 5, 2012]

TABLE OF CONTENTS
Sec. 1. Short Title.
Sec. 2. Definitions.
Sec. 2A. Swap Agreements.
Sec. 3. Exempted Securities.
Sec. 4. Exempted Transactions.
Sec. 4A. Requirements With Respect to Certain Small Transactions.
Sec. 5. Prohibitions Relating to Interstate Commerce and the Mails.
Sec. 6. Registration of Securities and Signing of Registration Statement.
Sec. 7. Information Required in Registration Statement.
Sec. 8. Taking Effect of Registration Statements and Amendments Thereto.
Sec. 8A. Cease-And-Desist Proceedings.
Sec. 9. Court Review of Orders.
Sec. 10. Information Required in Prospectus.
Sec. 11. Civil Liabilities on Account of False Registration Statement.
Sec. 12. Civil Liabilities Arising in Connection With Prospectuses and Communica-
tions.
Sec. 13. Limitation of Actions.
Sec. 14. Contrary Stipulations Void.
Sec. 15. Liability of Controlling Persons.
Sec. 16. Additional Remedies; Limitation on Remedies.
Sec. 17. Fraudulent Interstate Transactions.
Sec. 18. Exemption From State Regulation of Securities Offerings.
Sec. 19. Special Powers of Commission.
Sec. 20. Injunctions and Prosecution of Offenses.
Sec. 21. Hearings by Commission.
Sec. 22. Jurisdiction of Offenses and Suits.
Sec. 23. Unlawful Representations.
Sec. 24. Penalties.
Sec. 25. Jurisdiction of Other Government Agencies Over Securities.
Sec. 26. Separability of Provisions.
Sec. 27. Private Securities Litigation.
Sec. 27A. Application of Safe Harbor for Forward-Looking Statements.
Sec. 27B. Conflicts of Interest Relating to Certain Securitizations.
Sec. 28. General Exemptive Authority.
Schedule A.
Schedule B.
SHORT TITLE
SEC. 1. This title may be cited as the Securities Act of 1933.
(May 27, 1933, ch. 38, title I, Sec. 1, 48 Stat. 74.)
DEFINITIONS
SEC. 2. (a) DEFINITIONS.When used in this title, unless the

context otherwise requires
(1) The term security means any note, stock, treasury
stock, security future, security-based swap, bond, debenture,
evidence of indebtedness, certificate of interest or participation
1
Sec. 2 SECURITIES ACT OF 1933 2
in any profit-sharing agreement, collateral-trust certificate,

preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of de-
posit for a security, fractional undivided interest in oil, gas, or
other mineral rights, any put, call, straddle, option, or privilege
on any security, certificate of deposit, or group or index of secu-
rities (including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege entered
into on a national securities exchange relating to foreign cur-
rency, or, in general, any interest or instrument commonly
known as a security, or any certificate of interest or partici-
pation in, temporary or interim certificate for, receipt for, guar-
antee of, or warrant or right to subscribe to or purchase, any
of the foregoing.
(2) The term person means an individual, a corporation,
a partnership, an association, a joint-stock company, a trust,
any unincorporated organization, or a government or political
subdivision thereof. As used in this paragraph the term trust
shall include only a trust where the interest or interests of the
beneficiary or beneficiaries are evidenced by a security.
(3) The term sale or sell shall include every contract of
sale or disposition of a security or interest in a security, for
value. The term offer to sell, offer for sale, or offer shall
include every attempt or offer to dispose of, or solicitation of
an offer to buy, a security or interest in a security, for value.
The terms defined in this paragraph and the term offer to
buy as used in subsection (c) of section 5 shall not include pre-
liminary negotiations or agreements between an issuer (or any
person directly or indirectly controlling or controlled by an
issuer, or under direct or indirect common control with an
issuer) and any underwriter or among underwriters who are or
are to be in privity of contract with an issuer (or any person
directly or indirectly controlling or controlled by an issuer, or
under direct or indirect common control with an issuer). Any
security given or delivered with, or as a bonus on account of,
any purchase of securities or any other thing, shall be conclu-
sively presumed to constitute a part of the subject of such pur-
chase and to have been offered and sold for value. The issue
or transfer of a right or privilege, when originally issued or
transferred with a security, giving the holder of such security
the right to convert such security into another security of the
same issuer or of another person, or giving a right to subscribe
to another security of the same issuer or of another person,
which right cannot be exercised until some future date, shall
not be deemed to be an offer or sale of such other security; but
the issue or transfer of such other security upon the exercise
of such right of conversion or subscription shall be deemed a
sale of such other security. Any offer or sale of a security fu-
tures product by or on behalf of the issuer of the securities un-
derlying the security futures product, an affiliate of the issuer,
or an underwriter, shall constitute a contract for sale of, sale
of, offer for sale, or offer to sell the underlying securities. Any
offer or sale of a security-based swap by or on behalf of the
issuer of the securities upon which such security-based swap is
3 SECURITIES ACT OF 1933 Sec. 2
based or is referenced, an affiliate of the issuer, or an under-

writer, shall constitute a contract for sale of, sale of, offer for
sale, or offer to sell such securities. The publication or distribu-
tion by a broker or dealer of a research report about an emerg-
ing growth company that is the subject of a proposed public of-
fering of the common equity securities of such emerging growth
company pursuant to a registration statement that the issuer
proposes to file, or has filed, or that is effective shall be
deemed for purposes of paragraph (10) of this subsection and
section 5(c) not to constitute an offer for sale or offer to sell a
security, even if the broker or dealer is participating or will
participate in the registered offering of the securities of the
issuer. As used in this paragraph, the term research report
means a written, electronic, or oral communication that in-
cludes information, opinions, or recommendations with respect
to securities of an issuer or an analysis of a security or an
issuer, whether or not it provides information reasonably suffi-
cient upon which to base an investment decision.
(4) The term issuer means every person who issues or
proposes to issue any security; except that with respect to cer-
tificates of deposit, voting-trust certificates, or collateral-trust
certificates, or with respect to certificates of interest or shares
in an unincorporated investment trust not having a board of
directors (or persons performing similar functions) or of the
fixed, restricted management, or unit type, the term issuer
means the person or persons performing the acts and assuming
the duties of depositor or manager pursuant to the provisions
of the trust or other agreement or instrument under which
such securities are issued; except that in the case of an unin-
corporated association which provides by its articles for limited
liability of any or all of its members, or in the case of a trust,
committee, or other legal entity, the trustees or members
thereof shall not be individually liable as issuers of any secu-
rity issued by the association, trust, committee, or other legal
entity; except that with respect to equipment- trust certificates
or like securities, the term issuer means the person by whom
the equipment or property is or is to be used; and except that
with respect to fractional undivided interests in oil, gas, or
other mineral rights, the term issuer means the owner of any
such right or of any interest in such right (whether whole or
fractional) who creates fractional interests therein for the pur-
pose of public offering.
(5) The term Commission means the Securities and Ex-
change Commission.
(6) The term Territory means Puerto Rico, the Virgin Is-
lands, and the insular possessions of the United States. [1]
(7) The term interstate commerce means trade or com-
merce in securities or any transportation or communication re-
lating thereto among the several States or between the District
of Columbia or any Territory of the United States and any
State or other Territory, or between any foreign country and
1The words Philippine Islands were deleted from the definition of the term Territory on
the basis of Presidential Proclamation No. 2695, effective July 4, 1946 (11 F.R. 7517; 60 Stat.
1352), which granted independence to the Philippine Islands.
any State, Territory, or the District of Columbia, or within the

District of Columbia.
(8) The term registration statement means the statement
provided for in section 6, and includes any amendment thereto
and any report, document, or memorandum filed as part of
such statement or incorporated therein by reference.
(9) The term write or written shall include printed,
lithographed, or any means of graphic communication.
(10) The term prospectus means any prospectus, notice,
circular, advertisement, letter, or communication, written or by
radio or television, which offers any security for sale or con-
firms the sale of any security; except that (a) a communication
sent or given after the effective date of the registration state-
ment (other than a prospectus permitted under subsection (b)
of section 10) shall not be deemed a prospectus if it is proved
that prior to or at the same time with such communication a
written prospectus meeting the requirements of subsection (a)
of section 10 at the time of [2] such communication was sent or
given to the person to whom the communication was made,
and (b) a notice, circular, advertisement, letter, or communica-
tion in respect of a security shall not be deemed to be a pro-
spectus if it states from whom a written prospectus meeting
the requirements of section 10 may be obtained and, in addi-
tion, does no more than identify the security, state the price
thereof, state by whom orders will be executed, and contain
such other information as the Commission, by rules or regula-
tions deemed necessary or appropriate in the public interest
and for the protection of investors, and subject to such terms
and conditions as may be prescribed therein, may permit.
(11) The term underwriter means any person who has
purchased from an issuer with a view to, or offers or sells for
an issuer in connection with, the distribution of any security,
or participates or has a direct or indirect participation in any
such undertaking, or participates or has a participation in the
direct or indirect underwriting of any such undertaking; but
such term shall not include a person whose interest is limited
to a commission from an underwriter or dealer not in excess
of the usual and customary distributors or sellers commission.
As used in this paragraph the term issuer shall include, in
addition to an issuer, any person directly or indirectly control-
ling or controlled by the issuer, or any person under direct or
indirect common control with the issuer.
(12) The term dealer means any person who engages ei-
ther for all or part of his time, directly or indirectly, as agent,
broker, or principal, in the business of offering, buying, selling,
or otherwise dealing or trading in securities issued by another
person.
(13) The term insurance company means a company
which is organized as an insurance company, whose primary
and predominant business activity is the writing of insurance
or the reinsuring of risks underwritten by insurance compa-
nies, and which is subject to supervision by the insurance com-
2So in law. Word of probably should not appear.
missioner, or a similar official or agency, of a State or territory

or the District of Columbia; or any receiver or similar official
or any liquidating agent for such company, in his capacity as
such.
(14) The term separate account means an account estab-
lished and maintained by an insurance company pursuant to
the laws of any State or territory of the United States, the Dis-
trict of Columbia, or of Canada or any province thereof, under
which income, gains and losses, whether or not realized, from
assets allocated to such account, are, in accordance with the
applicable contract, credited to or charged against such account
without regard to other income, gains, or losses of the insur-
ance company.
(15) The term accredited investor shall mean
(i) a bank as defined in section 3(a)(2) whether acting
in its individual or fiduciary capacity; an insurance com-
pany as defined in paragraph (13) of this subsection; an in-
vestment company registered under the Investment Com-
pany Act of 1940 or a business development company as
defined in section 2(a)(48) of that Act; a Small Business In-
vestment Company licensed by the Small Business Admin-
istration; or an employee benefit plan, including an indi-
vidual retirement account, which is subject to the provi-
sions of the Employee Retirement Income Security Act of
1974, if the investment decision is made by a plan fidu-
ciary, as defined in section 3(21) of such Act, which is ei-
ther a bank, insurance company, or registered investment
adviser; or
(ii) any person who, on the basis of such factors as fi-
nancial sophistication, net worth, knowledge, and experi-
ence in financial matters, or amount of assets under man-
agement qualifies as an accredited investor under rules
and regulations which the Commission shall prescribe.
(16) The terms security future, narrow-based security
index, and security futures product have the same meanings
as provided in section 3(a)(55) of the Securities Exchange Act
of 1934.
(17) The terms swap and security-based swap have the
same meanings as in section 1a of the Commodity Exchange
Act (7 U.S.C. 1a).
(18) The terms purchase or sale of a security-based
swap shall be deemed to mean the execution, termination
(prior to its scheduled maturity date), assignment, exchange, or
similar transfer or conveyance of, or extinguishing of rights or
obligations under, a security-based swap, as the context may
require.
(19) The term emerging growth company means an
issuer that had total annual gross revenues of less than
$1,000,000,000 (as such amount is indexed for inflation every
5 years by the Commission to reflect the change in the Con-
sumer Price Index for All Urban Consumers published by the
Bureau of Labor Statistics, setting the threshold to the nearest
1,000,000) during its most recently completed fiscal year. An
issuer that is an emerging growth company as of the first day
of that fiscal year shall continue to be deemed an emerging

growth company until the earliest of
(A) the last day of the fiscal year of the issuer during
which it had total annual gross revenues of $1,000,000,000
(as such amount is indexed for inflation every 5 years by
the Commission to reflect the change in the Consumer
Price Index for All Urban Consumers published by the Bu-
reau of Labor Statistics, setting the threshold to the near-
est 1,000,000) or more;
(B) the last day of the fiscal year of the issuer fol-
lowing the fifth anniversary of the date of the first sale of
common equity securities of the issuer pursuant to an ef-
fective registration statement under this title;
(C) the date on which such issuer has, during the pre-
vious 3-year period, issued more than $1,000,000,000 in
non- convertible debt; or
(D) the date on which such issuer is deemed to be a
large accelerated filer, as defined in section 240.12b-2 of
title 17, Code of Federal Regulations, or any successor
thereto..
(b) CONSIDERATION OF PROMOTION OF EFFICIENCY, COMPETI-
TION, AND CAPITAL FORMATION.Whenever pursuant to this title
the Commission is engaged in rulemaking and is required to con-
sider or determine whether an action is necessary or appropriate
in the public interest, the Commission shall also consider, in addi-
tion to the protection of investors, whether the action will promote
efficiency, competition, and capital formation.
(May 27, 1933, ch. 38, title I, Sec. 2, 48 Stat. 74; June 6, 1934, ch.
404, title II, Sec. 201, 48 Stat. 905; Aug. 10, 1954, ch. 667, title I,
Sec. 1-4, 68 Stat. 683, 684; Pub. L. 86-70, Sec. 12(a), June 25, 1959,
73 Stat. 143; Pub. L. 86-624, Sec. 7(a), July 12, 1960, 74 Stat. 412;
Pub. L. 91-547, Sec. 27(a), Dec. 14, 1970, 84 Stat. 1433; Pub. L. 96-
477, title VI, Sec. 603, Oct. 21, 1980, 94 Stat. 2294; Pub. L. 97-303,
Sec. 1, Oct. 13, 1982, 96 Stat. 1409; Pub. L. 100-181, title II, Sec.
201, 202, Dec. 4, 1987, 101 Stat. 1252; Pub. L. 104-290, title I, Sec.
106(a), Oct. 11, 1996, 110 Stat. 3424; Pub. L. 105-353, title III, Sec.
301(a)(1), Nov. 3, 1998, 112 Stat. 3235; Pub. L. 106-554, Sec. 1(a)(5)
[title II, Sec. 208(a)(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A-434;
Pub. L. 111-203, title VII, Sec. 768(a), July 21, 2010, 124 Stat.
1800; Pub. L. 112-106, title I, Secs. 101(a), 105(a), Apr. 5, 2012, 126
Stat. 307, 310.)
REFERENCES IN TEXT
The Investment Company Act of 1940, referred to in text,

is title I of act Aug. 20, 1940, ch. 686, 54 Stat. 789, as amend-
ed, which is classified generally to subchapter I (Sec. 80a-1 et
seq.) of chapter 2D of U.S. Code Title 15, Commerce and Trade.
The Employee Retirement Income Security Act of 1974, re-
ferred to in text, is Pub. L. 93-406, Sept. 2, 1974, 88 Stat. 832,
as amended, which is classified principally to chapter 18 (Sec.
1001 et seq.) of U.S. Code Title 29, Labor.
The Securities Exchange Act of 1934, referred to in text,

is act June 6, 1934, ch. 404, 48 Stat. 881, as amended, which
is classified generally to this chapter (Sec. 78a et seq.).
The Commodity Exchange Act, referred to in text, is act
Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended, which is
classified generally to chapter 1 (Sec. 1 et seq.) of U.S. Code
Title 7, Agriculture.
AMENDMENTS
2012 Subsec. (a)(3). Pub. L. 112-106, Sec. 105(a), added

at end: The publication or distribution by a broker or dealer
of a research report about an emerging growth company that
is the subject of a proposed public offering of the common eq-
uity securities of such emerging growth company pursuant to
a registration statement that the issuer proposes to file, or has
filed, or that is effective shall be deemed for purposes of para-
graph (10) of this subsection and section 5(c) not to constitute
an offer for sale or offer to sell a security, even if the broker
or dealer is participating or will participate in the registered
offering of the securities of the issuer. As used in this para-
graph, the term research report means a written, electronic,
or oral communication that includes information, opinions, or
recommendations with respect to securities of an issuer or an
analysis of a security or an issuer, whether or not it provides
information reasonably sufficient upon which to base an invest-
ment decision.
Subsec. (a)(19). Pub. L. 112-106, Sec. 101(a), added par.
(19).
2010 Subsec. (a)(1). Pub. L. 111-203, Sec. 768(a)(1), in-
serted security-based swap, after security future,.
Subsec. (a)(3). Pub. L. 111-203, Sec. 768(a)(2), added at the
end Any offer or sale of a security-based swap by or on behalf
of the issuer of the securities upon which such security-based
swap is based or is referenced, an affiliate of the issuer, or an
underwriter, shall constitute a contract for sale of, sale of, offer
for sale, or offer to sell such securities.
Subsec. (a)(17), (18). Pub. L. 111-203, Sec. 768(a)(3), added
pars. (17) and (18).
2000 Subsec. (a)(1). Pub. L. 106-554, Sec. 1(a)(5) [title
II, Sec. 208(a)(1)(A)], inserted security future, after treasury
stock,.
Subsec. (a)(3). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
208(a)(1)(B)], inserted at end Any offer or sale of a security fu-
tures product by or on behalf of the issuer of the securities un-
derlying the security futures product, an affiliate of the issuer,
or an underwriter, shall constitute a contract for sale of, sale
of, offer for sale, or offer to sell the underlying securities.
Subsec. (a)(16). Pub. L. 106-554, Sec. 1(a)(5) [title II, Sec.
208(a)(1)(C)], added par. (16).
1998 Subsec. (a)(15)(i). Pub. L. 105-353 substituted
3(a)(2) for 3(a)(2) of the Act and paragraph (13) of this sub-
section for section 2(13) of the Act.
1996 Pub. L. 104-290 designated existing provisions as
subsec. (a), inserted heading, and added subsec. (b).
1987 Par. (5). Pub. L. 100-181, Sec. 201, substituted

Securities and Exchange Commission for Federal Trade
Commission.
Par. (6). Pub. L. 100-181, Sec. 202, struck out reference to
Canal Zone.
1982 Par. (1). Pub. L. 97-303 inserted any put, call,
straddle, option, or privilege on any security, certificate of de-
posit, or group or index of securities (including any interest
therein or based on the value thereof), or any put, call, strad-
dle, option, or privilege entered into on a national securities ex-
change relating to foreign currency, after mineral rights,.
1980 Par. (15). Pub. L. 96-477 added par. (15).
1970 Pars. (13), (14). Pub. L. 91-547 added pars. (13)
and (14).
1960 Par. (6). Pub. L. 86-624 struck out reference to Ha-
waii.
1959 Par. (6). Pub. L. 86-70 struck out reference to
Alaska.
1954 Act Aug. 10, 1954, in pars. (3), (8), (10), and (11),
redefined term sale so as to distinguish between offers and
sales, clarified definition of registration statement, and con-
formed definition of prospectus to changes made by act Aug.
10, 1954, to sections 5 and 10 of this Act.
1934 Act June 6, 1934, amended pars. (1), (4), and (10).
EFFECTIVE DATE OF 2012 AMENDMENT
Pub. L. 112-106, title I, Sec. 101(d), Apr. 5, 2012, 126 Stat.

308, provided that: Notwithstanding section 2(a)(19) of the Se-
curities Act of 1933 and section 3(a)(80) of the Securities Ex-
change Act of 1934, an issuer shall not be an emerging growth
company for purposes of such Acts if the first sale of common
equity securities of such issuer pursuant to an effective reg-
istration statement under the Securities Act of 1933 occurred
on or before December 8, 2011.
Pub. L. 111-203, title VII, Sec. 774, July 21, 2010, 124
Stat. 1802, provided that: Unless otherwise provided, the pro-
visions of this subtitle [Subt. B (Secs. 761 to 774) of title VII
of Pub. L. 111-203] shall take effect on the later of 360 days
after the date of the enactment of this subtitle [July 21, 2010]
or, to the extent a provision of this subtitle requires a rule-
making, not less than 60 days after publication of the final rule
or regulation implementing such provision of this subtitle.
Amendment by Pub. L. 91-547 effective Dec. 14, 1970, see

section 30 of Pub. L. 91-547.
Amendment by act Aug. 10, 1954, ch. 667, effective 60

days after Aug. 10, 1954, see section 501 of act Aug. 10, 1954,
ch. 667.
9 SECURITIES ACT OF 1933 Sec. 2A
TRANSFER OF FUNCTIONS
For transfer of functions of Securities and Exchange Com-

mission, with certain exceptions, to Chairman of such Commis-
sion, see Reorg. Plan No. 10 of 1950, Sec. 1, 2, eff. May 24,
1950, 15 F.R. 3175, 64 Stat. 1265.
SEC. 2A. SWAP AGREEMENTS.

(a) [Reserved]
(b) SECURITY-BASED SWAP AGREEMENTS.
(1) The definition of security in section 2(a)(1) of this title
does not include any security-based swap agreement (as de-
fined in section 3(a)(78) of the Securities Exchange Act of
1934).
(2) The Commission is prohibited from registering, or re-
quiring, recommending, or suggesting, the registration under
this title of any security-based swap agreement (as defined in
section 3(a)(78) of the Securities Exchange Act of 1934). If the
Commission becomes aware that a registrant has filed a reg-
istration
statement with respect to such a swap agreement, the Com-
mission
shall promptly so notify the registrant. Any such registration
statement with respect to such a swap agreement shall be void
and of
no force or effect.
(3) The Commission is prohibited from
(A) promulgating, interpreting, or enforcing rules; or
(B) issuing orders of general applicability;
under this title in a manner that imposes or specifies reporting
or recordkeeping requirements, procedures, or standards as
prophylactic measures against fraud, manipulation, or insider
trading with respect to any security-based swap agreement (as
defined in section 3(a)(78) of the Securities Exchange Act of
1934).
(4) References in this title to the purchase or sale of a
security-based swap agreement shall be deemed to mean the
execution, termination (prior to its scheduled maturity date),
assignment, exchange, or similar transfer or conveyance of, or
extinguishing of rights or obligations under, a security-based
swap agreement (as defined in section 3(a)(78) of the Securities
Exchange Act of 1934), as the context may require.
(May 27, 1933, ch. 38, title I, Sec. 2A, as added Pub. L. 106-554,
Sec. 1(a)(5) [title III, Sec. 302(a)], Dec. 21, 2000, 114 Stat. 2763,
2763A-451; amended Pub. L. 111-203, title VII, Sec. 762(c)(1), July
21, 2010, 124 Stat. 1759.)
REFERENCES IN TEXT

AMENDMENTS
2010 Subsec. (a). Pub. L. 111-203, Sec. 762(c)(1)(A), re-

served subsec. (a).
Subsec. (b). Pub. L. 111-203, Sec. 761(c)(1)(B), substituted
(as defined in section 3(a)(78) of the Securities Exchange Act
of 1934 for (as defined in section 206B of the Gramm-Leach-
Bliley Act).
Amendment by section 761(c)(1) of Pub. L. 111-203 effec-

tive on the later of 360 days after July 21, 2010, or, to the ex-
tent a provision of subtitle B (Secs. 761 to 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 implementing
such provision of such subtitle B, see section 774 of Pub. L.
111-203.
EXEMPTED SECURITIES
SEC. 3. (a) Except as hereinafter expressly provided, the provi-

sions of this title shall not apply to any of the following classes of
securities:
(1) Reserved.
(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 Govern-
ment 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 in-
terest in or a direct obligation of a Federal Reserve bank; or
any interest or participation in any common trust fund or simi-
lar fund that is excluded from the definition of the term in-
vestment company under section 3(c)(3) of the Investment
Company Act of 1940; or any security which is an industrial
development bond (as defined in section 103(c)(2) of the Inter-
nal Revenue Code of 1954) [3] the interest on which is exclud-
able 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 trust fund, or in a collective
trust fund maintained by a bank, or any security arising out
3The Internal Revenue Code of 1954 was redesignated as the Internal Revenue Code of 1986
by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095. Section 103 of such Code, which related
to interest on certain governmental obligations was amended generally by Pub. L. 99-514, title
XIII, Sec. 1301(a), Oct. 22, 1986, 100 Stat. 2602, and as so amended relates to interest on State
and local bonds. Section 103(b)(2) (formerly section 103(c)(2)), which prior to the general amend-
ment defined industrial development bond, relates to the applicability of the interest exclusion
to arbitrage bonds.
of a contract issued by an insurance company, which interest,

participation, or security 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, (B) an annuity plan which meets the re-
quirements for the deduction of the employers contributions
under section 404(a)(2) of such Code, (C) a governmental plan
as defined in section 414(d) of such Code which has been estab-
lished by an employer for the exclusive benefit of its employees
or their beneficiaries for the purpose of distributing to such
employees or their beneficiaries the corpus and income of the
funds accumulated under such plan, if under such plan it is
impossible, prior to the satisfaction of all liabilities with re-
spect to such employees and their beneficiaries, for any part of
the corpus or income to be used for, or diverted to, purposes
other than the exclusive benefit of such employees or their
beneficiaries, or (D) a church plan, company, or account that
is excluded from the definition of an investment company
under section 3(c)(14) of the Investment Company Act of 1940,
other than any plan described in subparagraph (A), (B), (C), or
(D) of this paragraph (i) the contributions under which are
held in a single trust fund or in a separate account maintained
by an insurance company for a single employer and under
which an amount in excess of the employers contribution is al-
located to the purchase of securities (other than interests or
participations in the trust or separate account itself) issued by
the employer or any company directly or indirectly controlling,
controlled by, or under common control with the employer, (ii)
which covers employees some or all of whom are employees
within the meaning of section 401(c)(1) of such Code, or (iii)
which is a plan funded by an annuity contract described in sec-
tion 403(b) of such Code. The Commission, by rules and regula-
tions 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 com-
mon trust fund or similar fund, or a collective trust fund, the
term bank has the same meaning as in the Investment Com-
pany Act of 1940;
(3) Any note, draft, bill of exchange, or bankers acceptance
which arises out of a current transaction or the proceeds of
which have been or are to be used for current transactions, and

which has a maturity at the time of issuance of not exceeding
nine months, exclusive of days of grace, or any renewal thereof
the maturity of which is likewise limited;
(4) Any security issued by a person organized and operated
exclusively for religious, educational, benevolent, fraternal,
charitable, or reformatory purposes and not for pecuniary prof-
it, and no part of the net earnings of which inures to the ben-
efit of any person, private stockholder, or individual, or any se-
curity of a fund that is excluded from the definition of an in-
vestment company under section 3(c)(10)(B) of the Investment
Company Act of 1940;
(5) Any security issued (A) by a savings and loan associa-
tion, building and loan association, cooperative bank, home-
stead association, or similar institution, which is supervised
and examined by State or Federal authority having supervision
over any such institution; or (B) by (i) a farmers cooperative
organization exempt from tax under section 521 of the Internal
Revenue Code of 1954, (ii) a corporation described in section
501(c)(16) of such Code and exempt from tax under section
501(a) of such Code, or (iii) a corporation described in section
501(c)(2) of such Code which is exempt from tax under section
501(a) of such Code and is organized for the exclusive purpose
of holding title to property, collecting income therefrom, and
turning over the entire amount thereof, less expenses, to an or-
ganization or corporation described in clause (i) or (ii);
(6) Any interest in a railroad equipment trust. For pur-
poses of this paragraph interest in a railroad equipment trust
means any interest in an equipment trust, lease, conditional
sales contract, or other similar arrangement entered into,
issued, assumed, guaranteed by, or for the benefit of, a com-
mon carrier to finance the acquisition of rolling stock, includ-
ing motive power;
(7) Certificates issued by a receiver or by a trustee in
bankruptcy, with the approval of the court;
(8) Any insurance or endowment policy or annuity contract
or optional annuity contract, issued by a corporation subject to
the supervision of the insurance commissioner, bank commis-
sioner, or any agency or officer performing like functions, of
any State or Territory of the United States or the District of
Columbia;
(9) Except with respect to a security exchanged in a case
under title 11, any security exchanged by the issuer with its
existing security holders exclusively where no commission or
other remuneration is paid or given directly or indirectly for
soliciting such exchange;
(10) Except with respect to a security exchanged in a case
under title 11, any security which is issued in exchange for one
or more bona fide outstanding securities, claims or property in-
terests, or partly in such exchange and partly for cash, where
the terms and conditions of such issuance and exchange are
approved, after a hearing upon the fairness of such terms and
conditions at which all persons to whom it is proposed to issue
securities in such exchange shall have the right to appear, by
any court, or by any official or agency of the United States, or

by any State or Territorial banking or insurance commission or
other governmental authority expressly authorized by law to
grant such approval;
(11) Any security which is a part of an issue offered and
sold only to persons resident within a single State or Territory,
where the issuer of such security is a person resident and
doing business within or, if a corporation, incorporated by and
doing business within, such State or Territory.
(12) Any equity security issued in connection with the ac-
quisition by a holding company of a bank under section 3(a) of
the Bank Holding Company Act of 1956 or a savings associa-
tion under section 10(e) of the Home Owners Loan Act, if
(A) the acquisition occurs solely as part of a reorga-
nization in which security holders exchange their shares of
a bank or savings association for shares of a newly formed
holding company with no significant assets other than se-
curities of the bank or savings association and the existing
subsidiaries of the bank or savings association;
(B) the security holders receive, after that reorganiza-
tion, substantially the same proportional share interests in
the holding company as they held in the bank or savings
association, except for nominal changes in shareholders
interests resulting from lawful elimination of fractional in-
terests and the exercise of dissenting shareholders rights
under State or Federal law;
(C) the rights and interests of security holders in the
holding company are substantially the same as those in
the bank or savings association prior to the transaction,
other than as may be required by law; and
(D) the holding company has substantially the same
assets and liabilities, on a consolidated basis, as the bank
or savings association had prior to the transaction.
For purposes of this paragraph, the term savings association
means a savings association (as defined in section 3(b) of the
Federal Deposit Insurance Act) the deposits of which are in-
sured by the Federal Deposit Insurance Corporation.
(13) Any security issued by or any interest or participation
in any church plan, company or account that is excluded from
the definition of an investment company under section 3(c)(14)
of the Investment Company Act of 1940.
(14) Any security futures product that is
(A) cleared by a clearing agency registered under sec-
tion 17A of the Securities Exchange Act of 1934 or exempt
from registration under subsection (b)(7) of such section
17A; and
(B) traded on a national securities exchange or a na-
tional securities association registered pursuant to section
15A(a) of the Securities Exchange Act of 1934.
(b) ADDITIONAL EXEMPTIONS.
(1) SMALL ISSUES EXEMPTIVE AUTHORITY.The Commission
may from time to time by its rules and regulations, and subject
to such terms and conditions as may be prescribed therein, add
any class of securities to the securities exempted as provided
in this section, if it finds that the enforcement of this title with

respect to such securities is not necessary in the public interest
and for the protection of investors by reason of the small
amount involved or the limited character of the public offering;
but no issue of securities shall be exempted under this sub-
section where the aggregate amount at which such issue is of-
fered to the public exceeds $5,000,000.
(2) ADDITIONAL ISSUES.The Commission shall by rule or
regulation add a class of securities to the securities exempted
pursuant to this section in accordance with the following terms
and conditions:
(A) The aggregate offering amount of all securities of-
fered and sold within the prior 12-month period in reliance
on the exemption added in accordance with this paragraph
shall not exceed $50,000,000.
(B) The securities may be offered and sold publicly.
(C) The securities shall not be restricted securities
within the meaning of the Federal securities laws and the
regulations promulgated thereunder.
(D) The civil liability provision in section 12(a)(2) shall
apply to any person offering or selling such securities.
(E) The issuer may solicit interest in the offering prior
to filing any offering statement, on such terms and condi-
tions as the Commission may prescribe in the public inter-
est or for the protection of investors.
(F) The Commission shall require the issuer to file au-
dited financial statements with the Commission annually.
(G) Such other terms, conditions, or requirements as
the Commission may determine necessary in the public in-
terest and for the protection of investors, which may in-
clude
(i) a requirement that the issuer prepare and elec-
tronically file with the Commission and distribute to
prospective investors an offering statement, and any
related documents, in such form and with such content
as prescribed by the Commission, including audited fi-
nancial statements, a description of the issuers busi-
ness operations, its financial condition, its corporate
governance principles, its use of investor funds, and
other appropriate matters; and
(ii) disqualification provisions under which the ex-
emption shall not be available to the issuer or its
predecessors, affiliates, officers, directors, under-
writers, or other related persons, which shall be sub-
stantially similar to the disqualification provisions
contained in the regulations adopted in accordance
with section 926 of the Dodd-Frank Wall Street Re-
form and Consumer Protection Act (15 U.S.C. 77d
note).
(3) LIMITATION.Only the following types of securities may
be exempted under a rule or regulation adopted pursuant to
paragraph (2): equity securities, debt securities, and debt secu-
rities convertible or exchangeable to equity interests, including
any guarantees of such securities.
(4) PERIODIC DISCLOSURES.Upon such terms and condi-

tions as the Commission determines necessary in the public in-
terest and for the protection of investors, the Commission by
rule or regulation may require an issuer of a class of securities
exempted under paragraph (2) to make available to investors
and file with the Commission periodic disclosures regarding
the issuer, its business operations, its financial condition, its
corporate governance principles, its use of investor funds, and
other appropriate matters, and also may provide for the sus-
pension and termination of such a requirement with respect to
that issuer.
(5) ADJUSTMENT.Not later than 2 years after the date of
enactment of the Small Company Capital Formation Act of
2011 [4] and every 2 years thereafter, the Commission shall re-
view the offering amount limitation described in paragraph
(2)(A) and shall increase such amount as the Commission de-
termines appropriate. If the Commission determines not to in-
crease such amount, it shall report to the Committee on Finan-
cial Services of the House of Representatives and the Com-
mittee on Banking, Housing, and Urban Affairs of the Senate
on its reasons for not increasing the amount.
(c) The Commission may from time to time by its rules and
regulations and subject to such terms and conditions as may be
prescribed therein, add to the securities exempted as provided in
this section any class of securities issued by a small business in-
vestment company under the Small Business Investment Act of
1958 1 if it finds, having regard to the purposes of that Act, that
the enforcement of this Act with respect to such securities is not
necessary in the public interest and for the protection of investors.
404, title II, Sec. 202, 48 Stat. 906; Feb. 4, 1887, ch. 104, title II,
Sec. 214, as added Aug. 9, 1935, ch. 498, 49 Stat. 557; amended
June 29, 1938, ch. 811, Sec. 15, 52 Stat. 1240; May 15, 1945, ch.
122, 59 Stat. 167; Aug. 10, 1954, ch. 667, title I, Sec. 5, 68 Stat.
684; Pub. L. 85-699, title III, Sec. 307(a), Aug. 21, 1958, 72 Stat.
694; Pub. L. 91-373, title IV, Sec. 401(a), Aug. 10, 1970, 84 Stat.
718; Pub. L. 91-547, Sec. 27(b), (c), Dec. 14, 1970, 84 Stat. 1434;
Pub. L. 91-565, Dec. 19, 1970, 84 Stat. 1480; Pub. L. 91-567, Sec.
6(a), Dec. 22, 1970, 84 Stat. 1498; Pub. L. 94-210, title III, Sec.
308(a)(1), (3), Feb. 5, 1976, 90 Stat. 56, 57; Pub. L. 95-283, Sec. 18,
May 21, 1978, 92 Stat. 275; Pub. L. 95-425, Sec. 2, Oct. 6, 1978,
92 Stat. 962; Pub. L. 95-598, title III, Sec. 306, Nov. 6, 1978, 92
Stat. 2674; Pub. L. 96-477, title III, Sec. 301, title VII, Sec. 701,
Oct. 21, 1980, 94 Stat. 2291, 2294; Pub. L. 97-261, Sec. 19(d), Sept.
20, 1982, 96 Stat. 1121; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100
Stat. 2095; Pub. L. 100-181, title II, Sec. 203, 204, Dec. 4, 1987, 101
Stat. 1252; Pub. L. 103-325, title III, Sec. 320, Sept. 23, 1994, 108
Stat. 2225; Pub. L. 104-62, Sec. 3, Dec. 8, 1995, 109 Stat. 684; Pub.
L. 104-290, title V, Sec. 508(b), Oct. 11, 1996, 110 Stat. 3447; Pub.
L. 106-102, title II, Sec. 221(a), Nov. 12, 1999, 113 Stat. 1401; Pub.
4Probably means the Jumpstart Our Business Startups Act, Pub. L. 112-106, Apr. 5, 2012,
126 Stat. 306.
L. 106-554, Sec. 1(a)(5) [title II, Sec. 208(a)(2)], Dec. 21, 2000, 114
Stat. 2763, 2763A-435; Pub. L. 108-359, Sec. 1(b), Oct. 25, 2004 118
Stat. 1666; Pub. L. 111-203, title IX, Sec. 985(a)(1), July 21, 2010,
124 Stat. 1933; Pub. L. 112-106, title IV, Sec. 401(a), Apr. 5, 2012,
126 Stat. 323.)
REFERENCES IN TEXT
The Internal Revenue Code of 1954, referred to in text,

was enacted by act Aug. 16, 1954, ch. 736, 68A Stat. 3, was
redesignated as the Internal Revenue Code of 1986 by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, and is classified
generally to U.S. Code Title 26, Internal Revenue Code. Sec-
tion 103 of such Code, which related to interest on certain gov-
ernmental obligations was amended generally by Pub. L. 99-
514, title XIII, Sec. 1301(a), Oct. 22, 1986, 100 Stat. 2602, and
as so amended relates to interest on State and local bonds.
Section 103(b)(2) (formerly section 103(c)(2)), which prior to the
general amendment defined industrial development bond, re-
lates to the applicability of the interest exclusion to arbitrage
bonds.
Title 11, referred to in subsec. (a)(9), (10), probably means
title 11 of the United States Code.
The Bank Holding Company Act of 1956, referred to in
text, is act May 9, 1956, ch. 240, 70 Stat. 133, as amended,
which is classified principally to chapter 17 (Sec. 1841 et seq.)
of U.S. Code Title 12, Banks and Banking.
The Home Owners Loan Act of 1933, referred to in text,
is classified generally to chapter 12 (Sec. 1461 et seq.) of U.S.
Code Title 12, Banks and Banking.
The Federal Deposit Insurance Act, referred to in text, is
act Sept. 21, 1950, ch. 967, Sec. 2, 64 Stat. 873, as amended,
which is classified generally to chapter 16 (Sec. 1811 et seq.)
of U.S. Code Title 12, Banks and Banking.
The Small Business Investment Act of 1958, referred to in
text, is Pub. L. 85-699, Aug. 21, 1958, 72 Stat. 689, as amend-
ed, which is classified principally to chapter 14B (Sec. 661 et
seq.) of U.S. Code Title 15, Commerce and Trade.
The Dodd-Frank Wall Street Reform and Consumer Pro-
tection Act, referred to in text, is Pub. L. 111-203, July 21,
2010, 124 Stat. 1376, as amended.
AMENDMENTS
2012 Subsec. (b). Pub. L. 112-106, Sec. 401(a), des-

ignated existing provisions as par. (1) and added pars. (2) to
(5).
2010 Subsec. (a)(4). Pub. L. 111-203, Sec. 985(a)(1), sub-

stituted individual, for individual;.
2004 Subsec. (a)(2). Pub. L. 108-359 struck out or at
end of cl. (B) and substituted or (D) a church plan, company,
or account that is excluded from the definition of an invest-
ment company under section 3(c)(14) of the Investment Com-
pany Act of 1940, other than any plan described in subpara-
graph (A), (B), (C), or (D) for other than any plan described
in clause (A), (B), or (C).
2000 Subsec. (a)(14). Pub. L. 106-554 added par. (14).
1999 Subsec. (a)(2). Pub. L. 106-102 substituted or any
interest or participation in any common trust fund or similar
fund that is excluded from the definition of the term invest-
ment company under section 3(c)(3) of the Investment Com-
pany Act of 1940 for or any interest or participation in any
common trust fund or similar fund maintained by a bank ex-
clusively for the collective investment and reinvestment of as-
sets contributed thereto by such bank in its capacity as trust-
ee, executor, administrator, or guardian.
1995 Subsec. (a)(4). Pub. L. 104-62 inserted at end or
any security of a fund that is excluded from the definition of
an investment company under section 3(c)(10)(B) of the Invest-
ment Company Act of 1940;.
1987 Subsec. (a)(1). Pub. L. 100-181, Sec. 203, reserved
par. (1).
Subsec. (a)(5)(A). Pub. L. 100-181, Sec. 204, struck out ,
except that the foregoing exemption shall not apply with re-
spect to any such security where the issuer takes from the
total amount paid or deposited by the purchaser, by way of any
fee, cash value or other device whatsoever, either upon termi-
nation of the investment at maturity or before maturity, an ag-
gregate amount in excess of 3 per centum of the face value of
such security after any such institution.
1986 Subsec. (a)(2), (5). Pub. L. 99-514 provided for re-
designation of Internal Revenue Code of 1954 as Internal Rev-
enue Code of 1986, and provided that reference to former gen-
erally includes reference to latter, but did not explicitly provide
for change in text.
1982 Subsec. (a)(6). Pub. L. 97-261 struck out provisions
relating to any security issued by a motor carrier subject to
certain provisions.
1980 Subsec. (a)(2). Pub. L. 96-477, Sec. 701, provided
that single trust funds did not have to be maintained by banks
in order to qualify for exemption from the provisions of this
title, substituted provisions relating to securities arising out of
contracts issued by insurance companies for provisions relating
to separate accounts maintained by insurance companies, pro-
vided that an interest, participation, or security could be issued
in connection with certain governmental plans as defined in
section 414(d) of Internal Revenue Code of 1954 and qualify for
exemption from the provisions of this title, and excluded from
exemption plans described in cls. (A), (B), or (C) of par. (2)
which were funded by annuity contracts described in section

403(b) of such Code.
Subsec. (b). Pub. L. 96-477, Sec. 301, substituted
$5,000,000 for $2,000,000.
1978 Subsec. (a)(7). Pub. L. 95-598, Sec. 306(a), sub-
stituted or debtor in possession in a case under title 11 for
in bankruptcy.
Subsec. (a)(9), (10). Pub. L. 95-598, Sec. 306(b), substituted
Except with respect to a security exchanged in a case under
title 11, any for Any.
Subsec. (b). Pub. L. 95-425 substituted $2,000,000 for
$1,500,000.
Pub. L. 95-283 substituted $1,500,000 for $500,000.
1976 Subsec. (a)(6). Pub. L. 94-210 substituted provi-
sions relating to any security issued by a motor carrier subject
to certain provisions or any interest in a railroad equipment
trust, and provisions defining interest in a railroad equipment
trust, for provisions relating to any security issued by a com-
mon or contract carrier, subject to certain provisions.
1970 Subsec. (a)(2). Pub. L. 91-567 exempted any inter-
est 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,
any security which is an industrial development bond the in-
terest on which is excludable from gross income under section
103(a)(1) of the Internal Revenue Code of 1954, 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 stock bonus, pension, or profit-sharing plan which meets
the requirements for qualification under section 401 of such
Code, or an annuity plan which meets the requirements for the
deduction of the employers contribution under section
404(a)(2) of such Code, directed the Commission to exempt
from the provisions of section 5 of this Act any interest or par-
ticipation 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 such Code if and to the extent that the Commission
determines this to be necessary or appropriate in the public in-
terest and consistent with the protection of investors, and pro-
vided that for the purposes of this paragraph a security issued
or guaranteed by a bank shall not include any interest or par-
ticipation in any collective trust fund maintained by a bank,
and that in the case of a common trust fund or similar fund,
or a collective trust fund, the term bank has the same mean-
ing as in the Investment Company Act of 1940.
Pub. L. 91-547, Sec. 27(b), struck out reference to indus-
trial development bonds the interest on which is excludable
from gross income under section 103(a)(1) of the Internal Rev-
enue Code of 1954; and exempted from registration provisions
interests or participations in common trust funds maintained
by a bank for collective investment of assets held by it in a fi-
duciary capacity interests or participations in bank collective

trust funds maintained for funding of employees stock bonus,
pension, or profit-sharing plans; interests or participations in
separate accounts maintained by insurance companies for
funding certain stock-bonus, pension, or profit-sharing plans
which meet the requirements for qualification under section
401 of such Code; and interests or participations issued by
bank collective trust funds or insurance company separate ac-
counts for funding certain stock-bonus, pension, profit-sharing,
or annuity plans when the Commission by rule, regulation, or
order determines this to be necessary in the public interest;
provided that a security issued or guaranteed by a bank shall
not include any interest or participation in any collective trust
fund maintained by a bank; substituted where first appearing
security issued or guaranteed by any bank for security
issued or guaranteed by any national bank, or by any banking
institution organized under the laws of any State or Territory
or the District of Columbia, the business of which is substan-
tially confined to banking and is supervised by the State or
Territorial banking commission or similar official, the latter
provision now incorporated in a separate definition of term
bank; and made the Investment Company Act definition of
bank applicable as in the case of a common trust fund or simi-
lar fund, or a collective trust fund.
Pub. L. 91-373 inserted reference to industrial develop-
ment bonds the interest on which is excludable from gross in-
come under section 103(a)(1) of the Internal Revenue Code of
1954.
Subsec. (a)(5). Pub. L. 91-547, Sec. 27(c), designated exist-
ing provisions as cl. (A), included cooperative bank issues, re-
quired the issuer to be an institution which is supervised and
examined by State or Federal authority having supervision
over such institution, struck out substantially all the business
of which is confined to the making of loans to members after
similar institution and substituted provisions designated as
cl. (B) for prior provision relating to a security issued by a
farmers cooperative association as defined in paragraphs (12),
(13), and (14) of section 103 of the Revenue Act of 1932.
Subsec. (b). Pub. L. 91-565 substituted $500,000 for
$300,000.
1958 Subsec. (c). Pub. L. 85-699 added subsec. (c).
1954 Subsec. (a)(11). Act Aug. 10, 1954, inserted of-
fered and before sold.
1945 Subsec. (b). Act May 15, 1945, substituted
$300,000 for $100,000.
1938 Subsec. (a)(6). Act June 29, 1938, reenacted par.
(6) without change.
1935 Subsec. (a)(6). Act Feb. 4, 1887, as added by act
Aug. 9, 1935, included a security issued by a contract carrier.
1934 Subsec. (a). Act June 6, 1934, amended pars. (2),
(4), and (8) and added pars. (9) to (11).
Amendment by Pub. L. 111-203 effective 1 day after July

21, 2010, see section 4 of Pub. L. 111-203.
Amendment by section 221(a) of Pub. L. 106-102 effective

18 months after Nov.12, 1999, see section 225 of Pub. L. 106-
102.
Amendments by Pub. L. 104-62 applicable in all adminis-

trative and judicial actions pending on or commenced after
Dec. 8, 1995, as a defense to any claim that any person, secu-
rity, interest, or participation of the type described in Pub. L.
104-62 and the amendments made by 104-62 is subject to the
provisions of the Securities Act of 1933, the Securities Ex-
change Act of 1934, the Investment Company Act of 1940, or
the Investment Advisers Act of 1940, or any State statute or
regulation preempted as provided in section 6 of 104-62, except
as otherwise specifically provided in such Acts or State law,
see section 7 of Pub. L. 104-62.
Amendments by Pub. L. 97-261 effective on the 60th day

after Sept. 20, 1982, see section 31 of Pub. L. 97-261.
Amendment by Pub. L. 95-598 effective Oct. 1, 1979, see

section 402(a) of Pub. L. 95-598.
Amendments by section 308(a) of Pub. L. 94-210 effective

on the 60th day after Feb. 5, 1976, but inapplicable to any
bona fide offering of a security made by the issuer, or by or
through an underwriter, before such 60th day, see section
308(d)(1) of Pub. L. 94-210.
EFFECTIVE DATE OF 1970 AMENDMENTS
Amendments by section 6 of Pub. L. 91-657 applicable with

respect to securities sold after Jan. 1, 1970, see section 6(d) of
Pub. L. 91-657.
Amendment by Pub. L. 91-547 effective Dec. 14, 1970, see
Amendments by section 401 of Pub. L. 91-373 applicable
with respect to securities sold after Jan. 1, 1970, see section
401(c) of Pub. L. 91-373.
Amendment by act Aug. 10, 1954, effective 60 days after

Aug. 10, 1954.
REPEALS
Section 214 of act Feb. 4, 1887 (the Interstate Commerce

Act), as added Aug. 9, 1935, ch. 498, 49 Stat. 557, cited as a
credit to this section, was repealed by Pub. L. 97-449, Sec. 7(b),
Jan. 12, 1983, 96 Stat. 2443, 2444.

1950, 15 F.R. 3175, 64 Stat. 1265.
EXEMPTED TRANSACTIONS
SEC. 4. (a) The provisions of section 5 shall not apply to

(1) transactions by any person other than an issuer, under-
writer, or dealer.
(2) transactions by an issuer not involving any public offer-
ing.
(3) transactions by a dealer (including an underwriter no
longer acting as an underwriter in respect of the security in-
volved in such transaction), except
(A) transactions taking place prior to the expiration of
forty days after the first date upon which the security was
bona fide offered to the public by the issuer or by or
through an underwriter,
(B) transactions in a security as to which a registra-
tion statement has been filed taking place prior to the ex-
piration of forty days after the effective date of such reg-
istration statement or prior to the expiration of forty days
after the first date upon which the security was bona fide
offered to the public by the issuer or by or through an un-
derwriter after such effective date, whichever is later (ex-
cluding in the computation of such forty days any time
during which a stop order issued under section 8 is in ef-
fect as to the security), or such shorter period as the Com-
mission may specify by rules and regulations or order, and
(C) transactions as to securities constituting the whole
or a part of an unsold allotment to or subscription by such
dealer as a participant in the distribution of such securi-
ties by the issuer or by or through an underwriter.
With respect to transactions referred to in clause (B), if securi-
ties of the issuer have not previously been sold pursuant to an
earlier effective registration statement the applicable period,
instead of forty days, shall be ninety days, or such shorter pe-
riod as the Commission may specify by rules and regulations
or order.
(4) brokers transactions executed upon customers orders
on any exchange or in the over-the-counter market but not the
solicitation of such orders.
(5) transactions involving offers or sales by an issuer solely
to one or more accredited investors, if the aggregate offering
price of an issue of securities offered in reliance on this para-
graph does not exceed the amount allowed under section

3(b)(1) of this title, if there is no advertising or public solicita-
tion in connection with the transaction by the issuer or anyone
acting on the issuers behalf, and if the issuer files such notice
with the Commission as the Commission shall prescribe.
(6) transactions involving the offer or sale of securities by
an issuer (including all entities controlled by or under common
control with the issuer), provided that
(A) the aggregate amount sold to all investors by the
issuer, including any amount sold in reliance on the ex-
emption provided under this paragraph during the 12-
month period preceding the date of such transaction, is not
more than $1,000,000;
(B) the aggregate amount sold to any investor by an
issuer, including any amount sold in reliance on the ex-
emption provided under this paragraph during the 12-
month period preceding the date of such transaction, does
not exceed
(i) the greater of $2,000 or 5 percent of the annual
income or net worth of such investor, as applicable, if
either the annual income or the net worth of the in-
vestor is less than $100,000; and
(ii) 10 percent of the annual income or net worth
of such investor, as applicable, not to exceed a max-
imum aggregate amount sold of $100,000, if either the
annual income or net worth of the investor is equal to
or more than $100,000;
(C) the transaction is conducted through a broker or
funding portal that complies with the requirements of sec-
tion 4A(a); and
(D) the issuer complies with the requirements of sec-
tion 4A(b).
(b) [5] Offers and sales exempt under section 230.506 of title 17,
Code of Federal Regulations (as revised pursuant to section 201 of
the Jumpstart Our Business Startups Act) shall not be deemed
public offerings under the Federal securities laws as a result of
general advertising or general solicitation.
(b)(1) [5] With respect to securities offered and sold in compli-
ance with Rule 506 of Regulation D under this Act, no person who
meets the conditions set forth in paragraph (2) shall be subject to
registration as a broker or dealer pursuant to section 15(a)(1) of
this title, [6] solely because
(A) that person maintains a platform or mechanism
that permits the offer, sale, purchase, or negotiation of or
with respect to securities, or permits general solicitations,
general advertisements, or similar or related activities by
issuers of such securities, whether online, in person, or
through any other means;
(B) that person or any person associated with that per-
son co-invests in such securities; or
5Two subsec. (b) have been enacted.
6Probably should be a reference to section 15(a)(1) of the Securities Exchange Act of 1934.
(C) that person or any person associated with that per-

son provides ancillary services with respect to such securi-
ties.
(2) The exemption provided in paragraph (1) shall apply to any
person described in such paragraph if
(A) such person and each person associated with that per-
son receives no compensation in connection with the purchase
or sale of such security;
(B) such person and each person associated with that per-
son does not have possession of customer funds or securities in
connection with the purchase or sale of such security; and
(C) such person is not subject to a statutory disqualifica-
tion as defined in section 3(a)(39) [7] of this title and does not
have any person associated with that person subject to such a
statutory disqualification.
(3) For the purposes of this subsection, the term ancillary
services means
(A) the provision of due diligence services, in connection
with the offer, sale, purchase, or negotiation of such security,
so long as such services do not include, for separate compensa-
tion, investment advice or recommendations to issuers or in-
vestors; and
(B) the provision of standardized documents to the issuers
and investors, so long as such person or entity does not nego-
tiate the terms of the issuance for and on behalf of third par-
ties and issuers are not required to use the standardized docu-
ments as a condition of using the service.
Sec. 6, 68 Stat. 684; Pub. L. 88-467, Sec. 12, Aug. 20, 1964, 78 Stat.
580; Pub. L. 94-29, Sec. 30, June 4, 1975, 89 Stat. 169; Pub. L. 96-
477, title VI, Sec. 602, Oct. 21, 1980, 94 Stat. 2294; Pub. L. 111-
203, title IX, Sec. 944(a), July 21, 2010, 124 Stat. 1897; Pub. L.
112-106, title II, Sec. 201(b), (c), title III, Sec. 302(a), title IV, Sec.
401(c), Apr. 5, 2012, 126 Stat. 314, 315, 325.)
REFERENCES IN TEXT
The Jumpstart Our Business Startups Act, referred to in

text, is Pub. L. 112-106, Apr. 5, 2012, 126 Stat. 306.
AMENDMENTS
2012 Pub. L. 112-106, Sec. 201(b)(1), (c)(1), made iden-

tical amendment designating existing provisions as subsec. (a).
Subsec. (a)(5). Pub. L. 112-106, Sec. 401(c), which directed
the substitution of 3(b)(1) for 3(b) in par. (5) of this section,
was executed to par. (5) of subsec. (a) of this section, as the
probable intent of Congress.
Subsec. (a)(6). Pub. L. 112-106, Sec. 302(a), which directed
the amendment of this section by adding at the end a par. (6),
was executed to subsec. (a), as the probable intent of Congress,
7Probably should be a reference to section 3(a)(39) of the Securities Exchange Act of 1934.
because of intervening amendments by Pub. L. 112-106, Sec.

201(b)(1), (c)(1). See 2012 Amendment note above.
Subsec. (b). Pub. L. 112-106, Sec. 201(c)(2), added subsec.
(b) relating to securities offered and sold in compliance with
Rule 506 of Regulation D under this Act.
Pub. L. 112-106, Sec. 201(b)(2), added subsec. (b) relating
to offers and sales exempt under section 230.506 of title 17,
Code of Federal Regulations.
2010 Pars. (5), (6). Pub. L. 111-203, Sec. 944(a), redesig-
nated par. (6) as (5).
1964 Pub. L. 88-467 substituted shall not apply to
for shall not apply to any of the following transactions: in
introductory text.
Par. (1). Pub. L. 88-467 reenacted existing first provision
of par. (1) and struck out second and third provisions, which
are incorporated in pars. (2) and (3)(A) to (C).
Par. (2). Pub. L. 88-467 redesignated existing second provi-
sion of par. (1) as (2). Former par. (2) redesignated (4).
Par. (3). Pub. L. 88-467 redesignated existing third provi-
sion of par. (1) as (3), designated the excepted transactions as
cls. (A) to (C), inserted in cl. (B) or such shorter period as the
Commission may specify by rules and regulations or order and
inserted sentence relating to the applicable period to trans-
actions referred to in clause (B).
Par. (4). Pub. L. 88-467 redesignated former par. (2) as (4)
and substituted over-the-counter market for open or counter
market.
1954 Act Aug. 10, 1954, reduced from 1 year to 40 days
the period during which the delivery of a prospectus is re-
quired in trading transactions as distinguished from initial dis-
tribution of the new securities.
1934 Act June 6, 1934, among other changes, repealed
par. (3).

Amendment by Pub. L. 94-29 effective June 4, 1975, see

Amendment by Pub. L. 88-467 effective Aug. 20, 1964, see


ch. 667.

1950, 15 F.R. 3175, 64 Stat. 1265.
SEC. 4A. REQUIREMENTS WITH RESPECT TO CERTAIN SMALL

TRANSACTIONS.
(a) REQUIREMENTS ON INTERMEDIARIES.A person acting as an
intermediary in a transaction involving the offer or sale of securi-
ties for the account of others pursuant to section 4(6) [8] shall
(1) register with the Commission as
(A) a broker; or
(B) a funding portal (as defined in section 3(a)(80) of
the Securities Exchange Act of 1934);
(2) register with any applicable self-regulatory organiza-
tion (as defined in section 3(a)(26) of the Securities Exchange
Act of 1934);
(3) provide such disclosures, including disclosures related
to risks and other investor education materials, as the Com-
mission shall, by rule, determine appropriate;
(4) ensure that each investor
(A) reviews investor-education information, in accord-
ance with standards established by the Commission, by
rule;
(B) positively affirms that the investor understands
that the investor is risking the loss of the entire invest-
ment, and that the investor could bear such a loss; and
(C) answers questions demonstrating
(i) an understanding of the level of risk generally
applicable to investments in startups, emerging busi-
nesses, and small issuers;
(ii) an understanding of the risk of illiquidity; and
(iii) an understanding of such other matters as the
Commission determines appropriate, by rule;
(5) take such measures to reduce the risk of fraud with re-
spect to such transactions, as established by the Commission,
by rule, including obtaining a background and securities en-
forcement regulatory history check on each officer, director,
and person holding more than 20 percent of the outstanding
equity of every issuer whose securities are offered by such per-
son;
(6) not later than 21 days prior to the first day on which
securities are sold to any investor (or such other period as the
Commission may establish), make available to the Commission
and to potential investors any information provided by the
issuer pursuant to subsection (b);
(7) ensure that all offering proceeds are only provided to
the issuer when the aggregate capital raised from all investors
is equal to or greater than a target offering amount, and allow
8All references to section 4(6) probably should be references to section 4(a)(6).
Sec. 4A SECURITIES ACT OF 1933 26
all investors to cancel their commitments to invest, as the

Commission shall, by rule, determine appropriate;
(8) make such efforts as the Commission determines ap-
propriate, by rule, to ensure that no investor in a 12-month pe-
riod has purchased securities offered pursuant to section 4(6) [8]
that, in the aggregate, from all issuers, exceed the investment
limits set forth in section 4(6)(B); [8]
(9) take such steps to protect the privacy of information
collected from investors as the Commission shall, by rule, de-
termine appropriate;
(10) not compensate promoters, finders, or lead generators
for providing the broker or funding portal with the personal
identifying information of any potential investor;
(11) prohibit its directors, officers, or partners (or any per-
son occupying a similar status or performing a similar func-
tion) from having any financial interest in an issuer using its
services; and
(12) meet such other requirements as the Commission
may, by rule, prescribe, for the protection of investors and in
the public interest.
(b) REQUIREMENTS FOR ISSUERS.For purposes of section
4(6), [8] an issuer who offers or sells securities shall
(1) file with the Commission and provide to investors and
the relevant broker or funding portal, and make available to
potential investors
(A) the name, legal status, physical address, and
website address of the issuer;
(B) the names of the directors and officers (and any
persons occupying a similar status or performing a similar
function), and each person holding more than 20 percent
of the shares of the issuer;
(C) a description of the business of the issuer and the
anticipated business plan of the issuer;
(D) a description of the financial condition of the
issuer, including, for offerings that, together with all other
offerings of the issuer under section 4(6) [8] within the pre-
ceding 12-month period, have, in the aggregate, target of-
fering amounts of
(i) $100,000 or less
(I) the income tax returns filed by the issuer
for the most recently completed year (if any); and
(II) financial statements of the issuer, which
shall be certified by the principal executive officer
of the issuer to be true and complete in all mate-
rial respects;
(ii) more than $100,000, but not more than
$500,000, financial statements reviewed by a public
accountant who is independent of the issuer, using
professional standards and procedures for such review
or standards and procedures established by the Com-
mission, by rule, for such purpose; and
(iii) more than $500,000 (or such other amount as
the Commission may establish, by rule), audited finan-
cial statements;
(E) a description of the stated purpose and intended

use of the proceeds of the offering sought by the issuer
with respect to the target offering amount;
(F) the target offering amount, the deadline to reach
the target offering amount, and regular updates regarding
the progress of the issuer in meeting the target offering
amount;
(G) the price to the public of the securities or the
method for determining the price, provided that, prior to
sale, each investor shall be provided in writing the final
price and all required disclosures, with a reasonable oppor-
tunity to rescind the commitment to purchase the securi-
ties;
(H) a description of the ownership and capital struc-
ture of the issuer, including
(i) terms of the securities of the issuer being of-
fered and each other class of security of the issuer, in-
cluding how such terms may be modified, and a sum-
mary of the differences between such securities, in-
cluding how the rights of the securities being offered
may be materially limited, diluted, or qualified by the
rights of any other class of security of the issuer;
(ii) a description of how the exercise of the rights
held by the principal shareholders of the issuer could
negatively impact the purchasers of the securities
being offered;
(iii) the name and ownership level of each existing
shareholder who owns more than 20 percent of any
class of the securities of the issuer;
(iv) how the securities being offered are being val-
ued, and examples of methods for how such securities
may be valued by the issuer in the future, including
during subsequent corporate actions; and
(v) the risks to purchasers of the securities relat-
ing to minority ownership in the issuer, the risks asso-
ciated with corporate actions, including additional
issuances of shares, a sale of the issuer or of assets of
the issuer, or transactions with related parties; and
(I) such other information as the Commission may, by
rule, prescribe, for the protection of investors and in the
public interest;
(2) not advertise the terms of the offering, except for no-
tices which direct investors to the funding portal or broker;
(3) not compensate or commit to compensate, directly or in-
directly, any person to promote its offerings through commu-
nication channels provided by a broker or funding portal, with-
out taking such steps as the Commission shall, by rule, require
to ensure that such person clearly discloses the receipt, past or
prospective, of such compensation, upon each instance of such
promotional communication;
(4) not less than annually, file with the Commission and
provide to investors reports of the results of operations and fi-
nancial statements of the issuer, as the Commission shall, by
rule, determine appropriate, subject to such exceptions and ter-

mination dates as the Commission may establish, by rule; and
(5) comply with such other requirements as the Commis-
sion may, by rule, prescribe, for the protection of investors and
in the public interest.
(c) LIABILITY FOR MATERIAL MISSTATEMENTS AND OMISSIONS.
(1) ACTIONS AUTHORIZED.
(A) IN GENERAL.Subject to paragraph (2), a person
who purchases a security in a transaction exempted by the
provisions of section 4(6) [8] may bring an action against an
issuer described in paragraph (2), either at law or in eq-
uity in any court of competent jurisdiction, to recover the
consideration paid for such security with interest thereon,
less the amount of any income received thereon, upon the
tender of such security, or for damages if such person no
longer owns the security.
(B) LIABILITY.An action brought under this para-
graph shall be subject to the provisions of section 12(b)
and section 13, as if the liability were created under sec-
tion 12(a)(2).
(2) APPLICABILITY.An issuer shall be liable in an action
under paragraph (1), if the issuer
(A) by the use of any means or instruments of trans-
portation or communication in interstate commerce or of
the mails, by any means of any written or oral communica-
tion, in the offering or sale of a security in a transaction
exempted by the provisions of section 4(6), [8] makes an un-
true statement of a material fact or omits to state a mate-
rial fact required to be stated or necessary in order to
make the statements, in the light of the circumstances
under which they were made, not misleading, provided
that the purchaser did not know of such untruth or omis-
sion; and
(B) does not sustain the burden of proof that such
issuer did not know, and in the exercise of reasonable care
could not have known, of such untruth or omission.
(3) DEFINITION.As used in this subsection, the term
issuer includes any person who is a director or partner of the
issuer, and the principal executive officer or officers, principal
financial officer, and controller or principal accounting officer
of the issuer (and any person occupying a similar status or per-
forming a similar function) that offers or sells a security in a
transaction exempted by the provisions of section 4(6), [8] and
any person who offers or sells the security in such offering.
(d) INFORMATION AVAILABLE TO STATES.The Commission
shall make, or shall cause to be made by the relevant broker or
funding portal, the information described in subsection (b) and
such other information as the Commission, by rule, determines ap-
propriate, available to the securities commission (or any agency or
office performing like functions) of each State and territory of the
United States and the District of Columbia.
(e) RESTRICTIONS ON SALES.Securities issued pursuant to a
transaction described in section 4(6) [8]
(1) may not be transferred by the purchaser of such securi-

ties during the 1-year period beginning on the date of pur-
chase, unless such securities are transferred
(A) to the issuer of the securities;
(B) to an accredited investor;
(C) as part of an offering registered with the Commis-
sion; or
(D) to a member of the family of the purchaser or the
equivalent, or in connection with the death or divorce of
the purchaser or other similar circumstance, in the discre-
tion of the Commission; and
(2) shall be subject to such other limitations as the Com-
mission shall, by rule, establish.
(f) APPLICABILITY.Section 4(6) [8] shall not apply to trans-
actions involving the offer or sale of securities by any issuer that
(1) is not organized under and subject to the laws of a
State or territory of the United States or the District of Colum-
bia;
(2) is subject to the requirement to file reports pursuant to
section 13 or section 15(d) of the Securities Exchange Act of
1934;
(3) is an investment company, as defined in section 3 of
the Investment Company Act of 1940, or is excluded from the
definition of investment company by section 3(b) or section 3(c)
of that Act; or
(4) the Commission, by rule or regulation, determines ap-
propriate.
(g) RULE OF CONSTRUCTION.Nothing in this section or section
4(6) [8] shall be construed as preventing an issuer from raising cap-
ital through methods not described under section 4(6). [8]
(h) CERTAIN CALCULATIONS.
(1) DOLLAR AMOUNTS.Dollar amounts in section 4(6) [8]
and subsection (b) of this section shall be adjusted by the Com-
mission not less frequently than once every 5 years, by notice
published in the Federal Register to reflect any change in the
Consumer Price Index for All Urban Consumers published by
the Bureau of Labor Statistics.
(2) INCOME AND NET WORTH.The income and net worth
of a natural person under section 4(6)(B) [8] shall be calculated
in accordance with any rules of the Commission under this
title regarding the calculation of the income and net worth, re-
spectively, of an accredited investor.
title III, Sec. 302(b), Apr. 5, 2012, 126 Stat. 315.)
REFERENCES IN TEXT

PROHIBITIONS RELATING TO INTERSTATE COMMERCE AND THE MAILS
SEC. 5. (a) Unless a registration statement is in effect as to a

security, it shall be unlawful for any person, directly or indirectly
(1) to make use of any means or instruments of transpor-
tation or communication in interstate commerce or of the mails
to sell such security through the use or medium of any pro-
spectus or otherwise; or
(2) to carry or cause to be carried through the mails or in
interstate commerce, by any means or instruments of transpor-
tation, any such security for the purpose of sale or for delivery
after sale.
(b) It shall be unlawful for any person, directly or indirectly
(1) to make use of any means or instruments of transpor-
tation or communication in interstate commerce or of the mails
to carry or transmit any prospectus relating to any security
with respect to which a registration statement has been filed
under this title, unless such prospectus meets the require-
ments of section 10; or
(2) to carry or cause to be carried through the mails or in
interstate commerce any such security for the purpose of sale
or for delivery after sale, unless accompanied or preceded by a
prospectus that meets the requirements of subsection (a) of
section 10.
(c) It shall be unlawful for any person, directly or indirectly,
to make use of any means or instruments of transportation or com-
munication in interstate commerce or of the mails to offer to sell
or offer to buy through the use or medium of any prospectus or oth-
erwise any security, unless a registration statement has been filed
as to such security, or while the registration statement is the sub-
ject of a refusal order or stop order or (prior to the effective date
of the registration statement) any public proceeding or examination
under section 8.
(d) LIMITATION.Notwithstanding any other provision of this
section, an emerging growth company or any person authorized to
act on behalf of an emerging growth company may engage in oral
or written communications with potential investors that are quali-
fied institutional buyers or institutions that are accredited inves-
tors, as such terms are respectively defined in section 230.144A
and section 230.501(a) of title 17, Code of Federal Regulations, or
any successor thereto, to determine whether such investors might
have an interest in a contemplated securities offering, either prior
to or following the date of filing of a registration statement with
respect to such securities with the Commission, subject to the re-
quirement of subsection (b)(2).
(e) Notwithstanding the provisions of section 3 or 4, unless a
registration statement meeting the requirements of section 10(a) is
in effect as to a security-based swap, it shall be unlawful for any
person, directly or indirectly, to make use of any means or instru-
ments of transportation or communication in interstate commerce
or of the mails to offer to sell, offer to buy or purchase or sell a
security- based swap to any person who is not an eligible contract
participant as defined in section 1a(18) of the Commodity Exchange
Act (7 U.S.C. 1a(18)).
Sec. 7, 68 Stat. 684; Pub. L. 111-203, title VII, Sec. 768(b), July 21,
2010, 124 Stat. 1801; Pub. L. 112-106, title I, Sec. 105(c), Apr. 5,
2012, 126 Stat. 311.)
REFERENCES IN TEXT
The Commodity Exchange Act, referred to in text, is act

Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended, which is
classified generally to chapter 1 (Sec. 1 et seq.) of U.S. Code
Title 7, Agriculture.
AMENDMENTS
2012 Subsecs. (d), (e). Pub. L. 112-106, Sec. 105(c),

added subsec. (d) and redesignated former subsec. (d) as (e).
2010 Subsec. (d). Pub. L. 111-203, Sec. 768(b), added
subsec. (d).
1954 Subsec. (a)(1). Act Aug. 10, 1954, struck out or
offer to buy after to sell.
Subsec. (b). Act Aug. 10, 1954, in par. (1) substituted with
respect to which a registration statement has been filed for
registered and in par. (2) omitted to after to carry or and
inserted subsection (a) of before section 10.
Subsec. (c). Act Aug. 10, 1954, added subsec. (c).
1934 Act June 6, 1934, repealed subsec. (c), the provi-
sions of which were replaced by section 3(a)(11) of this Act.
Amendment by section 768(b) of Pub. L. 111-203 effective

on the later of 360 days after July 21, 2010, or, to the extent
a provision of subtitle B (Secs. 761 to 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 implementing such
provision of such subtitle B, see section 774 of Pub. L. 111-203.

ch. 667.
REGISTRATION OF SECURITIES AND SIGNING OF REGISTRATION

STATEMENT
SEC. 6. (a) Any security may be registered with the Commis-

sion under the terms and conditions hereinafter provided, by filing
a registration statement in triplicate, at least one of which shall be
signed by each issuer, its principal executive officer or officers, its
principal financial officer, its comptroller or principal accounting of-
ficer, and the majority of its board of directors or persons per-
forming similar functions (or, if there is no board of directors or
persons performing similar functions, by the majority of the per-
sons or board having the power of management of the issuer), and
in case the issuer is a foreign or Territorial person by its duly au-
thorized representative in the United States; except that when

such registration statement relates to a security issued by a foreign
government, or political subdivision thereof, it need be signed only
by the underwriter of such security. Signatures of all such persons
when written on the said registration statements shall be pre-
sumed to have been so written by authority of the person whose
signature is so affixed and the burden of proof, in the event such
authority shall be denied, shall be upon the party denying the
same. The affixing of any signature without the authority of the
purported signer shall constitute a violation of this title. A registra-
tion statement shall be deemed effective only as to the securities
specified therein as proposed to be offered.
(b) REGISTRATION FEE.
(1) FEE PAYMENT REQUIRED.At the time of filing a reg-
istration statement, the applicant shall pay to the Commission
a fee at a rate that shall be equal to $92 per $1,000,000 of the
maximum aggregate price at which such securities are pro-
posed to be offered, except that during fiscal year 2003 and any
succeeding fiscal year such fee shall be adjusted pursuant to
paragraph (2).
(2) ANNUAL ADJUSTMENT.For each fiscal year, the Com-
mission shall by order adjust the rate required by paragraph
(1) for such fiscal year to a rate that, when applied to the base-
line estimate of the aggregate maximum offering prices for
such fiscal year, is reasonably likely to produce aggregate fee
collections under this subsection that are equal to the target
fee collection amount for such fiscal year.
(3) PRO RATA APPLICATION.The rates per $1,000,000 re-
quired by this subsection shall be applied pro rata to amounts
and balances of less than $1,000,000.
(4) REVIEW AND EFFECTIVE DATE.In exercising its author-
ity under this subsection, the Commission shall not be required
to comply with the provisions of section 553 of title 5, United
States Code. An adjusted rate prescribed under paragraph (2)
and published under paragraph (5) shall not be subject to judi-
cial review. An adjusted rate prescribed under paragraph (2)
shall take effect on the first day of the fiscal year to which
such rate applies.
(5) PUBLICATION.The Commission shall publish in the
Federal Register notices of the rate applicable under this sub-
section and under sections 13(e) and 14(g) for each fiscal year
not later than August 31 of the fiscal year preceding the fiscal
year to which such rate applies, together with any estimates
or projections on which such rate is based.
(6) DEFINITIONS.For purposes of this subsection:
(A) TARGET OFFSETTING [9] COLLECTION AMOUNT.The
target fee collection amount for each fiscal year is deter-
mined
according to the following table:
Target fee Fiscal year: collection amount
2002 .............................................. $377,000,000
2003 .............................................. $435,000,000
9So in original. Probably should be FEE.
2004 .............................................. $467,000,000

2005 .............................................. $570,000,000
2006 .............................................. $689,000,000
2007 .............................................. $214,000,000
2008 .............................................. $234,000,000
2009 .............................................. $284,000,000
2010 .............................................. $334,000,000
2011 .............................................. $394,000,000
2012 .............................................. $425,000,000
2013 .............................................. $455,000,000
2014 .............................................. $485,000,000
2015 .............................................. $515,000,000
2016 .............................................. $550,000,000
2017 .............................................. $585,000,000
2018 .............................................. $620,000,000
2019 .............................................. $660,000,000
2020 .............................................. $705,000,000
2021 and each fiscal year thereafter An amount that
is equal to the target fee collection amount for the prior
fiscal year, adjusted by the rate of inflation.
(B) BASELINE ESTIMATE OF THE AGGREGATE MAXIMUM
OFFERING PRICES.The baseline estimate of the aggregate
maximum offering prices for any fiscal year is the baseline
estimate of the aggregate maximum offering price at which
securities are proposed to be offered pursuant to registra-
tion statements filed with the Commission during such fis-
cal year as determined by the Commission, after consulta-
tion with the Congressional Budget Office and the Office
of Management and Budget, using the methodology re-
quired for projections pursuant to section 257 of the Bal-
anced Budget and Emergency Deficit Control Act of 1985.
(c) The filing with the Commission of a registration statement,
or of an amendment to a registration statement, shall be deemed
to have taken place upon the receipt thereof, but the filing of a reg-
istration statement shall not be deemed to have taken place unless
it is accompanied by a United States postal money order or a cer-
tified bank check or cash for the amount of the fee required under
subsection (b).
(d) The information contained in or filed with any registration
statement shall be made available to the public under such regula-
tions as the Commission may prescribe, and copies thereof, photo-
static or otherwise, shall be furnished to every applicant at such
reasonable charge as the Commission may prescribe.
(e) EMERGING GROWTH COMPANIES.
(1) IN GENERAL.Any emerging growth company, prior to
its initial public offering date, may confidentially submit to the
Commission a draft registration statement, for confidential
nonpublic review by the staff of the Commission prior to public
filing, provided that the initial confidential submission and all
amendments thereto shall be publicly filed with the Commis-
sion not later than 21 days before the date on which the issuer
conducts a road show, as such term is defined in section
230.433(h)(4) of title 17, Code of Federal Regulations, or any
successor thereto.
(2) CONFIDENTIALITY.Notwithstanding any other provi-

sion of this title, the Commission shall not be compelled to dis-
close any information provided to or obtained by the Commis-
sion pursuant to this subsection. For purposes of section 552
of title 5, United States Code, this subsection shall be consid-
ered a statute described in subsection (b)(3)(B) of such section
552. Information described in or obtained pursuant to this sub-
section shall be deemed to constitute confidential information
for purposes of section 24(b)(2) of the Securities Exchange Act
of 1934.
(May 27, 1933, ch. 38, title I, Sec. 6, 48 Stat. 78; Oct. 22, 1965,
Pub. L. 89-289, Sec. 1, 79 Stat. 1051; Dec. 4, 1987, Pub. L. 100-
181, title II, Sec. 205, 101 Stat. 1252; Oct. 11, 1996, Pub. L. 104-
290, title IV, Sec. 404, 110 Stat. 3441; Pub. L. 107-123, Sec. 4, Jan.
16, 2002, 115 Stat. 2393; Pub. L. 111-203, title IX, Sec. 991(b)(1),
July 21, 2010, 124 Stat. 1952; Pub. L. 112-106, title I, Sec. 106(a),
Apr. 5, 2012, 126 Stat. 312.)
REFERENCES IN TEXT
The Balanced Budget and Emergency Deficit Control Act

of 1985, referred to in subsec. (b)(11)(B), is Pub. L. 99-177, title
II, Dec. 12, 1985, 99 Stat. 1038, as amended.
AMENDMENTS
2012 Subsec. (e). Pub. L. 112-106, Sec. 106(a), added

subsec. (e).
2010 Subsec. (b). Pub. L. 111-203, Sec. 991(b)(1)(A), sub-
stituted fee for offsetting wherever appearing.
Subsec. (b)(1) to (11). Pub. L. 111-203, Sec. 991(b)(1)(B) to
(G), (J), added par. (4); redesignated pars. (2), (5), (7), (10), and
(11) as (1), (2), (3), (5), and (6), respectively; and struck out
former pars. (1), (3), (4), (6), 8), and (9).
Subsec. (b)(1). Pub. L. 111-203, Sec. 991(b)(1)(H), sub-
stituted paragraph (2). for paragraph (5) or (6)..
Subsec. (b)(2). Pub. L. 111-203, Sec. 991(b)(1)(I), sub-
stituted fiscal year for of the fiscal years 2003 through 2011
and substituted paragraph (1) for paragraph (2).
Subsec. (b)(5). Pub. L. 111-203, Sec. 991(b)(1)(K), sub-
stituted August 31 for April 30.
Subsec. (b)(6). Pub. L. 111-203, Sec. 991(b)(1)(L), sub-
stituted fiscal year for of the fiscal years 2002 through 2011
and added entries for years after 2011.
2002 Subsec. (b)(2) to (11). Pub. L. 107-123 added pars.
(2) to (11) and struck out former pars. (2) to (5), which required
fee payment, set out rates for general revenue and offsetting
collection fees, and required pro rata rates for amounts and
balances equal to less than $1,000,000.
1996 Subsec. (b). Pub. L. 104-290 inserted heading and
amended text of subsec. (b) generally. Prior to amendment,
text read as follows: At the time of filing a registration state-

ment the applicant shall pay to the Commission a fee of one-
fiftieth of 1 per centum of the maximum aggregate price at
which such securities are proposed to be offered, but in no case
shall such fee be less than $100.
1987 Subsec. (e). Pub. L. 100-181 struck out subsec. (e)
which provided that no registration statement should be filed
within the first 40 days following May 27, 1933.
1965 Subsec. (b). Pub. L. 89-289 substituted one-fif-
tieth for one one-hundredth and $100 for $25.
Pub. L. 111-203, title IX, Sec. 991(b)(4), July 21, 2010, 124
Stat. 1953, provided that: The amendments made by this sub-
section shall take effect on October 1, 2011, except that for fis-
cal year 2012, the [Securities and Exchange] Commission shall
publish the rate established under section 6(b) of the Securities
Act of 1933 (15 U.S.C. 77f(b)), as amended by this Act, on Au-
gust 31, 2011.
Amendment by Pub. L. 107-123 effective Oct. 1, 2001, ex-

cept that authorities provided by subsec. (b)(9) of this section
to not apply until Oct. 1, 2002, see section 11 of Pub. L. 107-
123.
Amendments by section 1 of Pub. L. 89-289 effective Jan.


1950, 15 F.R. 3175, 64 Stat. 1265.
INFORMATION REQUIRED IN REGISTRATION STATEMENT
SEC. 7. (a) INFORMATION REQUIRED IN REGISTRATION STATE-

MENT.
(1) IN GENERAL.The registration statement, when relat-
ing to a security other than a security issued by a foreign gov-
ernment, or political subdivision thereof, shall contain the in-
formation, and be accompanied by the documents, specified in
Schedule A, and when relating to a security issued by a foreign
government, or political subdivision thereof, shall contain the
information, and be accompanied by the documents, specified
in Schedule B; except that the Commission may by rules or
regulations provide that any such information or document
need not be included in respect of any class of issuers or secu-
rities if it finds that the requirement of such information or
document is inapplicable to such class and that disclosure fully
adequate for the protection of investors is otherwise required
to be included within the registration statement. If any ac-

countant, engineer, or appraiser, or any person whose profes-
sion gives authority to a statement made by him, is named as
having prepared or certified any part of the registration state-
ment, or is named as having prepared or certified a report or
valuation for use in connection with the registration statement,
the written consent of such person shall be filed with the reg-
istration statement. If any such person is named as having
prepared or certified a report or valuation (other than a public
official document or statement) which is used in connection
with the registration statement, but is not named as having
prepared or certified such report or valuation for use in connec-
tion with the registration statement, the written consent of
such person shall be filed with the registration statement un-
less the Commission dispenses with such filing as impracti-
cable or as involving undue hardship on the person filing the
registration statement. Any such registration statement shall
contain such other information, and be accompanied by such
other documents, as the Commission may by rules or regula-
tions require as being necessary or appropriate in the public
interest or for the protection of investors.
(2) TREATMENT OF EMERGING GROWTH COMPANIES.An
emerging growth company
(A) need not present more than 2 years of audited fi-
nancial statements in order for the registration statement
of such emerging growth company with respect to an ini-
tial public offering of its common equity securities to be ef-
fective, and in any other registration statement to be filed
with the Commission, an emerging growth company need
not present selected financial data in accordance with sec-
tion 229.301 of title 17, Code of Federal Regulations, for
any period prior to the earliest audited period presented in
connection with its initial public offering; and
(B) may not be required to comply with any new or re-
vised financial accounting standard until such date that a
company that is not an issuer (as defined under section
2(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(a)))
is required to comply with such new or revised accounting
standard, if such standard applies to companies that are
not issuers.
(b)(1) The Commission shall prescribe special rules with re-
spect to registration statements filed by any issuer that is a blank
check company. Such rules may, as the Commission determines
necessary or appropriate in the public interest or for the protection
of investors
(A) require such issuers to provide timely disclosure, prior
to or after such statement becomes effective under section 8,
of (i) information regarding the company to be acquired and
the specific application of the proceeds of the offering, or (ii)
additional information necessary to prevent such statement
from being misleading;
(B) place limitations on the use of such proceeds and the
distribution of securities by such issuer until the disclosures
required under subparagraph (A) have been made; and
(C) provide a right of rescission to shareholders of such se-

curities.
(2) The Commission may, as it determines consistent with the
public interest and the protection of investors, by rule or order ex-
empt any issuer or class of issuers from the rules prescribed under
paragraph (1).
(3) For purposes of paragraph (1) of this subsection, the term
blank check company means any development stage company
that is issuing a penny stock (within the meaning of section
3(a)(51) of the Securities Exchange Act of 1934) and that
(A) has no specific business plan or purpose; or
(B) has indicated that its business plan is to merge with
an unidentified company or companies.
(c) DISCLOSURE REQUIREMENTS.
(1) IN GENERAL.The Commission shall adopt regulations
under this subsection requiring each issuer of an asset-backed
security to disclose, for each tranche or class of security, infor-
mation regarding the assets backing that security.
(2) CONTENT OF REGULATIONS.In adopting regulations
under this subsection, the Commission shall
(A) set standards for the format of the data provided
by issuers of an asset-backed security, which shall, to the
extent feasible, facilitate comparison of such data across
securities in similar types of asset classes; and
(B) require issuers of asset-backed securities, at a min-
imum, to disclose asset-level or loan-level data, if such
data are necessary for investors to independently perform
due diligence, including
(i) data having unique identifiers relating to loan
brokers or originators;
(ii) the nature and extent of the compensation of
the broker or originator of the assets backing the secu-
rity; and
(iii) the amount of risk retention by the originator
and the securitizer of such assets.
(d) REGISTRATION STATEMENT FOR ASSET-BACKED SECURI-
TIES.Not later than 180 days after the date of enactment of this
subsection, the Commission shall issue rules relating to the reg-
istration statement required to be filed by any issuer of an asset-
backed security (as that term is defined in section 3(a)(77) of the
Securities Exchange Act of 1934) that require any issuer of an
asset-backed security
(1) to perform a review of the assets underlying the asset-
backed security; and
(2) to disclose the nature of the review under paragraph
(1).
(May 27, 1933, ch. 38, title I, Sec. 7, 48 Stat. 78; Pub. L. 101-429,
title V, Sec. 508, Oct. 15, 1990, 104 Stat. 956; Pub. L. 111-203, title
IX, Secs. 942(b), 945, July 21, 2010, 124 Stat. 1897, 1898; Pub. L.
112-106, title I, Sec. 102(b)(1), Apr. 5, 2012, 126 Stat. 309.)
REFERENCES IN TEXT
The Sarbanes-Oxley Act of 2002, referred to in text, is

Pub. L. 107-204, July 30, 2002, 116 Stat. 745, which is classi-
fied principally to chapter 98 (Sec. 7201 et seq.) of U.S. Code
Title 15, Commerce and Trade.
The date of enactment of this subsection, referred to in
subsec. (d), is the date of enactment of Pub. L. 111-203, which
was approved July 21, 2010.
AMENDMENTS
2012 Subsec. (a). Pub. L. 112-106, Sec. 102(b)(1), in-

serted heading, designated existing provisions as par. (1) and
inserted heading, and added par. (2).
2010 Subsec. (c). Pub. L. 111-203, Sec. 942(b), added
subsec. (c).
Subsec. (d). Pub. L. 111-203, Sec. 945, added subsec. (d).
1990 Pub. L. 101-429 designated existing provision as
subsec. (a) and added subsec. (b).

Amendment by section 508 of Pub. L. 101-429 effective 18

months after Oct. 15, 1990 or upon the issuance of final regula-
tions initially implementing such section, whichever is earlier,
see section 1(c) of Pub. L. 101-429.

1950, 15 F.R. 3175, 64 Stat. 1265.
TAKING EFFECT OF REGISTRATION STATEMENTS AND AMENDMENTS

THERETO
SEC. 8. (a) Except as hereinafter provided, the effective date of

a registration statement shall be the twentieth day after the filing
thereof or such earlier date as the Commission may determine,
having due regard to the adequacy of the information respecting
the issuer theretofore available to the public, to the facility with
which the nature of the securities to be registered, their relation-
ship to the capital structure of the issuer and the rights of holders
thereof can be understood, and to the public interest and the pro-
tection of investors. If any amendment to any such statement is
filed prior to the effective date of such statement, the registration
statement shall be deemed to have been filed when such amend-
ment was filed; except that an amendment filed with the consent
of the Commission, prior to the effective date of the registration
statement, or filed pursuant to an order of the Commission, shall
be treated as a part of the registration statement.
(b) If it appears to the Commission that a registration state-
ment is on its face incomplete or inaccurate in any material re-
spect, the Commission may, after notice by personal service or the
sending of confirmed telegraphic notice not later than ten days
after the filing of the registration statement, and opportunity for
hearing (at a time fixed by the Commission) within ten days after
such notice by personal service or the sending of such telegraphic
notice, issue an order prior to the effective date of registration re-
fusing to permit such statement to become effective until it has
been amended in accordance with such order. When such state-
ment has been amended in accordance with such order the Com-
mission shall so declare and the registration shall become effective
at the time provided in subsection (a) or upon the date of such dec-
laration, whichever date is the later.
(c) An amendment filed after the effective date of the registra-
tion statement, if such amendment, upon its face, appears to the
Commission not to be incomplete or inaccurate in any material re-
spect, shall become effective on such date as the Commission may
determine, having due regard to the public interest and the protec-
tion of investors.
(d) If it appears to the Commission at any time that the reg-
istration statement includes any untrue statement of a material
fact or omits to state any material fact required to be stated there-
in or necessary to make the statements therein not misleading, the
Commission may, after notice by personal service or the sending of
confirmed telegraphic notice, and after opportunity for hearing (at
a time fixed by the Commission) within fifteen days after such no-
tice by personal service or the sending of such telegraphic notice,
issue a stop order suspending the effectiveness of the registration
statement. When such statement has been amended in accordance
with such stop order the Commission shall so declare and there-
upon the stop order shall cease to be effective.
(e) The Commission is hereby empowered to make an examina-
tion in any case in order to determine whether a stop order should
issue under subsection (d). In making such examination the Com-
mission or any officer or officers designated by it shall have access
to and may demand the production of any books and papers of, and
may administer oaths and affirmations to and examine, the issuer,
underwriter, or any other person, in respect of any matter relevant
to the examination, and may, in its discretion, require the produc-
tion of a balance sheet exhibiting the assets and liabilities of the
issuer, or its income statement, or both, to be certified to by a pub-
lic or certified accountant approved by the Commission. If the
issuer or underwriter shall fail to cooperate, or shall obstruct or
refuse to permit the making of an examination, such conduct shall
be proper ground for the issuance of a stop order.
(f) Any notice required under this section shall be sent to or
served on the issuer, or, in case of a foreign government or political
subdivision thereof, to or on the underwriter, or, in the case of a
foreign or Territorial person, to or on its duly authorized represent-
ative in the United States named in the registration statement,

properly directed in each case of telegraphic notice to the address
given in such statement.
(May 27, 1933, ch. 38, title I, Sec. 8, 48 Stat. 79; Aug. 22, 1940,
ch. 686, title III, Sec. 301, 54 Stat. 857.)
AMENDMENTS
1940 Subsec. (a). Act Aug. 22, 1940, amended subsec.

(a) generally.

1950, 15 F.R. 3175, 64 Stat. 1265.
CEASE-AND-DESIST PROCEEDINGS
SEC. 8A. (a) AUTHORITY OF THE COMMISSION.If the Commis-

sion finds, after notice and opportunity for hearing, that any person
is violating, has violated, or is about to violate any provision of this
title, or any rule or regulation thereunder, the Commission may
publish its findings and enter an order requiring such person, and
any other person that is, was, or would be a cause of the violation,
due to an act or omission the person knew or should have known
would contribute to such violation, to cease and desist from com-
mitting or causing such violation and any future violation of the
same provision, rule, or regulation. Such order may, in addition to
requiring a person to cease and desist from committing or causing
a violation, require such person to comply, or to take steps to effect
compliance, with such provision, rule, or regulation, upon such
terms and conditions and within such time as the Commission may
specify in such order. Any such order may, as the Commission
deems appropriate, require future compliance or steps to effect fu-
ture compliance, either permanently or for such period of time as
the Commission may specify, with such provision, rule, or regula-
tion with respect to any security, any issuer, or any other person.
(b) HEARING.The notice instituting proceedings pursuant to
subsection (a) shall fix a hearing date not earlier than 30 days nor
later than 60 days after service of the notice unless an earlier or
a later date is set by the Commission with the consent of any re-
spondent so served.
(c) TEMPORARY ORDER.
(1) IN GENERAL.Whenever the Commission determines
that the alleged violation or threatened violation specified in
the notice instituting proceedings pursuant to subsection (a), or
the continuation thereof, is likely to result in significant dis-
sipation or conversion of assets, significant harm to investors,
or substantial harm to the public interest, including, but not
limited to, losses to the Securities Investor Protection Corpora-
tion, prior to the completion of the proceedings, the Commis-
sion may enter a temporary order requiring the respondent to
cease and desist from the violation or threatened violation and

to take such action to prevent the violation or threatened viola-
tion and to prevent dissipation or conversion of assets, signifi-
cant harm to investors, or substantial harm to the public inter-
est as the Commission deems appropriate pending completion
of such proceeding. Such an order shall be entered only after
notice and opportunity for a hearing, unless the Commission
determines that notice and hearing prior to entry would be im-
practicable or contrary to the public interest. A temporary
order shall become effective upon service upon the respondent
and, unless set aside, limited, or suspended by the Commission
or a court of competent jurisdiction, shall remain effective and
enforceable pending the completion of the proceedings.
(2) APPLICABILITY.This subsection shall apply only to a
respondent that acts, or, at the time of the alleged misconduct
acted, as a broker, dealer, investment adviser, investment com-
pany, municipal securities dealer, government securities
broker, government securities dealer, or transfer agent, or is,
or was at the time of the alleged misconduct, an associated
person of, or a person seeking to become associated with, any
of the foregoing.
(d) REVIEW OF TEMPORARY ORDERS.
(1) COMMISSION REVIEW.At any time after the respond-
ent has been served with a temporary cease-and-desist order
pursuant to subsection (c), the respondent may apply to the
Commission to have the order set aside, limited, or suspended.
If the respondent has been served with a temporary cease-and-
desist order entered without a prior Commission hearing, the
respondent may, within 10 days after the date on which the
order was served, request a hearing on such application and
the Commission shall hold a hearing and render a decision on
such application at the earliest possible time.
(2) JUDICIAL REVIEW.Within
(A) 10 days after the date the respondent was served
with a temporary cease-and-desist order entered with a
prior Commission hearing, or
(B) 10 days after the Commission renders a decision
on an application and hearing under paragraph (1), with
respect to any temporary cease- and-desist order entered
without a prior Commission hearing,
the respondent may apply to the United States district court
for the district in which the respondent resides or has its prin-
cipal place of business, or for the District of Columbia, for an
order setting aside, limiting, or suspending the effectiveness or
enforcement of the order, and the court shall have jurisdiction
to enter such an order. A respondent served with a temporary
cease-and- desist order entered without a prior Commission
hearing may not apply to the court except after hearing and
decision by the Commission on the respondents application
under paragraph (1) of this subsection.
(3) NO AUTOMATIC STAY OF TEMPORARY ORDER.The com-
mencement of proceedings under paragraph (2) of this sub-
section shall not, unless specifically ordered by the court, oper-
ate as a stay of the Commissions order.
(4) EXCLUSIVE REVIEW.Section 9(a) of this title shall not

apply to a temporary order entered pursuant to this section.
(e) AUTHORITY TO ENTER AN ORDER REQUIRING AN ACCOUNT-
ING AND DISGORGEMENT.In any cease-and-desist proceeding
under subsection (a), the Commission may enter an order requiring
accounting and disgorgement, including reasonable interest. The
Commission is authorized to adopt rules, regulations, and orders
concerning payments to investors, rates of interest, periods of ac-
crual, and such other matters as it deems appropriate to imple-
ment this subsection.
(f) AUTHORITY OF THE COMMISSION TO PROHIBIT PERSONS FROM
SERVING AS OFFICERS OR DIRECTORS.In any cease-and-desist pro-
ceeding under subsection (a), the Commission may issue an order
to prohibit, conditionally or unconditionally, and permanently or
for such period of time as it shall determine, any person who has
violated section 17(a)(1) or the rules or regulations thereunder,
from acting as an officer or director of any issuer that has a class
of securities registered pursuant to section 12 of the Securities Ex-
change Act of 1934, or that is required to file reports pursuant to
section 15(d) of that Act, if the conduct of that person demonstrates
unfitness to serve as an officer or director of any such issuer.
(g) AUTHORITY TO IMPOSE MONEY PENALTIES.
(1) GROUNDS.In any cease-and-desist proceeding under
subsection (a), the Commission may impose a civil penalty on
a person if the Commission finds, on the record, after notice
and opportunity for hearing, that
(A) such person
(i) is violating or has violated any provision of this
title, or any rule or regulation issued under this title;
or
(ii) is or was a cause of the violation of any provi-
sion of this title, or any rule or regulation thereunder;
and
(B) such penalty is in the public interest.
(2) MAXIMUM AMOUNT OF PENALTY.
(A) FIRST TIER.The maximum amount of a penalty
for each act or omission described in paragraph (1) shall
be $7,500 for a natural person or $75,000 for any other
person.
(B) SECOND TIER.Notwithstanding subparagraph (A),
the maximum amount of penalty for each such act or omis-
sion shall be $75,000 for a natural person or $375,000 for
any other person, if the act or omission described in para-
graph (1) involved fraud, deceit, manipulation, or delib-
erate or reckless disregard of a regulatory requirement.
(C) THIRD TIER.Notwithstanding subparagraphs (A)
and (B), the maximum amount of penalty for each such act
or omission shall be $150,000 for a natural person or
$725,000 for any other person, if
(i) the act or omission described in paragraph (1)
involved fraud, deceit, manipulation, or deliberate or
reckless disregard of a regulatory requirement; and
(ii) such act or omission directly or indirectly re-
sulted in
(I) substantial losses or created a significant

risk of substantial losses to other persons; or
(II) substantial pecuniary gain to the person
who committed the act or omission.
(3) EVIDENCE CONCERNING ABILITY TO PAY.In any pro-
ceeding in which the Commission may impose a penalty under
this section, a respondent may present evidence of the ability
of the respondent to pay such penalty. The Commission may,
in its discretion, consider such evidence in determining wheth-
er such penalty is in the public interest. Such evidence may re-
late to the extent of the ability of the respondent to continue
in business and the collectability of a penalty, taking into ac-
count any other claims of the United States or third parties
upon the assets of the respondent and the amount of the assets
of the respondent.
(May 27, 1933, ch. 38, title I, Sec. 8A, as added Oct. 15, 1990, Pub.
L. 101-429, title I, Sec. 102, 104 Stat. 933; amended Pub. L. 107-
204, title XI, Sec. 1105(b), July 30, 2002, 116 Stat. 809; Pub. L.
111-203, title IX, Sec. 929P(a)(1), July 21, 2010, 124 Stat. 1862.)
REFERENCES IN TEXT

AMENDMENTS
2010 Subsec. (g). Pub. L. 111-203, Sec. 929P(a)(1),

added subsec. (g).
2002 Subsec. (f). Pub. L. 107-204 added subsec. (f).

EFFECTIVE DATE
Section effective Oct. 15, 1990, with provisions relating to

civil penalties and accounting and disgorgement, see section
1(c)(1) and (2) of Pub. L. 101-429.
COURT REVIEW OF ORDERS
SEC. 9. (a) Any person aggrieved by an order of the Commis-

sion may obtain a review of such order in the court of appeals of
the United States, within any circuit wherein such person resides
or has his principal place of business, or in the United States Court
of Appeals for the District of Columbia, by filing in such Court;
within sixty days after the entry of such order, a written petition
praying that the order of the Commission be modified or be set
aside in whole or in part. A copy of such petition shall be forthwith
transmitted by the clerk of the court to the Commission, and there-
upon the Commission shall file in the court the record upon which
the order complained of was entered, as provided in section 2112
of title 28, United States Code. No objection to the order of the

Commission shall be considered by the court unless such objection
shall have been urged before the Commission. The finding of the
Commission as to the facts, if supported by evidence, shall be con-
clusive. If either party shall apply to the court for leave to adduce
additional evidence, and shall show to the satisfaction of the court
that such additional evidence is material and that there were rea-
sonable grounds for failure to adduce such evidence in the hearing
before the Commission, the court may order such additional evi-
dence to be taken before the Commission and to be adduced upon
the hearing in such manner and upon such terms and conditions
as to the court may seem proper. The Commission may modify its
findings as to the facts, by reason of the additional evidence so
taken, and it shall file such modified or new findings, which, if sup-
ported by evidence, shall be conclusive, and its recommendation, if
any, for the modification or setting aside of the original order. The
jurisdiction of the court shall be exclusive and its judgment and de-
cree, affirming, modifying, or setting aside, in whole or in part, any
order of the Commission, shall be final, subject to review by the
Supreme Court of the United States upon certiorari or certification
as provided in section 1254 of title 28, United States Code.
(b) The commencement of proceedings under subsection (a)
shall not, unless specifically ordered by the court, operate as a stay
of the Commissions order.
Sec. 9, Aug. 28, 1958, 72 Stat. 945; Pub. L. 100-181, title II, Sec.
206, Dec. 4, 1987, 101 Stat. 1252.)
AMENDMENTS
1987 Subsec. (a). Pub. L. 100-181 substituted court of

appeals for Circuit Court of Appeals, United States Court
of Appeals for the District of Columbia, by filing in such Court
for Court of Appeals of the District of Columbia, by filing in
such court, and section 1254 of title 28, United States Code
for sections 239 and 240 of the Judicial Code, as amended
(U.S.C., title 28, secs. 346 and 347).
1958 Subsec. (a). Pub. L. 85-791, in second sentence,
substituted transmitted by the clerk of the court to for
served upon, struck out certify and before file in the
court, struck out a transcript of after file in the court, and
inserted as provided in section 2112 of title 28, United States
Code.

1950, 15 F.R. 3175, 64 Stat. 1265.
INFORMATION REQUIRED IN PROSPECTUS
SEC. 10. (a) Except to the extent otherwise permitted or re-

quired pursuant to this subsection or subsections (c), (d), or (e)
(1) a prospectus relating to a security other than a security
issued by a foreign government or political subdivision thereof,
shall contain the information contained in the registration
statement, but it need not include the documents referred to
in paragraphs (28) to (32), inclusive, of schedule A;
(2) a prospectus relating to a security issued by a foreign
government or political subdivision thereof shall contain the
information contained in the registration statement, but it
need not include the documents referred to in paragraphs (13)
and (14) of schedule B;
(3) notwithstanding the provisions of paragraphs (1) and
(2) of this subsection (a) when a prospectus is used more than
nine months after the effective date of the registration state-
ment, the information contained therein shall be as of a date
not more than sixteen months prior to such use, so far as such
information is known to the user of such prospectus or can be
furnished by such user without unreasonable effort or expense;
(4) there may be omitted from any prospectus any of the
information required under this subsection (a) which the Com-
mission may by rules or regulations designate as not being
necessary or appropriate in the public interest or for the pro-
tection of investors.
(b) In addition to the prospectus permitted or required in sub-
section (a), the Commission shall by rules or regulations deemed
necessary or appropriate in the public interest or for the protection
of investors permit the use of a prospectus for the purposes of sub-
section (b)(1) of section 5 which omits in part or summarizes infor-
mation in the prospectus specified in subsection (a). A prospectus
permitted under this subsection shall, except to the extent the
Commission by rules or regulations deemed necessary or appro-
priate in the public interest or for the protection of investors other-
wise provides, be filed as part of the registration statement but
shall not be deemed a part of such registration statement for the
purposes of section 11. The Commission may at any time issue an
order preventing or suspending the use of a prospectus permitted
under this subsection (b), if it has reason to believe that such pro-
spectus has not been filed (if required to be filed as part of the reg-
istration statement) or includes any untrue statement of a material
fact or omits to state any material fact required to be stated there-
in or necessary to make the statements therein, in the light of the
circumstances under which such prospectus is or is to be used, not
misleading. Upon issuance of an order under this subsection, the
Commission shall give notice of the issuance of such order and op-
portunity for hearing by personal service or the sending of con-
firmed telegraphic notice. The Commission shall vacate or modify
the order at any time for good cause or if such prospectus has been
filed or amended in accordance with such order.
(c) Any prospectus shall contain such other information as the
Commission may by rules or regulations require as being necessary
or appropriate in the public interest or for the protection of inves-

tors.
(d) In the exercise of its powers under subsections (a), (b), or
(c), the Commission shall have authority to classify prospectuses
according to the nature and circumstances of their use or the na-
ture of the security, issue, issuer, or otherwise, and, by rules and
regulations and subject to such terms and conditions as it shall
specify therein, to prescribe as to each class the form and contents
which it may find appropriate and consistent with the public inter-
est and the protection of investors.
(e) The statements or information required to be included in a
prospectus by or under authority of subsections (a), (b), (c), or (d),
when written, shall be placed in a conspicuous part of the pro-
spectus and, except as otherwise permitted by rules or regulations,
in type as large as that used generally in the body of the pro-
spectus.
(f) In any case where a prospectus consists of a radio or tele-
vision broadcast, copies thereof shall be filed with the Commission
under such rules and regulations as it shall prescribe. The Com-
mission may by rules and regulations require the filing with it of
forms and prospectuses used in connection with the offer or sale of
securities registered under this title.
(May 27, 1933, ch. 38, title I, Sec. 10, 48 Stat. 81; June 6, 1934,
ch. 404, title II, Sec. 205, 48 Stat. 906; Aug. 10, 1954, ch. 667, title
I, Sec. 8, 68 Stat. 685.)
AMENDMENTS
1954 Act Aug. 10, 1954, complemented changes in sec-

tion 5 of this Act by act Aug. 10, 1954, permitted offering ac-
tivities in the waiting period and in so doing rearranged the
sequence of the subsections, added new text contained in sub-
sec. (b), and renumbered subsecs. (c) and (d) as (e) and (f), re-
spectively.
1934 Subsec. (b)(1). Act June 6, 1934, amended par. (1).

ch. 667.

1950, 15 F.R. 3175, 64 Stat. 1265.
CIVIL LIABILITIES ON ACCOUNT OF FALSE REGISTRATION STATEMENT
SEC. 11. (a) In case any part of the registration statement,

when such part became effective, contained an untrue statement of
a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, any person acquiring such security (unless it is proved

that at the time of such acquisition he knew of such untruth or
omission) may, either at law or in equity, in any court of competent
jurisdiction, sue
(1) every person who signed the registration statement;
(2) every person who was a director of (or person per-
forming similar functions) or partner in, the issuer at the time
of the filing of the part of the registration statement with re-
spect to which his liability is asserted;
(3) every person who, with his consent, is named in the
registration statement as being or about to become a director,
person performing similar functions or partner;
(4) every accountant, engineer, or appraiser, or any person
whose profession gives authority to a statement made by him,
who has with his consent been named as having prepared or
certified any part of the registration statement, or as having
prepared or certified any report or valuation which is used in
connection with the registration statement, with respect to the
statement in such registration statement, report, or valuation,
which purports to have been prepared or certified by him;
(5) every underwriter with respect to such security.
If such person acquired the security after the issuer has made gen-
erally available to its security holders an earning statement cov-
ering a period of at least twelve months beginning after the effec-
tive date of the registration statement, then the right of recovery
under this subsection shall be conditioned on proof that such per-
son acquired the security relying upon such untrue statement in
the registration statement or relying upon the registration state-
ment and not knowing of such omission, but such reliance may be
established without proof of the reading of the registration state-
ment by such person.
(b) Notwithstanding the provisions of subsection (a) no person,
other than the issuer, shall be liable as provided therein who shall
sustain the burden of proof
(1) that before the effective date of the part of the registra-
tion statement with respect to which his liability is asserted
(A) he had resigned from or had taken such steps as are per-
mitted by law to resign from, or ceased or refused to act in,
every office, capacity, or relationship in which he was described
in the registration statement as acting or agreeing to act, and
(B) he had advised the Commission and the issuer in writing
that he had taken such action and that he would not be re-
sponsible for such part of the registration statement; or
(2) that if such part of the registration statement became
effective without his knowledge, upon becoming aware of such
fact he forthwith acted and advised the Commission, in accord-
ance with paragraph (1), and, in addition, gave reasonable pub-
lic notice that such part of the registration statement had be-
come effective without his knowledge; or
(3) that (A) as regards any part of the registration state-
ment not purporting to be made on the authority of an expert,
and not purporting to be a copy of or extract from a report or
valuation of an expert, and not purporting to be made on the
authority of a public official document or statement, he had,
after reasonable investigation, reasonable ground to believe

and did believe, at the time such part of the registration state-
ment became effective, that the statements therein were true
and that there was no omission to state a material fact re-
quired to be stated therein or necessary to make the state-
ments therein not misleading; and (B) as regards any part of
the registration statement purporting to be made upon his au-
thority as an expert or purporting to be a copy of or extract
from a report or valuation of himself as an expert, (i) he had,
after reasonable investigation, reasonable ground to believe
and did believe, at the time such part of the registration state-
ment became effective, that the statements therein were true
and that there was no omission to state a material fact re-
quired to be stated therein or necessary to make the state-
ments therein not misleading, or (ii) such part of the registra-
tion statement did not fairly represent his statement as an ex-
pert or was not a fair copy of or extract from his report or valu-
ation as an expert; and (C) as regards any part of the registra-
tion statement purporting to be made on the authority of an
expert (other than himself) or purporting to be a copy of or ex-
tract from a report or valuation of an expert (other than him-
self), he had no reasonable ground to believe and did not be-
lieve, at the time such part of the registration statement be-
came effective, that the statements therein were untrue or that
there was an omission to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that such part of the registration statement did
not fairly represent the statement of the expert or was not a
fair copy of or extract from the report or valuation of the ex-
pert; and (D) as regards any part of the registration statement
purporting to be a statement made by an official person or pur-
porting to be a copy of or extract from a public official docu-
ment, he had no reasonable ground to believe and did not be-
lieve, at the time such part of the registration statement be-
came effective, that the statements therein were untrue, or
that there was an ommission to state a material fact required
to be stated therein or necessary to make the statements there-
in not misleading, or that such part of the registration state-
ment did not fairly represent the statement made by the offi-
cial person or was not a fair copy of or extract from the public
official document.
(c) In determining, for the purpose of paragraph (3) of sub-
section (b) of this section, what constitutes reasonable investigation
and reasonable ground for belief, the standard of reasonableness
shall be that required of a prudent man in the management of his
own property.
(d) If any person becomes an underwriter with respect to the
security after the part of the registration statement with respect to
which his liability is asserted has become effective, then for the
purposes of paragraph (3) of subsection (b) of this section such part
of the registration statement shall be considered as having become
effective with respect to such person as of the time when he be-
came an underwriter.
(e) The suit authorized under subsection (a) may be to recover

such damages as shall represent the difference between the
amount paid for the security (not exceeding the price at which the
security was offered to the public) and (1) the value thereof as of
the time such suit was brought, or (2) the price at which such secu-
rity shall have been disposed of in the market before suit, or (3)
the price at which such security shall have been disposed of after
suit but before judgment if such damages shall be less than the
damages representing the difference between the amount paid for
the security (not exceeding the price at which the security was of-
fered to the public) and the value thereof as of the time such suit
was brought: Provided, That if the defendant proves that any por-
tion or all of such damages represents other than the depreciation
in value of such security resulting from such part of the registra-
tion statement, with respect to which his liability is asserted, not
being true or omitting to state a material fact required to be stated
therein or necessary to make the statements therein not mis-
leading, such portion of or all such damages shall not be recover-
able. In no event shall any underwriter (unless such underwriter
shall have knowingly received from the issuer for acting as an un-
derwriter some benefit, directly or indirectly, in which all other un-
derwriters similarly situated did not share in proportion to their
respective interests in the underwriting) be liable in any suit or as
a consequence of suits authorized under subsection (a) for damages
in excess of the total price at which the securities underwritten by
him and distributed to the public were offered to the public. In any
suit under this or any other section of this title the court may, in
its discretion, require an undertaking for the payment of the costs
of such suit, including reasonable attorneys fees, and if judgment
shall be rendered against a party litigant, upon the motion of the
other party litigant, such costs may be assessed in favor of such
party litigant (whether or not such undertaking has been required)
if the court believes the suit or the defense to have been without
merit, in an amount sufficient to reimburse him for the reasonable
expenses incurred by him, in connection with such suit, such costs
to be taxed in the manner usually provided for taxing of costs in
the court in which the suit was heard.
(f)(1) Except as provided in paragraph (2), all or any one or
more of the persons specified in subsection (a) shall be jointly and
severally liable, and every person who becomes liable to make any
payment under this section may recover contribution as in cases of
contract from any person who, if sued separately, would have been
liable to make the same payment, unless the person who has be-
come liable was, and the other was not, guilty of fraudulent mis-
representation.
(2)(A) The liability of an outside director under subsection (e)
shall be determined in accordance with section 21D(f) of the Securi-
ties Exchange Act of 1934.
(B) For purposes of this paragraph, the term outside director
shall have the meaning given such term by rule or regulation of
the Commission.
(g) In no case shall the amount recoverable under this section
exceed the price at which the security was offered to the public.
ch. 404, title II, Sec. 206, 48 Stat. 907; Pub. L. 104-67, title II, Sec.
201(b), Dec. 22, 1995, 109 Stat. 762; Pub. L. 105-353, title III, Sec.
301(a)(2), Nov. 3, 1998, 112 Stat. 3235.)
REFERENCES IN TEXT

AMENDMENTS
1998 Subsec. (f)(2)(A). Pub. L. 105-353 made technical

amendment to references.
1995 Subsec. (f). Pub. L. 104-67 designated existing pro-
visions as par. (1), substituted Except as provided in para-
graph (2), all for All, and added par. (2).
1934 Subsec. (a). Act June 6, 1934, inserted last par.
Subsecs. (b)(3), (c) to (e). Act June 6, 1934, amended sub-
secs. (b)(3) and (c) to (e).
Amendments by title II of Pub. L. 104-67 not to affect or

apply to any private action arising under the securities laws
commenced before and pending on Dec. 22, 1995, see section
202 of Pub. L. 104-67.
CONSTRUCTION OF 1995 AMENDMENT
Nothing in amendment by Pub. L. 104-67 to be deemed to

create or ratify any implied right of action, or to prevent Com-
mission, by rule or regulation, from restricting or otherwise
regulating private actions under Securities Exchange Act of
1934, see section 203 of Pub. L. 104-67.

1950, 15 F.R. 3175, 64 Stat. 1265.
CIVIL LIABILITIES ARISING IN CONNECTION WITH PROSPECTUSES AND

COMMUNICATIONS
SEC. 12. (a) IN GENERAL.Any person who

(1) offers or sells a security in violation of section 5, or
(2) offers or sells a security (whether or not exempted by
the provisions of section 3, other than paragraphs (2) and (14)
of subsection (a) thereof), by the use of any means or instru-
ments of transportation or communication in interstate com-
merce or of the mails, by means of a prospectus or oral commu-
nication, which includes an untrue statement of a material fact
or omits to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they
were made, not misleading (the purchaser not knowing of such
untruth or omission), and who shall not sustain the burden of

proof that he did not know, and in the exercise of reasonable
care could not have known, of such untruth or omission,
shall be liable, subject to subsection (b), to the person purchasing
such security from him, who may sue either at law or in equity in
any court of competent jurisdiction, to recover the consideration
paid for such security with interest thereon, less the amount of any
income received thereon, upon the tender of such security, or for
damages if he no longer owns the security.
(b) LOSS CAUSATION.In an action described in subsection
(a)(2), if the person who offered or sold such security proves that
any portion or all of the amount recoverable under subsection (a)(2)
represents other than the depreciation in value of the subject secu-
rity resulting from such part of the prospectus or oral communica-
tion, with respect to which the liability of that person is asserted,
not being true or omitting to state a material fact required to be
stated therein or necessary to make the statement not misleading,
then such portion or amount, as the case may be, shall not be re-
coverable.
ch. 667, title I, Sec. 9, 68 Stat. 686; Pub. L. 104-67, title I, Sec. 105,
Dec. 22, 1995, 109 Stat. 757; Pub. L. 106-554, Sec. 1(a)(5) [title II,
Sec. 208(a)(3)], Dec. 21, 2000, 114 Stat. 2763, 2763A-435.)
AMENDMENTS
2000 Subsec. (a)(2). Pub. L. 106-554 substituted para-

graphs (2) and (14) for paragraph (2).
1995 Pub. L. 104-67 designated existing provisions as
subsec. (a), inserted heading, inserted , subject to subsection
(b) of this section, after shall be liable in concluding provi-
sions, and added subsec. (b).
1954 Act Aug. 10, 1954, inserted offers or before
sells in pars. (1) and (2).
Amendments by title I of Pub. L. 104-67 not to affect or

apply to any private action arising under title I of the Securi-
ties Exchange Act of 1934 or title I of the Securities Act of
1933, commenced before and pending on Dec. 22, 1995, see sec-
tion 108 of Pub. L. 104-67.

ch. 667.

LIMITATION OF ACTIONS
SEC. 13. No action shall be maintained to enforce any liability

created under section 11 or section 12(a)(2) unless brought within
one year after the discovery of the untrue statement or the omis-
sion, or after such discovery should have been made by the exercise
of reasonable diligence, or, if the action is to enforce a liability cre-
ated under section 12(a)(1), unless brought within one year after
the violation upon which it is based. In no event shall any such ac-
tion be brought to enforce a liability created under section 11 or
section 12(a)(1) more than three years after the security was bona
fide offered to the public, or under section 12(a)(2) more than three
years after the sale.
ch. 404, title II, Sec. 207, 48 Stat. 908; Pub. L. 105-353, title III,
Sec. 301(a)(3), Nov. 3, 1998, 112 Stat. 3235.)
AMENDMENTS
1998 Pub. L. 105-353 substituted 12(a)(2) for 12(2)

in two places and 12(a)(1) for 12(1) in two places.
1934 Act June 6, 1934, substituted one year for two
years, three years for ten years, and inserted or under
section 12(2) more than three years after the sale.
CONTRARY STIPULATIONS VOID
SEC. 14. Any condition, stipulation, or provision binding any

person acquiring any security to waive compliance with any provi-
sion of this title or of the rules and regulations of the Commission
shall be void.

1950, 15 F.R. 3175, 64 Stat. 1265.
LIABILITY OF CONTROLLING PERSONS
SEC. 15. (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 oth-
erwise, 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 whom such controlled person is
liable, unless the controlling person had no knowledge of or reason-
able 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 VIOLA-

TIONS.For purposes of any action brought by the Commission
under subparagraph (b) or (d) of section 20, any person that know-
ingly or recklessly provides substantial assistance to another per-
son in violation of a provision of this Act, or of any rule or regula-
tion issued under this Act, shall be deemed to be in violation of
such provision to the same extent as the person to whom such as-
sistance is provided.
ch. 404, title II, Sec. 208, 48 Stat. 908; Pub. L. 111-203, title IX,
Sec. 929M, July 21, 2010, 124 Stat. 1861.)
AMENDMENTS
2010 Pub. L. 111-203, Sec. 929M(a), designated existing

provisions as subsec. (a) and added subsec. (b).
1934 Act June 6, 1934, exempted from liability control-
ling persons having no knowledge or reasonable grounds for
belief.

SEC. 16. ADDITIONAL REMEDIES; LIMITATION ON REMEDIES.

(a) REMEDIES ADDITIONAL.Except as provided in subsection
(b), the rights and remedies provided by this title shall be in addi-
tion to any and all other rights and remedies that may exist at law
or in equity.
(b) CLASS ACTION LIMITATIONS.No covered class action based
upon the statutory or common law of any State or subdivision
thereof may be maintained in any State or Federal court by any
private party alleging
(1) an untrue statement or omission of a material fact in
connection with the purchase or sale of a covered security; or
(2) that the defendant used or employed any manipulative
or deceptive device or contrivance in connection with the pur-
chase or sale of a covered security.
(c) REMOVAL OF COVERED CLASS ACTIONS.Any covered class
action brought in any State court involving a covered security, as
set forth in subsection (b), shall be removable to the Federal dis-
trict court for the district in which the action is pending, and shall
be subject to subsection (b).
(d) PRESERVATION OF CERTAIN ACTIONS.
(1) ACTIONS UNDER STATE LAW OF STATE OF INCORPORA-
TION.
(A) ACTIONS PRESERVED.Notwithstanding subsection
(b) or (c), a covered class action described in subparagraph
(B) of this paragraph that is based upon the statutory or
common law of the State in which the issuer is incor-
porated (in the case of a corporation) or organized (in the
case of any other entity) may be maintained in a State or
Federal court by a private party.
(B) PERMISSIBLE ACTIONS.A covered class action is

described in this subparagraph if it involves
(i) the purchase or sale of securities by the issuer
or an affiliate of the issuer exclusively from or to hold-
ers of equity securities of the issuer; or
(ii) any recommendation, position, or other com-
munication with respect to the sale of securities of the
issuer that
(I) is made by or on behalf of the issuer or an
affiliate of the issuer to holders of equity securi-
ties of the issuer; and
(II) concerns decisions of those equity holders
with respect to voting their securities, acting in
response to a tender or exchange offer, or exer-
cising dissenters or appraisal rights.
(2) STATE ACTIONS.
(A) IN GENERAL.Notwithstanding any other provision
of this section, nothing in this section may be construed to
preclude a State or political subdivision thereof or a State
pension plan from bringing an action involving a covered
security on its own behalf, or as a member of a class com-
prised solely of other States, political subdivisions, or State
pension plans that are named plaintiffs, and that have au-
thorized participation, in such action.
(B) STATE PENSION PLAN DEFINED.For purposes of
this paragraph, the term State pension plan means a
pension plan established and maintained for its employees
by the government of the State or political subdivision
thereof, or by any agency or instrumentality thereof.
(3) ACTIONS UNDER CONTRACTUAL AGREEMENTS BETWEEN
ISSUERS AND INDENTURE TRUSTEES.Notwithstanding sub-
section (b) or (c), a covered class action that seeks to enforce
a contractual agreement between an issuer and an indenture
trustee may be maintained in a State or Federal court by a
party to the agreement or a successor to such party.
(4) REMAND OF REMOVED ACTIONS.In an action that has
been removed from a State court pursuant to subsection (c), if
the Federal court determines that the action may be main-
tained in State court pursuant to this subsection, the Federal
court shall remand such action to such State court.
(e) PRESERVATION OF STATE JURISDICTION.The securities
commission (or any agency or office performing like functions) of
any State shall retain jurisdiction under the laws of such State to
investigate and bring enforcement actions.
(f) DEFINITIONS.For purposes of this section, the following
definitions shall apply:
(1) AFFILIATE OF THE ISSUER.The term affiliate of the
issuer means a person that directly or indirectly, through one
or more intermediaries, controls or is controlled by or is under
common control with, the issuer.
(2) COVERED CLASS ACTION.
(A) IN GENERAL.The term covered class action
means
(i) any single lawsuit in which
(I) damages are sought on behalf of more than

50 persons or prospective class members, and
questions of law or fact common to those persons
or members of the prospective class, without ref-
erence to issues of individualized reliance on an
alleged misstatement or omission, predominate
over any questions affecting only individual per-
sons or members; or
(II) one or more named parties seek to recover
damages on a representative basis on behalf of
themselves and other unnamed parties similarly
situated, and questions of law or fact common to
those persons or members of the prospective class
predominate over any questions affecting only in-
dividual persons or members; or
(ii) any group of lawsuits filed in or pending in the
same court and involving common questions of law or
fact, in which
(I) damages are sought on behalf of more than
50 persons; and
(II) the lawsuits are joined, consolidated, or
otherwise proceed as a single action for any pur-
pose.
(B) EXCEPTION FOR DERIVATIVE ACTIONS. Notwith-
standing subparagraph (A), the term covered class action
does not include an exclusively derivative action brought
by one or more shareholders on behalf of a corporation.
(C) COUNTING OF CERTAIN CLASS MEMBERS.For pur-
poses of this paragraph, a corporation, investment com-
pany, pension plan, partnership, or other entity, shall be
treated as one person or prospective class member, but
only if the entity is not established for the purpose of par-
ticipating in the action.
(D) RULE OF CONSTRUCTION.Nothing in this para-
graph shall be construed to affect the discretion of a State
court in determining whether actions filed in such court
should be joined, consolidated, or otherwise allowed to pro-
ceed as a single action.
(3) COVERED SECURITY.The term covered security
means a security that satisfies the standards for a covered se-
curity specified in paragraph (1) or (2) of section 18(b) at the
time during which it is alleged that the misrepresentation,
omission, or manipulative or deceptive conduct occurred, except
that such term shall not include any debt security that is ex-
empt from registration under this title pursuant to rules issued
by the Commission under section 4(2). [10]
title I, Sec. 101(a)(1), Nov. 3, 1998, 112 Stat. 3227.)
10Probably should be a reference to section 4(a)(2).

AMENDMENTS
1998 Pub. L. 105-353 amended section catchline and

text generally.
Amendments by section 101 of Pub. L. 105-353 not to af-

fect or apply to any action commenced before and pending on
Nov. 3, 1998, see section 101(c) of Pub. L. 105-353.
FRAUDULENT INTERSTATE TRANSACTIONS
SEC. 17. (a) It shall be unlawful for any person in the offer or
sale of any securities (including security-based swaps) or any secu-
rity-based swap agreement (as defined in section 3(a)(78) of the Se-
curities Exchange Act) by the use of any means or instruments of
transportation or communication in interstate commerce or by use
of the mails, directly or indirectly
(1) to employ any device, scheme, or artifice to defraud, or
(2) to obtain money or property by means of any untrue
statement of a material fact or any omission to state a material
fact necessary in order to make the statements made, in light
of the circumstances under which they were made, not mis-
leading; or
(3) to engage in any transaction, practice, or course of busi-
ness which operates or would operate as a fraud or deceit upon
the purchaser.
(b) It shall be unlawful for any person, by the use of any
means or instruments of transportation or communication in inter-
state commerce or by the use of the mails, to publish, give publicity
to, or circulate any notice, circular, advertisement, newspaper, arti-
cle, letter, investment service, or communication which, though not
purporting to offer a security for sale, describes such security for
a consideration received or to be received, directly or indirectly,
from an issuer, underwriter, or dealer, without fully disclosing the
receipt, whether past or prospective, of such consideration and the
amount thereof.
(c) The exemptions provided in section 3 shall not apply to the
provisions of this section.
(d) The authority of the Commission under this section with re-
spect to security-based swap agreements (as defined in section
3(a)(78) of the Securities Exchange Act of 1934) shall be subject to
the restrictions and limitations of section 2A(b) of this title.
ch. 667, title I, Sec. 10, 68 Stat. 686; Pub. L. 106-554, Sec. 1(a)(5)
[title III, Sec. 302(b), (c)], Dec. 21, 2000, 114 Stat. 2763, 2763A-452;
Pub. L. 111-203, title VII, Sec. 762(c)(2), July 21, 2010, 124 Stat.
1759.)
REFERENCES IN TEXT

AMENDMENTS
2010 Subsec. (a). Pub. L. 111-203, Sec. 762(c)(2)(A), in-

serted (including security-based swaps) after securities and
substituted (as defined in section 3(a)(78) of the Securities Ex-
change Act) for (as defined in section 206B of the Gramm-
Leach-Bliley Act).
Subsec. (d). Pub. L. 111-203, Sec. 762(c)(2)(B), substituted
3(a)(78) of the Securities Exchange Act for 206B of the
Gramm-Leach-Bliley Act.
2000 Subsec. (a). Pub. L. 106-554, Sec. 1(a)(5) [title III,
Sec. 302(b)], amended subsec. (a) generally. Prior to amend-
ment, subsec. (a) read as follows: It shall be unlawful for any
person in the offer or sale of any securities by the use of any
means or instruments of transportation or communication in
interstate commerce or by the use of the mails, directly or indi-
rectly -
(1) to employ any device, scheme, or artifice to defraud,
or
(2) to obtain money or property by means of any untrue
statement of a material fact or any omission to state a material
fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not
misleading, or (3) to engage in any transaction, practice, or
course of business which operates or would operate as a fraud
or deceit upon the purchaser.
Subsec. (d). Pub. L. 106-554, Sec. 1(a)(5) [title III, Sec.
302(c)], added subsec. (d).
1954 Subsec. (a). Act Aug. 10, 1954, inserted offer or
before sale in introductory text.
Amendment by section 762(c)(2) of Pub. L. 111-203 effec-

tive on the later of 360 days after July 21, 2010, or, to the ex-
tent a provision of subtitle B (Secs. 761 to 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 implementing
such provision of such subtitle B, see section 774 of Pub. L.
111-203.

ch. 667.
SEC. 18. EXEMPTION FROM STATE REGULATION OF SECURITIES OF-

FERINGS.
(a) SCOPE OF EXEMPTION.Except as otherwise provided in
this section, no law, rule, regulation, or order, or other administra-
tive action of any State or any political subdivision thereof
(1) requiring, or with respect to, registration or qualifica-
tion of securities, or registration or qualification of securities
transactions, shall directly or indirectly apply to a security
that
(A) is a covered security; or

(B) will be a covered security upon completion of the
transaction;
(2) shall directly or indirectly prohibit, limit, or impose any
conditions upon the use of
(A) with respect to a covered security described in sub-
section (b), any offering document that is prepared by or
on behalf of the issuer; or
(B) any proxy statement, report to shareholders, or
other disclosure document relating to a covered security or
the issuer thereof that is required to be and is filed with
the Commission or any national securities organization
registered under section 15A of the Securities Exchange
Act of 1934, except that this subparagraph does not apply
to the laws, rules, regulations, or orders, or other adminis-
trative actions of the State of incorporation of the issuer;
or
(3) shall directly or indirectly prohibit, limit, or impose
conditions, based on the merits of such offering or issuer, upon
the offer or sale of any security described in paragraph (1).
(b) COVERED SECURITIES.For purposes of this section, the fol-
lowing are covered securities:
(1) EXCLUSIVE FEDERAL REGISTRATION OF NATIONALLY
TRADED SECURITIES.A security is a covered security if such
security is
(A) listed, or authorized for listing, on the New York
Stock Exchange or the American Stock Exchange, or listed,
or authorized for listing, on the National Market System
of the Nasdaq Stock Market (or any successor to such enti-
ties);
(B) listed, or authorized for listing, on a national secu-
rities exchange (or tier or segment thereof) that has listing
standards that the Commission determines by rule (on its
own initiative or on the basis of a petition) are substan-
tially similar to the listing standards applicable to securi-
ties described in subparagraph (A); or
(C) a security of the same issuer that is equal in se-
niority or that is a senior security to a security described
in subparagraph (A) or (B).
(2) EXCLUSIVE FEDERAL REGISTRATION OF INVESTMENT
COMPANIES.A security is a covered security if such security is
a security issued by an investment company that is registered,
or that has filed a registration statement, under the Invest-
ment Company Act of 1940.
(3) SALES TO QUALIFIED PURCHASERS.A security is a cov-
ered security with respect to the offer or sale of the security
to qualified purchasers, as defined by the Commission by rule.
In prescribing such rule, the Commission may define the term
qualified purchaser differently with respect to different cat-
egories of securities, consistent with the public interest and the
protection of investors.
(4) EXEMPTION IN CONNECTION WITH CERTAIN EXEMPT OF-
FERINGS.A security is a covered security with respect to a
transaction that is exempt from registration under this title

pursuant to
(A) paragraph (1) or (3) of section 4, and the issuer of
such security files reports with the Commission pursuant
to section 13 or 15(d) of the Securities Exchange Act of
1934;
(B) section 4(4); [11]
(C) section 4(6); [12]
(D) [13] a rule or regulation adopted pursuant to sec-
tion 3(b)(2) and such security is
(i) offered or sold on a national securities ex-
change; or
(ii) offered or sold to a qualified purchaser, as de-
fined by the Commission pursuant to paragraph (3)
with respect to that purchase or sale;
(D) [13] section 3(a), other than the offer or sale of a se-
curity that is exempt from such registration pursuant to
paragraph (4), (10), or (11) of such section, except that a
municipal security that is exempt from such registration
pursuant to paragraph (2) of such section is not a covered
security with respect to the offer or sale of such security
in the State in which the issuer of such security is located;
or
(E) Commission rules or regulations issued under sec-
tion 4(2), except that this subparagraph does not prohibit
a State from imposing notice filing requirements that are
substantially similar to those required by rule or regula-
tion under section 4(2) that are in effect on September 1,
1996.
(c) PRESERVATION OF AUTHORITY.
(1) FRAUD AUTHORITY.Consistent with this section, the
securities commission (or any agency or office performing like
functions) of any State shall retain jurisdiction under the laws
of such State to investigate and bring enforcement actions ,
in [14] connection with securities or securities transactions [15]
(A) with respect to
(i) fraud or deceit; or
(ii) unlawful conduct by a broker or dealer; and
(B) in connection to [16] a transaction described under
section 4(6), [17] with respect to
(i) fraud or deceit; or
(ii) unlawful conduct by a broker, dealer, funding
portal, or issuer.
(2) PRESERVATION OF FILING REQUIREMENTS.
(A) NOTICE FILINGS PERMITTED.Nothing in this sec-
tion prohibits the securities commission (or any agency or
office performing like functions) of any State from requir-
ing the filing of any document filed with the Commission
13Two subpars. (D) have been enacted.
14Probably should be part of subpar. (A).
15Probably should be followed by punctuation.
16Probably should be with.
pursuant to this title, together with annual or periodic re-

ports of the value of securities sold or offered to be sold to
persons located in the State (if such sales data is not in-
cluded in documents filed with the Commission), solely for
notice purposes and the assessment of any fee, together
with a consent to service of process and any required fee.
(B) PRESERVATION OF FEES.
(i) IN GENERAL.Until otherwise provided by law,
rule, regulation, or order, or other administrative ac-
tion of any State or any political subdivision thereof,
adopted after the date of enactment of the National
Securities Markets Improvement Act of 1996, filing or
registration fees with respect to securities or securities
transactions shall continue to be collected in amounts
determined pursuant to State law as in effect on the
day before such date.
(ii) SCHEDULE.The fees required by this sub-
paragraph shall be paid, and all necessary supporting
data on sales or offers for sales required under sub-
paragraph (A), shall be reported on the same schedule
as would have been applicable had the issuer not re-
lied on the exemption provided in subsection (a).
(C) AVAILABILITY OF PREEMPTION CONTINGENT ON PAY-
MENT OF FEES.
(i) IN GENERAL.During the period beginning on
the date of enactment of the National Securities Mar-
kets Improvement Act of 1996 and ending 3 years
after that date of enactment, the securities commis-
sion (or any agency or office performing like functions)
of any State may require the registration of securities
issued by any issuer who refuses to pay the fees re-
quired by subparagraph (B).
(ii) DELAYS.For purposes of this subparagraph,
delays in payment of fees or underpayments of fees
that are promptly remedied shall not constitute a re-
fusal to pay fees.
(D) FEES NOT PERMITTED ON LISTED SECURITIES. Not-
withstanding subparagraphs (A), (B), and (C), no filing or
fee may be required with respect to any security that is a
covered security pursuant to subsection (b)(1), or will be
such a covered security upon completion of the transaction,
or is a security of the same issuer that is equal in seniority
or that is a senior security to a security that is a covered
security pursuant to subsection (b)(1).
(F) [18] FEES NOT PERMITTED ON CROWDFUNDED SECURI-
TIES. Notwithstanding subparagraphs (A), (B), and (C),
no filing or fee may be required with respect to any secu-
rity that is a covered security pursuant to subsection
(b)(4)(B), or will be such a covered security upon comple-
tion of the transaction, except for the securities commis-
sion (or any agency or office performing like functions) of
the State of the principal place of business of the issuer,
18No subpar. (E) has been enacted.
or any State in which purchasers of 50 percent or greater

of the aggregate amount of the issue are residents, pro-
vided that for purposes of this subparagraph, the term
State includes the District of Columbia and the terri-
tories of the United States.
(3) ENFORCEMENT OF REQUIREMENTS.Nothing in this sec-
tion shall prohibit the securities commission (or any agency or
office performing like functions) of any State from suspending
the offer or sale of securities within such State as a result of
the failure to submit any filing or fee required under law and
permitted under this section.
(d) DEFINITIONS.For purposes of this section, the following
(1) OFFERING DOCUMENT.The term offering document
(A) has the meaning given the term prospectus in
section 2(a)(10), but without regard to the provisions of
subparagraphs (a) and (b) of that section; and
(B) includes a communication that is not deemed to
offer a security pursuant to a rule of the Commission.
(2) PREPARED BY OR ON BEHALF OF THE ISSUER.Not later
than 6 months after the date of enactment of the National Se-
curities Markets Improvement Act of 1996, the Commission
shall, by rule, define the term prepared by or on behalf of the
issuer for purposes of this section.
(3) STATE.The term State has the same meaning as in
section 3 of the Securities Exchange Act of 1934.
(4) SENIOR SECURITY.The term senior security means
any bond, debenture, note, or similar obligation or instrument
constituting a security and evidencing indebtedness, and any
stock of a class having priority over any other class as to dis-
tribution of assets or payment of dividends.
title I, Sec. 102(a), Oct. 11, 1996, 110 Stat. 3417; Pub. L. 105-353,
title III, Sec. 301(a)(4), 302, Nov. 3, 1998, 112 Stat. 3235, 3237;
Pub. L. 111-203, title IX, Sec. 985(a)(2), July 21, 2010, 124 Stat.
1933; Pub. L. 112-106, title III, Sec. 305(a), (b)(2), (c), (d)(2), title
IV, Sec. 401(b), Apr. 5, 2012, 126 Stat. 322, 323, 325.)
REFERENCES IN TEXT

The date of enactment of the National Securities Markets
Improvement Act of 1996, referred to in subsec. (c)(2)(B)(i),
(C)(i), is the date of enactment of Pub. L. 104-290, which was
approved Oct. 11, 1996.
AMENDMENTS
2012 Subsec. (b)(4)(C). Pub. L. 112-106, Sec. 305(a),

added subpar. (C) and redesignated former subpar. (C) (relat-
ing to section 3(a)) as (D).
Subsec. (b)(4)(D). Pub. L. 112-106, Sec. 401(b), added sub-
par. (D) relating to rule or regulation.
Pub. L. 112-106, Sec. 305(a)(1), redesignated subpar. (C)
(relating to section 3(a)) as (D) and redesignated former sub-
par. (D) as (E).
Subsec. (b)(4)(E). Pub. L. 112-106, Sec. 305(a)(1), redesig-
nated subpar. (D) as (E).
Subsec. (c)(1). Pub. L. 112-106, Sec. 305(d)(2), which di-
rected the substitution of , dealer, or funding portal for or
dealer, was not executed, in light of prior amendment by Pub.
L. 112-106, Sec. 305(b)(2).
Pub. L. 112-106, Sec. 305(b)(2), substituted , in connection
with securities or securities transactions and subpars. (A) and
(B) for with respect to fraud or deceit, or unlawful conduct by
a broker or dealer, in connection with securities or securities
transactions.
Subsec. (c)(2)(F). Pub. L. 112-106, Sec. 305(c), added sub-
par. (F).
2010 Subsec. (b)(1)(C). Pub. L. 111-203, Sec.
985(a)(2)(A), substituted a security for is a security.
Subsec. (c)(2)(B)(i). Pub. L. 111-203, Sec. 985(a)(2)(B), sub-
stituted State or for State, or.
1998 Subsec. (b)(1)(A). Pub. L. 105-353, Sec.
301(a)(4)(A), inserted , or authorized for listing, after Ex-
change, or listed.
Subsec. (b)(4)(C). Pub. L. 105-353, Sec. 302, substituted
paragraph (4), (10), or (11) for paragraph (4) or (11).
Subsec. (c)(2)(B)(i), (C)(i). Pub. L. 105-353, Sec.
301(a)(4)(B), (C), made technical amendments to references.
Subsec. (d)(1)(A). Pub. L. 105-353, Sec. 301(a)(4)(D), sub-
stituted section 2(a)(10) for section 2(10) and subpara-
graphs (a) and (b) for subparagraphs (A) and (B).
Subsec. (d)(2). Pub. L. 105-353, Sec. 301(a)(4)(E), made
technical amendment to reference.
Subsec. (d)(4). Pub. L. 105-353, Sec. 301(a)(4)(F), sub-
stituted The term for For purposes of this paragraph, the
term.
1996 Pub. L. 104-290 substituted Exemption from
State regulation of securities offerings for State control of se-
curities as section catchline and amended text generally.

1950, 15 F.R. 3175, 64 Stat. 1265.

SPECIAL POWERS OF COMMISSION
SEC. 19. (a) The Commission shall have authority from time to
time to make, amend, and rescind such rules and regulations as
may be necessary to carry out the provisions of this title, including
rules and regulations governing registration statements and
prospectuses for various classes of securities and issuers, and defin-
ing accounting, technical and trade terms used in this title. Among
other things, the Commission shall have authority, for the purposes
of this title, to prescribe the form or forms in which required infor-
mation shall be set forth, the items or details to be shown in the
balance sheet and earning statement, and the methods to be fol-
lowed in the preparation of accounts, in the appraisal or valuation
of assets and liabilities, in the determination of depreciation and
depletion, in the differentiation of recurring and non-recurring in-
come, in the differentiation of investment and operating income,
and in the preparation, where the Commission deems it necessary
or desirable, of consolidated balance sheets or income accounts of
any person directly or indirectly controlling or controlled by the
issuer, or any person under direct or indirect common control with
the issuer. The rules and regulations of the Commission shall be
effective upon publication in the manner which the Commission
shall prescribe. No provision of this title imposing any liability
shall apply to any act done or omitted in good faith in conformity
with any rule or regulation of the Commission, notwithstanding
that such rule or regulation may, after such act or omission, be
amended or rescinded or be determined by judicial or other author-
ity to be invalid for any reason.
(b) RECOGNITION OF ACCOUNTING STANDARDS.
(1) IN GENERAL.In carrying out its authority under sub-
section (a) and under section 13(b) of the Securities Exchange
Act of 1934, the Commission may recognize, as generally ac-
cepted for purposes of the securities laws, any accounting
principles established by a standard setting body
(A) that
(i) is organized as a private entity;
(ii) has, for administrative and operational pur-
poses, a board of trustees (or equivalent body) serving
in the public interest, the majority of whom are not,
concurrent with their service on such board, and have
not been during the 2-year period preceding such serv-
ice, associated persons of any registered public ac-
counting firm;
(iii) is funded as provided in section 109 of the
Sarbanes-Oxley Act of 2002;
(iv) has adopted procedures to ensure prompt con-
sideration, by majority vote of its members, of changes
to accounting principles necessary to reflect emerging
accounting issues and changing business practices;

and
(v) considers, in adopting accounting principles,
the need to keep standards current in order to reflect
changes in the business environment, the extent to
which international convergence on high quality ac-
counting standards is necessary or appropriate in the
public interest and for the protection of investors; and
(B) that the Commission determines has the capacity
to assist the Commission in fulfilling the requirements of
subsection (a) and section 13(b) of the Securities Exchange
Act of 1934, because, at a minimum, the standard setting
body is capable of improving the accuracy and effective-
ness of financial reporting and the protection of investors
under the securities laws.
(2) ANNUAL REPORT.A standard setting body described in
paragraph (1) shall submit an annual report to the Commis-
sion and the public, containing audited financial statements of
that standard setting body.
(c) For the purpose of all investigations which, in the opinion
of the Commission, are necessary and proper for the enforcement
of this title, any member of the Commission or any officer or offi-
cers designated by it are empowered to administer oaths and affir-
mations, subpena witnesses, take evidence, and require the produc-
tion of any books, papers, or other documents which the Commis-
sion deems relevant or material to the inquiry. Such attendance of
witnesses and the production of such documentary evidence may be
required from any place in the United States or any Territory at
any designated place of hearing.
(d)(1) The Commission is authorized to cooperate with any as-
sociation composed of duly constituted representatives of State gov-
ernments whose primary assignment is the regulation of the secu-
rities business within those States, and which, in the judgment of
the Commission, could assist in effectuating greater uniformity in
Federal-State securities matters. The Commission shall, at its dis-
cretion, cooperate, coordinate, and share information with such an
association for the purposes of carrying out the policies and
projects set forth in paragraphs (2) and (3).
(2) It is the declared policy of this subsection that there should
be greater Federal and State cooperation in securities matters, in-
cluding
(A) maximum effectiveness of regulation,
(B) maximum uniformity in Federal and State regulatory
standards,
(C) minimum interference with the business of capital for-
mation, and
(D) a substantial reduction in costs and paperwork to di-
minish the burdens of raising investment capital (particularly
by small business) and to diminish the costs of the administra-
tion of the Government programs involved.
(3) The purpose of this subsection is to engender cooperation
between the Commission, any such association of State securities
officials, and other duly constituted securities associations in the
following areas:
(A) the sharing of information regarding the registration or

exemption of securities issues applied for in the various States;
(B) the development and maintenance of uniform securities
forms and procedures; and
(C) the development of a uniform exemption from registra-
tion for small issuers which can be agreed upon among several
States or between the States and the Federal Government. The
Commission shall have the authority to adopt such an exemp-
tion as agreed upon for Federal purposes. Nothing in this Act
shall be construed as authorizing preemption of State law.
(4) In order to carry out these policies and purposes, the Com-
mission shall conduct an annual conference as well as such other
meetings as are deemed necessary, to which representatives from
such securities associations, securities self-regulatory organiza-
tions, agencies, and private organizations involved in capital forma-
tion shall be invited to participate.
(5) For fiscal year 1982, and for each of the three succeeding
fiscal years, there are authorized to be appropriated such amounts
as may be necessary and appropriate to carry out the policies, pro-
visions, and purposes of this subsection. Any sums so appropriated
shall remain available until expended.
(6) Notwithstanding any other provision of law, neither the
Commission nor any other person shall be required to establish any
procedures not specifically required by the securities laws, as that
term is defined in section 3(a)(47) of the Securities Exchange Act
of 1934, or by chapter 5 of title 5, United States Code, in connec-
tion with cooperation, coordination, or consultation with
(A) any association referred to in paragraph (1) or (3)
or any conference or meeting referred to in paragraph (4),
while such association, conference, or meeting is carrying
out
activities in furtherance of the provisions of this sub-
section; or
(B) any forum, agency or organization, or group referred to
in section 503 of the Small Business Investment Incentive Act
of 1980, while such forum, agency, organization, or group is
carrying out activities in furtherance of the provisions of such
section 503.
As used in this paragraph, the terms association, conference,
meeting, forum, agency, organization, and group include
any committee, subgroup, or representative of such entities.
(e) EVALUATION OF RULES OR PROGRAMS.For the purpose of
evaluating any rule or program of the Commission issued or car-
ried out under any provision of the securities laws, as defined in
section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c),
and the purposes of considering, proposing, adopting, or engaging
in any such rule or program or developing new rules or programs,
the Commission may
(1) gather information from and communicate with inves-
tors or other members of the public;
(2) engage in such temporary investor testing programs as
the Commission determines are in the public interest or would
protect investors; and
(3) consult with academics and consultants, as necessary

to carry out this subsection.
(f) RULE OF CONSTRUCTION.For purposes of the Paperwork
Reduction Act (44 U.S.C. 3501 et seq.), any action taken under sub-
section (e) shall not be construed to be a collection of information.
(g) FUNDING FOR THE GASB.
(1) IN GENERAL.The Commission may, subject to the lim-
itations imposed by section 15B of the Securities Exchange Act
of 1934 (15 U.S.C. 78o-4), require a national securities associa-
tion registered under the Securities Exchange Act of 1934 to
establish
(A) a reasonable annual accounting support fee to ade-
quately fund the annual budget of the Governmental Ac-
counting Standards Board (referred to in this subsection as
the GASB); and
(B) rules and procedures, in consultation with the
principal organizations representing State governors, legis-
lators, local elected officials, and State and local finance of-
ficers, to provide for the equitable allocation, assessment,
and collection of the accounting support fee established
under subparagraph (A) from the members of the associa-
tion, and the remittance of all such accounting support
fees to the Financial Accounting Foundation.
(2) ANNUAL BUDGET.For purposes of this subsection, the
annual budget of the GASB is the annual budget reviewed and
approved according to the internal procedures of the Financial
Accounting Foundation.
(3) USE OF FUNDS.Any fees or funds collected under this
subsection shall be used to support the efforts of the GASB to
establish standards of financial accounting and reporting rec-
ognized as generally accepted accounting principles applicable
to State and local governments of the United States.
(4) LIMITATION ON FEE.The annual accounting support
fees collected under this subsection for a fiscal year shall not
exceed the recoverable annual budgeted expenses of the GASB
(which may include operating expenses, capital, and accrued
items).
(5) RULES OF CONSTRUCTION.
(A) FEES NOT PUBLIC MONIES.Accounting support
fees collected under this subsection and other receipts of
the GASB shall not be considered public monies of the
United States.
(B) LIMITATION ON AUTHORITY OF THE COMMISSION.
Nothing in this subsection shall be construed to
(i) provide the Commission or any national securi-
ties association direct or indirect oversight of the
budget or technical agenda of the GASB; or
(ii) affect the setting of generally accepted ac-
counting principles by the GASB.
(C) NONINTERFERENCE WITH STATES.Nothing in this
subsection shall be construed to impair or limit the author-
ity of a State or local government to establish accounting
and financial reporting standards.
ch. 404, title II, Sec. 209, 48 Stat. 908; Feb. 5, 1976, Pub. L. 94-
210, title III, Sec. 308(a)(2), 90 Stat. 57; Oct. 21, 1980, Pub. L. 96-
477, title V, Sec. 505, 94 Stat. 2292; Dec. 4, 1987, Pub. L. 100-181,
title II, Sec. 207, 101 Stat. 1252; Pub. L. 107-204, title I, Sec.
108(a), July 30, 2002, 116 Stat. 768; Pub. L. 111-203, title IX, Secs.
912, 978(a), 985(a)(3), July 21, 2010, 124 Stat. 1824, 1924, 1933.)
REFERENCES IN TEXT

The Small Business Investment Incentive Act of 1980, re-
ferred to in subsec. (d)(6)(B), is Pub. L. 96-477, Oct. 21, 1980,
94 Stat. 2275, as amended.
The Paperwork Reduction Act, referred to in text, probably
means the Paperwork Reduction Act of 1980, Pub. L. 96-511,
Dec. 11, 1980, 94 Stat. 2812, as amended, which was classified
principally to chapter 35 (Sec. 3501 et seq.) of U.S. Code Title
44, Public Printing and Documents, prior to the general
amendment of that chapter by the Paperwork Reduction Act of
1995, Pub. L. 104-13, Sec. 2, May 22, 1995, 109 Stat. 163.
AMENDMENTS
2010 Subsec. (d)(6)(A). Pub. L. 111-203, Sec. 985(a)(3),

which directed the substitution of in paragraph (1) or (3) for
in paragraph (1) of (3), could not be executed, as the phrase
to be struck out did not appear in text.
Subsecs. (e), (f). Pub. L. 111-203, Sec. 912, added subsecs.
(e) and (f).
Subsec. (g). Pub. L. 111-203, Sec. 978(a), added subsec. (g).
2002 Subsecs. (b)-(d). Pub. L. 107-204 added subsec. (b).
Former subsecs. (b) and (c) were redesignated (c) and (d), re-
spectively.
1987 Subsec. (c)(6). Pub. L. 100-181 added par. (6).
1980 Subsec. (c). Pub. L. 96-477 added subsec. (c).
1976 Subsec. (a). Pub. L. 94-210 struck out provisions
relating to rules and regulations applicable to any common car-
rier subject to certain provisions.
1934 Subsec. (a). Act June 6, 1934, inserted technical
in first sentence and inserted last sentence.

Amendment by Pub. L. 96-477 effective Jan. 1, 1981, see

Amendment by Pub. L. 94-210 effective on 60th day after

Feb. 5, 1976, but not applicable to any bona fide offering of a
security made by the issuer, or by or through an underwriter,
before such 60th day, see section 308(d)(1) of Pub. L. 94-210.

1950, 15 F.R. 3175, 64 Stat. 1265.
INJUNCTIONS AND PROSECUTION OF OFFENSES
SEC. 20. (a) Whenever it shall appear to the Commission, ei-

ther upon complaint or otherwise, that the provisions of this title,
or of any rule or regulation prescribed under authority thereof,
have been or are about to be violated, it may, in its discretion, ei-
ther require or permit such person to file with it a statement in
writing, under oath, or otherwise, as to all the facts and cir-
cumstances concerning the subject matter which it believes to be
in the public interest to investigate, and may investigate such
facts.
(b) Whenever it shall appear to the Commission that any per-
son is engaged or about to engage in any acts or practices which
constitute or will constitute a violation of the provisions of this
title, or of any rule or regulation prescribed under authority there-
of, the Commission may, in its discretion, bring an action in any
district court of the United States, or United States court of any
Territory, to enjoin such acts or practices, and upon a proper show-
ing, a permanent or temporary injunction or restraining order shall
be granted without bond. The Commission may transmit such evi-
dence as may be available concerning such acts or practices to the
Attorney General who may, in his discretion, institute the nec-
essary criminal proceedings under this title. Any such criminal pro-
ceeding may be brought either in the district wherein the trans-
mittal of the prospectus or security complained of begins, or in the
district wherein such prospectus or security is received.
(c) Upon application of the Commission, the district courts of
the United States and the United States courts of any Territory
shall have jurisdiction to issue writs of mandamus commanding
any person to comply with the provisions of this title or any order
of the Commission made in pursuance thereof.
(d) MONEY PENALTIES IN CIVIL ACTIONS.
(1) AUTHORITY OF COMMISSION.Whenever it shall appear to
the Commission that any person has violated any provision of this
title, the rules or regulations thereunder, or a cease-and-desist
order entered by the Commission pursuant to section 8A of this
title, other than by committing a violation subject to a penalty pur-
suant to section 21A of the Securities Exchange Act of 1934, the
Commission may bring an action in a United States district court
to seek, and the court shall have jurisdiction to impose, upon a
proper showing, a civil penalty to be paid by the person who com-

mitted such violation.
(2) AMOUNT OF PENALTY.
(A) FIRST TIER.The amount of the penalty shall be deter-
mined by the court in light of the facts and circumstances. For
each violation, the amount of the penalty shall not exceed the
greater of (i) $5,000 for a natural person or $50,000 for any
other person, or (ii) the gross amount of pecuniary gain to such
defendant as a result of the violation.
(B) SECOND TIER.Notwithstanding subparagraph (A), the
amount of penalty for each such violation shall not exceed the
greater of (i) $50,000 for a natural person or $250,000 for any
other person, or (ii) the gross amount of pecuniary gain to such
defendant as a result of the violation, if the violation described
in paragraph (1) involved fraud, deceit, manipulation, or delib-
erate or reckless disregard of a regulatory requirement.
(C) THIRD TIER.Notwithstanding subparagraphs (A) and
(B), the amount of penalty for each such violation shall not ex-
ceed the greater of (i) $100,000 for a natural person or
$500,000 for any other person, or (ii) the gross amount of pecu-
niary gain to such defendant as a result of the violation, if
(I) the violation described in paragraph (1) involved
fraud, deceit, manipulation, or deliberate or reckless dis-
regard of a regulatory requirement; and
(II) such violation directly or indirectly resulted in
substantial losses or created a significant risk of substan-
tial losses to other persons.
(3) PROCEDURES FOR COLLECTION.
(A) PAYMENT OF PENALTY TO TREASURY.A penalty im-
posed under this section shall be payable into the Treasury of
the United States, except as otherwise provided in section 308
of the Sarbanes-Oxley Act of 2002 and section 21F of the Secu-
rities Exchange Act of 1934.
(B) COLLECTION OF PENALTIES.If a person upon whom
such a penalty is imposed shall fail to pay such penalty within
the time prescribed in the courts order, the Commission may
refer the matter to the Attorney General who shall recover
such penalty by action in the appropriate United States district
court.
(C) REMEDY NOT EXCLUSIVE.The actions authorized by
this subsection may be brought in addition to any other action
that the Commission or the Attorney General is entitled to
bring.
(D) JURISDICTION AND VENUE.For purposes of section 22
of this title, actions under this section shall be actions to en-
force a liability or a duty created by this title.
(4) SPECIAL PROVISIONS RELATING TO A VIOLATION OF A
CEASE-AND- DESIST ORDER.In an action to enforce a cease-and-
desist order entered by the Commission pursuant to section 8A,
each separate violation of such order shall be a separate offense,
except that in the case of a violation through a continuing failure
to comply with such an order, each day of the failure to comply
with the order shall be deemed a separate offense.
(e) AUTHORITY OF A COURT TO PROHIBIT PERSONS FROM SERV-

ING AS OFFICERS AND DIRECTORS.In any proceeding under sub-
section (b), the court may prohibit, conditionally or unconditionally,
and permanently or for such period of time as it shall determine,
any person who violated section 17(a)(1) of this title from acting as
an officer or director of any issuer that has a class of securities reg-
istered pursuant to section 12 of the Securities Exchange Act of
1934 or that is required to file reports pursuant to section 15(d) of
such Act if the persons conduct demonstrates unfitness to serve as
an officer or director of any such issuer.
(f) PROHIBITION OF ATTORNEYS FEES PAID FROM COMMISSION
DISGORGEMENT FUNDS.Except as otherwise ordered by the court
upon motion by the Commission, or, in the case of an administra-
tive action, as otherwise ordered by the Commission, funds dis-
gorged as the result of an action brought by the Commission in
Federal court, or as a result of any Commission administrative ac-
tion, shall not be distributed as payment for attorneys fees or ex-
penses incurred by private parties seeking distribution of the dis-
gorged funds.
(g) AUTHORITY OF A COURT TO PROHIBIT PERSONS FROM PAR-
TICIPATING IN AN OFFERING OF PENNY STOCK.
(1) IN GENERAL.In any proceeding under subsection (a)
against any person participating in, or, at the time of the al-
leged misconduct, who was participating in, an offering of
penny stock, the court may prohibit that person from partici-
pating in an offering of penny stock, conditionally or uncondi-
tionally, and permanently or for such period of time as the
court shall determine.
(2) DEFINITION.For purposes of this subsection, the term
person participating in an offering of penny stock includes
any person engaging in activities with a broker, dealer, or
issuer for purposes of issuing, trading, or inducing or attempt-
ing to induce the purchase or sale of, any penny stock. The
Commission may, by rule or regulation, define such term to in-
clude other activities, and may, by rule, regulation, or order,
exempt any person or class of persons, in whole or in part, con-
ditionally or unconditionally, from inclusion in such term.
(May 27, 1933, ch. 38, title I, Sec. 20, 48 Stat. 86; Dec. 4, 1987,
Pub. L. 100-181, title II, Sec. 208, 101 Stat. 1253; Oct. 15, 1990,
Pub. L. 101-429, title I, Sec. 101, 104 Stat. 932; Dec. 22, 1995, Pub.
L. 104-67, title I, Sec. 103(b)(1), 109 Stat. 756; Pub. L. 107-204,
title III, Secs. 305(a)(2), 308(d)(3), title VI, Sec. 603(b), July 30,
2002, 116 Stat. 779, 785, 795; Pub. L. 111-203, title IX, Sec.
923(a)(1), July 21, 2010, 124 Stat. 1849.)
REFERENCES IN TEXT

AMENDMENTS
2010 Subsec. (d)(3)(A). Pub. L. 111-203, Sec. 923(a)(1),

added reference to section 21F of the Securities Exchange Act
of 1934.
2002 Subsec. (d)(3)(A). Pub. L. 107-204, Sec. 308(d)(3),
added provision relating to exception.
Subsec. (e). Pub. L. 107-204, Sec. 305(a)(2), struck out
substantial before unfitness.
Subsec. (g). Pub. L. 107-204, Sec. 603(b), added subsec. (g).
1995 Subsec. (f). Pub. L. 104-67 added subsec. (f).
1990 Subsecs. (d), (e). Pub. L. 101-429 added subsecs.
(d) and (e).
1987 Subsec. (b). Pub. L. 100-181, Sec. 208(a), inserted
first sentence and struck out former first sentence containing
similar provisions.
Subsec. (c). Pub. L. 100-181, Sec. 208(b), amended subsec.
(c) generally.

Amendment by Pub. L. 104-67 not to affect or apply to any

private action arising under this title or title I of the Securities
Exchange Act of 1934, commenced before and pending on Dec.
Amendment by Pub. L. 101-429 effective Oct. 15, 1990,

with provisions relating to civil penalties and accounting and
disgorgement, see section 1(c)(1) and (2) of Pub. L. 101-429.


1950, 15 F.R. 3175, 64 Stat. 1265.
HEARINGS BY COMMISSION
SEC. 21. All hearings shall be public and may be held before
the Commission or an officer or officers of the Commission des-
ignated by it, and appropriate records thereof shall be kept.

1950, 15 F.R. 3175, 64 Stat. 1265.
JURISDICTION OF OFFENSES AND SUITS
SEC. 22. (a) The district courts of the United States and United
States courts of any Territory shall have jurisdiction of offenses
and violations under this title and under the rules and regulations
promulgated by the Commission in respect thereto, and, concurrent
with State and Territorial courts, except as provided in section 16
with respect to covered class actions, of all suits in equity and ac-
tions at law brought to enforce any liability or duty created by this
title. Any such suit or action may be brought in the district where-
in the defendant is found or is an inhabitant or transacts business,
or in the district where the offer or sale took place, if the defendant
participated therein, and process in such cases may be served in
any other district of which the defendant is an inhabitant or wher-
ever the defendant may be found. In any action or proceeding insti-
tuted by the Commission under this title in a United States district
court for any judicial district, a subpoena issued to compel the at-
tendance of a witness or the production of documents or tangible
things (or both) at a hearing or trial may be served at any place
within the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules
of Civil Procedure shall not apply to a subpoena issued under the
preceding sentence. Judgments and decrees so rendered shall be
subject to review as provided in sections 1254, 1291, 1292, and
1294 of title 28, United States Code. Except as provided in section
16(c), no case arising under this title and brought in any State
court of competent jurisdiction shall be removed to any court of the
United States. No costs shall be assessed for or against the Com-
mission in any proceeding under this title brought by or against it
in the Supreme Court or such other courts.
(b) In case of contumacy or refusal to obey a subpena issued
to any person, any of the said United States courts, within the ju-
risdiction of which said person guilty of contumacy or refusal to
obey is found or resides, upon application by the Commission may
issue to such person an order requiring such person to appear be-
fore the Commission, or one of its examiners designated by it, there
to produce documentary evidence if so ordered, or there to give evi-
dence touching the matter in question; and any failure to obey such
order of the court may be punished by said court as a contempt
thereof.
(c) EXTRATERRITORIAL JURISDICTION.The district courts of the
United States and the United States courts of any Territory shall
have jurisdiction of an action or proceeding brought or instituted
by the Commission or the United States alleging a violation of sec-
tion 17(a) involving
(1) conduct within the United States that constitutes sig-

nificant steps in furtherance of the violation, even if the securi-
ties transaction occurs outside the United States and involves
only foreign investors; or
(2) conduct occurring outside the United States that has a
foreseeable substantial effect within the United States.
ch. 804, 49 Stat. 1921; June 25, 1948, ch. 646, Sec. 32(b), 62 Stat.
991; May 24, 1949, ch. 139, Sec. 127, 63 Stat. 107; Aug. 10, 1954,
ch. 667, title I, Sec. 11, 68 Stat. 686; Pub. L. 91-452, title II, Sec.
213, Oct. 15, 1970, 84 Stat. 929; Pub. L. 100-181, title II, Sec. 209,
Dec. 4, 1987, 101 Stat. 1253; Pub. L. 105-353, title I, Sec. 101(a)(3),
Nov. 3, 1998, 112 Stat. 3230; Pub. L. 111-203, title IX, Secs.
929E(a), 929P(b)(1), July 21, 2010, 124 Stat. 1853, 1864.)
AMENDMENTS
2010 Subsec. (a). Pub. L. 111-203, Sec. 929E(a), inserted

after the second sentence In any action or proceeding insti-
tuted by the Commission under this title in a United States
district court for any judicial district, a subpoena issued to
compel the attendance of a witness or the production of docu-
ments or tangible things (or both) at a hearing or trial may be
served at any place within the United States. Rule
45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not
apply to a subpoena issued under the preceding sentence.
Subsec. (c). Pub. L. 111-203, Sec. 929P(b)(1), added subsec.
(c).
1998 Subsec. (a). Pub. L. 105-353 inserted except as
provided in section 16 with respect to covered class actions,
after Territorial courts, in first sentence and substituted Ex-
cept as provided in section 16(c), no case for No case in pe-
nultimate sentence.
1987 Subsec. (a). Pub. L. 100-181 substituted United
States and for United States, the, struck out , and the
United States District Court for the District of Columbia after
Territory, and substituted sections 1254, 1291, 1292, and
1294 of title 28, United States Code for sections 128 and 240
of the Judicial Code, as amended (U.S.C., title 28, secs. 225
and 347). See Codification note above.
1970 Subsec. (c). Pub. L. 91-452 struck out subsec. (c)
which related to immunity from prosecution of any individual
compelled to testify or produce evidence, documentary or other-
wise, after claiming his privilege against self-incrimination.
1954 Subsec. (a). Act Aug. 10, 1954, inserted offer or
before sale in second sentence.

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.
Amendment by Pub. L. 91-452 effective on sixtieth day fol-

lowing Oct. 15, 1970, see section 260 of Pub. L. 91-452.

ch. 667.
SAVINGS PROVISION
Amendment by Pub. L. 91-452 not to affect any immunity

to which any individual is entitled under this section by reason
of any testimony given before the sixtieth day following Oct.

1950, 15 F.R. 3175, 64 Stat. 1265.
UNLAWFUL REPRESENTATIONS
SEC. 23. Neither the fact that the registration statement for a
security has been filed or is in effect nor the fact that a stop order
is not in effect with respect thereto shall be deemed a finding by
the Commission that registration statement is true and accurate on
its face or that it does not contain an untrue statement of fact or
omit to state a material fact, or be held to mean that the Commis-
sion has in any way passed upon the merits of, or given approval
to, such security. It shall be unlawful to make, or cause to be made,
to any prospective purchaser any representation contrary to the
foregoing provisions of this section.

1950, 15 F.R. 3175, 64 Stat. 1265.
PENALTIES
SEC. 24. Any person who willfully violates any of the provisions
of this title, or the rules and regulations promulgated by the Com-
mission under authority thereof, or any person who willfully, in a
registration statement filed under this title, makes any untrue

statement of a material fact or omits to state any material fact re-
quired to be stated therein or necessary to make the statements
therein not misleading, shall upon conviction be fined not more
than $10,000 or imprisoned not more than five years, or both.
Sec. 27(a), June 4, 1975, 89 Stat. 163.)
AMENDMENTS
1975 Pub. L. 94-29 substituted $10,000 for $5,000.

Amendment by Pub. L. 94-29 effective June 4, 1975, see


1950, 15 F.R. 3175, 64 Stat. 1265.
JURISDICTION OF OTHER GOVERNMENT AGENCIES OVER SECURITIES
SEC. 25. Nothing in this title shall relieve any person from sub-
mitting to the respective supervisory units of the Government of
the United States information, reports, or other documents that are
now or may hereafter be required by any provision of law.
SEPARABILITY OF PROVISIONS
SEC. 26. If any provision of this Act, or the application of such

provision to any person or circumstance, shall be held invalid, the
remainder of this Act, or the application of such provision to per-
sons or circumstances other than those as to which it is held in-
valid, shall not be affected thereby.
SEC. 27. PRIVATE SECURITIES LITIGATION.

(a) PRIVATE CLASS ACTIONS.
(1) IN GENERAL.The provisions of this subsection shall
apply to each private action arising under this title that is
brought as a plaintiff class action pursuant to the Federal
Rules of Civil Procedure.
(2) CERTIFICATION FILED WITH COMPLAINT.
(A) IN GENERAL.Each plaintiff seeking to serve as a
representative party on behalf of a class shall provide a
sworn certification, which shall be personally signed by
such plaintiff and filed with the complaint, that
(i) states that the plaintiff has reviewed the com-

plaint and authorized its filing;
(ii) states that the plaintiff did not purchase the
security that is the subject of the complaint at the di-
rection of plaintiffs counsel or in order to participate
in any private action arising under this title;
(iii) states that the plaintiff is willing to serve as
a representative party on behalf of a class, including
providing testimony at deposition and trial, if nec-
essary;
(iv) sets forth all of the transactions of the plain-
tiff in the security that is the subject of the complaint
during the class period specified in the complaint;
(v) identifies any other action under this title,
filed during the 3-year period preceding the date on
which the certification is signed by the plaintiff, in
which the plaintiff has sought to serve, or served, as
a representative party on behalf of a class; and
(vi) states that the plaintiff will not accept any
payment for serving as a representative party on be-
half of a class beyond the plaintiffs pro rata share of
any recovery, except as ordered or approved by the
court in accordance with paragraph (4).
(B) NONWAIVER OF ATTORNEY-CLIENT PRIVILEGE.The
certification filed pursuant to subparagraph (A) shall not
be construed to be a waiver of the attorney-client privilege.
(3) APPOINTMENT OF LEAD PLAINTIFF.
(A) EARLY NOTICE TO CLASS MEMBERS.
(i) IN GENERAL.Not later than 20 days after the
date on which the complaint is filed, the plaintiff or
plaintiffs shall cause to be published, in a widely cir-
culated national business-oriented publication or wire
service, a notice advising members of the purported
plaintiff class
(I) of the pendency of the action, the claims
asserted therein, and the purported class period;
and
(II) that, not later than 60 days after the date
on which the notice is published, any member of
the purported class may move the court to serve
as lead plaintiff of the purported class.
(ii) MULTIPLE ACTIONS.If more than one action
on behalf of a class asserting substantially the same
claim or claims arising under this title is filed, only
the plaintiff or plaintiffs in the first filed action shall
be required to cause notice to be published in accord-
ance with clause (i).
(iii) ADDITIONAL NOTICES MAY BE REQUIRED UNDER
FEDERAL RULES.Notice required under clause (i)
shall be in addition to any notice required pursuant to
the Federal Rules of Civil Procedure.
(B) APPOINTMENT OF LEAD PLAINTIFF.
(i) IN GENERAL.Not later than 90 days after the
date on which a notice is published under subpara-
graph (A)(i), the court shall consider any motion made

by a purported class member in response to the notice,
including any motion by a class member who is not in-
dividually named as a plaintiff in the complaint or
complaints, and shall appoint as lead plaintiff the
member or members of the purported plaintiff class
that the court determines to be most capable of ade-
quately representing the interests of class members
(hereafter in this paragraph referred to as the most
adequate plaintiff) in accordance with this subpara-
graph.
(ii) CONSOLIDATED ACTIONS.If more than one ac-
tion on behalf of a class asserting substantially the
same claim or claims arising under this title has been
filed, and any party has sought to consolidate those
actions for pretrial purposes or for trial, the court
shall not make the determination required by clause
(i) until after the decision on the motion to consolidate
is rendered. As soon as practicable after such decision
is rendered, the court shall appoint the most adequate
plaintiff as lead plaintiff for the consolidated actions
in accordance with this subparagraph.
(iii) REBUTTABLE PRESUMPTION.
(I) IN GENERAL.Subject to subclause (II), for
purposes of clause (i), the court shall adopt a pre-
sumption that the most adequate plaintiff in any
private action arising under this title is the per-
son or group of persons that
(aa) has either filed the complaint or
made a motion in response to a notice under
subparagraph (A)(i);
(bb) in the determination of the court, has
the largest financial interest in the relief
sought by the class; and
(cc) otherwise satisfies the requirements
of Rule 23 of the Federal Rules of Civil Proce-
dure.
(II) REBUTTAL EVIDENCE.The presumption
described in subclause (I) may be rebutted only
upon proof by a member of the purported plaintiff
class that the presumptively most adequate plain-
tiff
(aa) will not fairly and adequately protect
the interests of the class; or
(bb) is subject to unique defenses that
render such plaintiff incapable of adequately
representing the class.
(iv) DISCOVERY.For purposes of this subpara-
graph, discovery relating to whether a member or
members of the purported plaintiff class is the most
adequate plaintiff may be conducted by a plaintiff only
if the plaintiff first demonstrates a reasonable basis
for a finding that the presumptively most adequate
plaintiff is incapable of adequately representing the

class.
(v) SELECTION OF LEAD COUNSEL.The most ade-
quate plaintiff shall, subject to the approval of the
court, select and retain counsel to represent the class.
(vi) RESTRICTIONS ON PROFESSIONAL PLAINTIFFS.
Except as the court may otherwise permit, consistent
with the purposes of this section, a person may be a
lead plaintiff, or an officer, director, or fiduciary of a
lead plaintiff, in no more than 5 securities class ac-
tions brought as plaintiff class actions pursuant to the
Federal Rules of Civil Procedure during any 3-year pe-
riod.
(4) RECOVERY BY PLAINTIFFS.The share of any final judg-
ment or of any settlement that is awarded to a representative
party serving on behalf of a class shall be equal, on a per share
basis, to the portion of the final judgment or settlement award-
ed to all other members of the class. Nothing in this paragraph
shall be construed to limit the award of reasonable costs and
expenses (including lost wages) directly relating to the rep-
resentation of the class to any representative party serving on
behalf of the class.
(5) RESTRICTIONS ON SETTLEMENTS UNDER SEAL.The
terms and provisions of any settlement agreement of a class
action shall not be filed under seal, except that on motion of
any party to the settlement, the court may order filing under
seal for those portions of a settlement agreement as to which
good cause is shown for such filing under seal. For purposes of
this paragraph, good cause shall exist only if publication of a
term or provision of a settlement agreement would cause direct
and substantial harm to any party.
(6) RESTRICTIONS ON PAYMENT OF ATTORNEYS FEES AND
EXPENSES.Total attorneys fees and expenses awarded by the
court to counsel for the plaintiff class shall not exceed a rea-
sonable percentage of the amount of any damages and prejudg-
ment interest actually paid to the class.
(7) DISCLOSURE OF SETTLEMENT TERMS TO CLASS MEM-
BERS.Any proposed or final settlement agreement that is
published or otherwise disseminated to the class shall include
each of the following statements, along with a cover page sum-
marizing the information contained in such statements:
(A) STATEMENT OF PLAINTIFF RECOVERY.The amount
of the settlement proposed to be distributed to the parties
to the action, determined in the aggregate and on an aver-
age per share basis.
(B) STATEMENT OF POTENTIAL OUTCOME OF CASE.
(i) AGREEMENT ON AMOUNT OF DAMAGES.If the
settling parties agree on the average amount of dam-
ages per share that would be recoverable if the plain-
tiff prevailed on each claim alleged under this title, a
statement concerning the average amount of such po-
tential damages per share.
(ii) DISAGREEMENT ON AMOUNT OF DAMAGES.If
the parties do not agree on the average amount of
damages per share that would be recoverable if the

plaintiff prevailed on each claim alleged under this
title, a statement from each settling party concerning
the issue or issues on which the parties disagree.
(iii) INADMISSIBILITY FOR CERTAIN PURPOSES.A
statement made in accordance with clause (i) or (ii)
concerning the amount of damages shall not be admis-
sible in any Federal or State judicial action or admin-
istrative proceeding, other than an action or pro-
ceeding arising out of such statement.
(C) STATEMENT OF ATTORNEYS FEES OR COSTS
SOUGHT.If any of the settling parties or their counsel in-
tend to apply to the court for an award of attorneys fees
or costs from any fund established as part of the settle-
ment, a statement indicating which parties or counsel in-
tend to make such an application, the amount of fees and
costs that will be sought (including the amount of such
fees and costs determined on an average per share basis),
and a brief explanation supporting the fees and costs
sought.
(D) IDENTIFICATION OF LAWYERS REPRESENTATIVES.
The name, telephone number, and address of one or more
representatives of counsel for the plaintiff class who will
be reasonably available to answer questions from class
members concerning any matter contained in any notice of
settlement published or otherwise disseminated to the
class.
(E) REASONS FOR SETTLEMENT.A brief statement ex-
plaining the reasons why the parties are proposing the set-
tlement.
(F) OTHER INFORMATION.Such other information as
may be required by the court.
(8) ATTORNEY CONFLICT OF INTEREST.If a plaintiff class
is represented by an attorney who directly owns or otherwise
has a beneficial interest in the securities that are the subject
of the litigation, the court shall make a determination of
whether such ownership or other interest constitutes a conflict
of interest sufficient to disqualify the attorney from rep-
resenting the plaintiff class.
(b) STAY OF DISCOVERY; PRESERVATION OF EVIDENCE.
(1) IN GENERAL.In any private action arising under this
title, all discovery and other proceedings shall be stayed during
the pendency of any motion to dismiss, unless the court finds,
upon the motion of any party, that particularized discovery is
necessary to preserve evidence or to prevent undue prejudice
to that party.
(2) PRESERVATION OF EVIDENCE.During the pendency of
any stay of discovery pursuant to this subsection, unless other-
wise ordered by the court, any party to the action with actual
notice of the allegations contained in the complaint shall treat
all documents, data compilations (including electronically re-
corded or stored data), and tangible objects that are in the cus-
tody or control of such person and that are relevant to the alle-
gations, as if they were the subject of a continuing request for
production of documents from an opposing party under the

Federal Rules of Civil Procedure.
(3) SANCTION FOR WILLFUL VIOLATION.A party aggrieved
by the willful failure of an opposing party to comply with para-
graph (2) may apply to the court for an order awarding appro-
priate sanctions.
(4) CIRCUMVENTION OF STAY OF DISCOVERY.Upon a prop-
er showing, a court may stay discovery proceedings in any pri-
vate action in a State court as necessary in aid of its jurisdic-
tion, or to protect or effectuate its judgments, in an action sub-
ject to a stay of discovery pursuant to this subsection.
(c) SANCTIONS FOR ABUSIVE LITIGATION.
(1) MANDATORY REVIEW BY COURT.In any private action
arising under this title, upon final adjudication of the action,
the court shall include in the record specific findings regarding
compliance by each party and each attorney representing any
party with each requirement of Rule 11(b) of the Federal Rules
of Civil Procedure as to any complaint, responsive pleading, or
dispositive motion.
(2) MANDATORY SANCTIONS.If the court makes a finding
under paragraph (1) that a party or attorney violated any re-
quirement of Rule 11(b) of the Federal Rules of Civil Procedure
as to any complaint, responsive pleading, or dispositive motion,
the court shall impose sanctions on such party or attorney in
accordance with Rule 11 of the Federal Rules of Civil Proce-
dure. Prior to making a finding that any party or attorney has
violated Rule 11 of the Federal Rules of Civil Procedure, the
court shall give such party or attorney notice and an oppor-
tunity to respond.
(3) PRESUMPTION IN FAVOR OF ATTORNEYS FEES AND
COSTS.
(A) IN GENERAL.Subject to subparagraphs (B) and
(C), for purposes of paragraph (2), the court shall adopt a
presumption that the appropriate sanction
(i) for failure of any responsive pleading or dis-
positive motion to comply with any requirement of
Rule 11(b) of the Federal Rules of Civil Procedure is
an award to the opposing party of the reasonable at-
torneys fees and other expenses incurred as a direct
result of the violation; and
(ii) for substantial failure of any complaint to com-
ply with any requirement of Rule 11(b) of the Federal
Rules of Civil Procedure is an award to the opposing
party of the reasonable attorneys fees and other ex-
penses incurred in the action.
(B) REBUTTAL EVIDENCE.The presumption described
in subparagraph (A) may be rebutted only upon proof by
the party or attorney against whom sanctions are to be im-
posed that
(i) the award of attorneys fees and other expenses
will impose an unreasonable burden on that party or
attorney and would be unjust, and the failure to make
such an award would not impose a greater burden on
the party in whose favor sanctions are to be imposed;

or
(ii) the violation of Rule 11(b) of the Federal Rules
of Civil Procedure was de minimis.
(C) SANCTIONS.If the party or attorney against
whom sanctions are to be imposed meets its burden under
subparagraph (B), the court shall award the sanctions that
the court deems appropriate pursuant to Rule 11 of the
Federal Rules of Civil Procedure.
(d) DEFENDANTS RIGHT TO WRITTEN INTERROGATORIES.In
any private action arising under this title in which the plaintiff
may recover money damages only on proof that a defendant acted
with a particular state of mind, the court shall, when requested by
a defendant, submit to the jury a written interrogatory on the issue
of each such defendants state of mind at the time the alleged viola-
tion occurred.
(May 27, 1933, ch. 38, title I, Sec. 27, as added Pub. L. 104-67, title
I, Sec. 101(a), Dec. 22, 1995, 109 Stat. 737; amended Pub. L. 105-
353, title I, Sec. 101(a)(2), title III, Sec. 301(a)(5), Nov. 3, 1998, 112
Stat. 3230, 3235.)
AMENDMENTS
1998 Pub. L. 105-353, Sec. 301(a)(5), made technical

correction relating to placement of section.
Subsec. (b)(4). Pub. L. 105-353, Sec. 101(a)(2), added par.
(4).
Amendment by section 101(a)(2) of 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.
EFFECTIVE DATE
Section not to affect or apply to any private action arising

under this title or title I of the Securities Exchange Act of
tion 108 of Pub. L. 104-67.
CONSTRUCTION
Nothing in section to be deemed to create or ratify any im-

plied right of action, or to prevent Commission, by rule or regu-
lation, from restricting or otherwise regulating private actions
under Securities Exchange Act of 1934, see section 203 of Pub.
L. 104-67.
SEC. 27A. APPLICATION OF SAFE HARBOR FOR FORWARD-LOOKING

STATEMENTS.
(a) APPLICABILITY.This section shall apply only to a forward-
looking statement made by
(1) an issuer that, at the time that the statement is made,
is subject to the reporting requirements of section 13(a) or sec-
tion 15(d) of the Securities Exchange Act of 1934;
(2) a person acting on behalf of such issuer;

(3) an outside reviewer retained by such issuer making a
statement on behalf of such issuer; or
(4) an underwriter, with respect to information provided by
such issuer or information derived from information provided
by the issuer.
(b) EXCLUSIONS.Except to the extent otherwise specifically
provided by rule, regulation, or order of the Commission, this sec-
tion shall not apply to a forward-looking statement
(1) that is made with respect to the business or operations
of the issuer, if the issuer
(A) during the 3-year period preceding the date on
which the statement was first made
(i) was convicted of any felony or misdemeanor de-
scribed in clauses (i) through (iv) of section 15(b)(4)(B)
of the Securities Exchange Act of 1934; or
(ii) has been made the subject of a judicial or ad-
ministrative decree or order arising out of a govern-
mental action that
(I) prohibits future violations of the antifraud
provisions of the securities laws;
(II) requires that the issuer cease and desist
from violating the antifraud provisions of the se-
curities laws; or
(III) determines that the issuer violated the
antifraud provisions of the securities laws;
(B) makes the forward-looking statement in connection
with an offering of securities by a blank check company;
(C) issues penny stock;
(D) makes the forward-looking statement in connection
with a rollup transaction; or
(E) makes the forward-looking statement in connection
with a going private transaction; or
(2) that is
(A) included in a financial statement prepared in ac-
cordance with generally accepted accounting principles;
(B) contained in a registration statement of, or other-
wise issued by, an investment company;
(C) made in connection with a tender offer;
(D) made in connection with an initial public offering;
(E) made in connection with an offering by, or relating
to the operations of, a partnership, limited liability com-
pany, or a direct participation investment program; or
(F) made in a disclosure of beneficial ownership in a
report required to be filed with the Commission pursuant
to section 13(d) of the Securities Exchange Act of 1934.
(c) SAFE HARBOR.
(1) IN GENERAL.Except as provided in subsection (b), in any
private action arising under this title that is based on an untrue
statement of a material fact or omission of a material fact nec-
essary to make the statement not misleading, a person referred to
in subsection (a) shall not be liable with respect to any forward-
looking statement, whether written or oral, if and to the extent
that
(A) the forward-looking statement is

(i) identified as a forward-looking statement, and is ac-
companied by meaningful cautionary statements identi-
fying important factors that could cause actual results to
differ materially from those in the forward-looking state-
ment; or
(ii) immaterial; or
(B) the plaintiff fails to prove that the forward-looking
statement
(i) if made by a natural person, was made with actual
knowledge by that person that the statement was false or
misleading; or
(ii) if made by a business entity, was
(I) made by or with the approval of an executive
officer of that entity, and
(II) made or approved by such officer with actual
knowledge by that officer that the statement was false
or misleading.
(2) ORAL FORWARD-LOOKING STATEMENTS.In the case of an
oral forward-looking statement made by an issuer that is subject
to the reporting requirements of section 13(a) or section 15(d) of the
Securities Exchange Act of 1934, or by a person acting on behalf
of such issuer, the requirement set forth in paragraph (1)(A) shall
be deemed to be satisfied
(A) if the oral forward-looking statement is accompanied
by a cautionary statement
(i) that the particular oral statement is a forward-look-
ing statement; and
(ii) that the actual results could differ materially from
those projected in the forward- looking statement; and
(B) if
(i) the oral forward-looking statement is accompanied
by an oral statement that additional information con-
cerning factors that could cause actual results to differ ma-
terially from those in the forward-looking statement is con-
tained in a readily available written document, or portion
thereof;
(ii) the accompanying oral statement referred to in
clause (i) identifies the document, or portion thereof, that
contains the additional information about those factors re-
lating to the forward-looking statement; and
(iii) the information contained in that written docu-
ment is a cautionary statement that satisfies the standard
established in paragraph (1)(A).
(3) AVAILABILITY.Any document filed with the Commission or
generally disseminated shall be deemed to be readily available for
purposes of paragraph (2).
(4) EFFECT ON OTHER SAFE HARBORS.The exemption pro-
vided for in paragraph (1) shall be in addition to any exemption
that the Commission may establish by rule or regulation under
subsection (g).
(d) DUTY TO UPDATE.Nothing in this section shall impose
upon any person a duty to update a forward-looking statement.
(e) DISPOSITIVE MOTION.On any motion to dismiss based

upon subsection (c)(1), the court shall consider any statement cited
in the complaint and cautionary statement accompanying the
forward- looking statement, which are not subject to material dis-
pute, cited by the defendant.
(f) STAY PENDING DECISION ON MOTION.In any private action
arising under this title, the court shall stay discovery (other than
discovery that is specifically directed to the applicability of the ex-
emption provided for in this section) during the pendency of any
motion by a defendant for summary judgment that is based on the
grounds that
(1) the statement or omission upon which the complaint is
based is a forward-looking statement within the meaning of
this section; and
(2) the exemption provided for in this section precludes a
claim for relief.
(g) EXEMPTION AUTHORITY.In addition to the exemptions pro-
vided for in this section, the Commission may, by rule or regula-
tion, provide exemptions from or under any provision of this title,
including with respect to liability that is based on a statement or
that is based on projections or other forward-looking information,
if and to the extent that any such exemption is consistent with the
public interest and the protection of investors, as determined by
the Commission.
(h) EFFECT ON OTHER AUTHORITY OF COMMISSION.Nothing in
this section limits, either expressly or by implication, the authority
of the Commission to exercise similar authority or to adopt similar
rules and regulations with respect to forward-looking statements
under any other statute under which the Commission exercises
rulemaking authority.
(i) DEFINITIONS.For purposes of this section, the following
(1) FORWARD-LOOKING STATEMENT.The term forward-
looking statement means
(A) a statement containing a projection of revenues,
income (including income loss), earnings (including earn-
ings loss) per share, capital expenditures, dividends, cap-
ital structure, or other financial items;
(B) a statement of the plans and objectives of manage-
ment for future operations, including plans or objectives
relating to the products or services of the issuer;
(C) a statement of future economic performance, in-
cluding any such statement contained in a discussion and
analysis of financial condition by the management or in
the results of operations included pursuant to the rules
and regulations of the Commission;
(D) any statement of the assumptions underlying or
relating to any statement described in subparagraph (A),
(B), or (C);
(E) any report issued by an outside reviewer retained
by an issuer, to the extent that the report assesses a for-
ward-looking statement made by the issuer; or
(F) a statement containing a projection or estimate of

such other items as may be specified by rule or regulation
of the Commission.
(2) INVESTMENT COMPANY.The term investment com-
pany has the same meaning as in section 3(a) of the Invest-
ment Company Act of 1940.
(3) PENNY STOCK.The term penny stock has the same
meaning as in section 3(a)(51) of the Securities Exchange Act
of 1934, and the rules and regulations, or orders issued pursu-
ant to that section.
(4) GOING PRIVATE TRANSACTION.The term going private
transaction has the meaning given that term under the rules
or regulations of the Commission issued pursuant to section
13(e) of the Securities Exchange Act of 1934.
(5) SECURITIES LAWS.The term securities laws has the
same meaning as in section 3 of the Securities Exchange Act
of 1934.
(6) PERSON ACTING ON BEHALF OF AN ISSUER.The term
person acting on behalf of an issuer means an officer, direc-
tor, or employee of the issuer.
(7) OTHER TERMS.The terms blank check company,
rollup transaction, partnership, limited liability company,
executive officer of an entity and direct participation invest-
ment program, have the meanings given those terms by rule
or regulation of the Commission.
title I, Sec. 102(a), Dec. 22, 1995, 109 Stat. 749; amended Pub. L.
105-353, title III, Sec. 301(a)(5), Nov. 3, 1998, 112 Stat. 3235; Pub.
L. 111-203, title IX, Sec. 985(a)(4), July 21, 2010, 124 Stat. 1933.)
REFERENCES IN TEXT

AMENDMENTS
2010 Subsec. (c)(1)(B)(ii). Pub. L. 111-203, Sec.

985(a)(4), substituted business entity, for business entity;.
1998 Pub. L. 105-353 made technical correction relating
to placement of section.

EFFECTIVE DATE
Section not to affect or apply to any private action arising

under this title or title I of the Securities Exchange Act of
Sec. 27B SECURITIES ACT OF 1933 86
tion 108 of Pub. L. 104-67.
CONSTRUCTION
Nothing in section deemed to create or ratify any implied

right of action, or to prevent Commission, by rule or regula-
tion, from restricting or otherwise regulating private actions
under Securities Exchange Act of 1934, see section 203 of Pub.
L. 104-67.
SEC. 27B. CONFLICTS OF INTEREST RELATING TO CERTAIN

SECURITIZATIONS.
(a) IN GENERAL.An underwriter, placement agent, initial pur-
chaser, or sponsor, or any affiliate or subsidiary of any such entity,
of an asset-backed security (as such term is defined in section 3 of
the Securities and Exchange Act of 1934 (15 U.S.C. 78c), which for
the purposes of this section shall include a synthetic asset-backed
security), shall not, at any time for a period ending on the date
that is one year after the date of the first closing of the sale of the
asset-backed security, engage in any transaction that would involve
or result in any material conflict of interest with respect to any in-
vestor in a transaction arising out of such activity.
(b) RULEMAKING.Not later than 270 days after the date of en-
actment of this section, the Commission shall issue rules for the
purpose of implementing subsection (a).
(c) EXCEPTION.The prohibitions of subsection (a) shall not
apply to
(1) risk-mitigating hedging activities in connection with po-
sitions or holdings arising out of the underwriting, placement,
initial purchase, or sponsorship of an asset-backed security,
provided that such activities are designed to reduce the specific
risks to the underwriter, placement agent, initial purchaser, or
sponsor associated with positions or holdings arising out of
such underwriting, placement, initial purchase, or sponsorship;
or
(2) purchases or sales of asset-backed securities made pur-
suant to and consistent with
(A) commitments of the underwriter, placement agent,
initial purchaser, or sponsor, or any affiliate or subsidiary
of any such entity, to provide liquidity for the asset-backed
security, or
(B) bona fide market-making in the asset backed secu-
rity.
(d) RULE OF CONSTRUCTION.This subsection [19] shall not oth-
erwise limit the application of section 15G of the Securities Ex-
change Act of 1934.
(May 27, 1933, ch. 38, title I, Sec. 27B, as added Pub. L. 111-203,
title VI, Sec. 621(a), July 21, 2010, 124 Stat. 1631.)
19So in original. Probably should be section.

87 SECURITIES ACT OF 1933 Sched. A
REFERENCES IN TEXT

The date of enactment of this section, referred to in text,
is the date of enactment of Pub. L. 111-203, which was ap-
proved July 21, 2010.
EFFECTIVE DATE
Pub. L. 111-203, title VI, Sec. 621(b), July 21, 2010, 124
Stat. 1631, provided that: Section 27B of the Securities Act of
1933, as added by this section, shall take effect on the effective
date of final rules issued by the [Securities and Exchange]
Commission under subsection (b) of such section 27B, except
that subsections (b) and (d) of such section 27B shall take ef-
fect on the date of enactment of this Act [July 21,2010].
SEC. 28. GENERAL EXEMPTIVE AUTHORITY.

The Commission, by rule or regulation, may conditionally or
unconditionally exempt any person, security, or transaction, or any
class or classes of persons, securities, or transactions, from any pro-
vision or provisions of this title or of any rule or regulation issued
under this title, to the extent that such exemption is necessary or
appropriate in the public interest, and is consistent with the pro-
tection of investors.
(May 27, 1933, ch. 38, title I, Sec. 28, as added Pub. L. 104-290,
title I, Sec. 105(a), Oct. 11, 1996, 110 Stat. 3424; amended Pub. L.
105-353, title III, Sec. 301(a)(5), Nov. 3, 1998, 112 Stat. 3235.)
AMENDMENTS
1998 Pub. L. 105-353 made technical correction relating

to placement of section.
SCHEDULE A
(1) The name under which the issuer is doing or intends to do
business;
(2) the name of the State or other sovereign power under which
the issuer is organized;
(3) the location of the issuers principal business office, and if
the issuer is a foreign or territorial person, the name and address
of its agent in the United States authorized to receive notice;
(4) the names and addresses of the directors or persons per-
forming similar functions, and the chief executive, financial and ac-
counting officers, chosen or to be chosen if the issuer be a corpora-
tion, association, trust, or other entity; of all partners, if the issuer
be a partnership; and of the issuer, if the issuer be an individual;
and of the promoters in the case of a business to be formed, or
formed within two years prior to the filing of the registration state-
ment;
(5) the names and addresses of the underwriters;
Sched. A SECURITIES ACT OF 1933 88
(6) the names and addresses of all persons, if any, owning of

record or beneficially, if known, more than 10 per centum of any
class of stock of the issuer, or more than 10 per centum in the ag-
gregate of the outstanding stock of the issuer as of a date within
twenty days prior to the filing of the registration statement;
(7) the amount of securities of the issuer held by any person
specified in paragraphs (4), (5), and (6) of this schedule, as of a
date within twenty days prior to the filing of the registration state-
ment, and, if possible, as of one year prior thereto, and the amount
of the securities, for which the registration statement is filed, to
which such persons have indicated their intention to subscribe;
(8) the general character of the business actually transacted or
to be transacted by the issuer;
(9) a statement of the capitalization of the issuer, including the
authorized and outstanding amounts of its capital stock and the
proportion thereof paid up, the number and classes of shares in
which such capital stock is divided, par value thereof, or if it has
no par value, the stated or assigned value thereof, a description of
the respective voting rights, preferences, conversion and exchange
rights, rights to dividends, profits, or capital of each class, with re-
spect to each other class, including the retirement and liquidation
rights or values thereof;
(10) a statement of the securities, if any, covered by options
outstanding or to be created in connection with the security to be
offered, together with the names and addresses of all persons, if
any, to be allotted more than 10 per centum in the aggregate of
such options;
(11) the amount of capital stock of each class issued or in-
cluded in the shares of stock to be offered;
(12) the amount of the funded debt outstanding and to be cre-
ated by the security to be offered, with a brief description of the
date, maturity, and character of such debt, rate of interest, char-
acter of amortization provisions, and the security, if any, therefor.
If substitution of any security is permissible, a summarized state-
ment of the conditions under which such substitution is permitted.
If substitution is permissible without notice, a specific statement to
that effect;
(13) the specific purposes in detail and the approximate
amounts to be devoted to such purposes, so far as determinable, for
which the security to be offered is to supply funds, and if the funds
are to be raised in part from other sources, the amounts thereof
and the sources thereof, shall be stated;
(14) the remuneration, paid or estimated to be paid, by the
issuer or its predecessor, directly or indirectly, during the past year
and ensuing year to (a) the directors or persons performing similar
functions, and (b) its officers and other persons, naming them
wherever such remuneration exceeded $25,000 during any such
year;
(15) the estimated net proceeds to be derived from the security
to be offered;
(16) the price at which it is proposed that the security shall be
offered to the public or the method by which such price is computed
and any variation therefrom at which any portion of such security
is proposed to be offered to any persons or classes of persons, other
than the underwriters, naming them or specifying the class. A vari-

ation in price may be proposed prior to the date of the public offer-
ing of the security, but the Commission shall immediately be noti-
fied of such variation;
(17) all commissions or discounts paid or to be paid, directly or
indirectly, by the issuer to the underwriters in respect of the sale
of the security to be offered. Commissions shall include all cash, se-
curities, contracts, or anything else of value, paid, to be set aside,
disposed of, or understandings with or for the benefit of any other
persons in which any underwriter is interested, made, in connec-
tion with the sale of such security. A commission paid or to be paid
in connection with the sale of such security by a person in which
the issuer has an interest or which is controlled or directed by, or
under common control with, the issuer shall be deemed to have
been paid by the issuer. Where any such commission is paid the
amount of such commission paid to each underwriter shall be stat-
ed;
(18) the amount or estimated amounts, itemized in reasonable
detail, of expenses, other than commissions specified in paragraph
(17) of this schedule, incurred or borne by or for the account of the
issuer in connection with the sale of the security to be offered or
properly chargeable thereto, including legal, engineering, certifi-
cation, authentication, and other charges;
(19) the net proceeds derived from any security sold by the
issuer during the two years preceding the filing of the registration
statement, the price at which such security was offered to the pub-
lic, and the names of the principal underwriters of such security;
(20) any amount paid within two years preceding the filing of
the registration statement or intended to be paid to any promoter
and the consideration for any such payment;
(21) the names and addresses of the vendors and the purchase
price of any property, or good will, acquired or to be acquired, not
in the ordinary course of business, which is to be defrayed in whole
or in part from the proceeds of the security to be offered, the
amount of any commission payable to any person in connection
with such acquisition, and the name or names of such person or
persons, together with any expense incurred or to be incurred in
connection with such acquisition, including the cost of borrowing
money to finance such acquisition;
(22) full particulars of the nature and extent of the interest, if
any, of every director, principal executive officer, and of every
stockholder holding more than 10 per centum of any class of stock
or more than 10 per centum in the aggregate of the stock of the
issuer, in any property acquired, not in the ordinary course of busi-
ness of the issuer, within two years preceding the filing of the reg-
istration statement or proposed to be acquired at such date;
(23) the names and addresses of counsel who have passed on
the legality of the issue;
(24) dates of and parties to, and the general effect concisely
stated of every material contract made, not in the ordinary course
of business, which contract is to be executed in whole or in part at
or after the filing of the registration statement or which contract
has been made not more than two years before such filing. Any
management contract or contract providing for special bonuses or
Sched. A SECURITIES ACT OF 1933 90
profit-sharing arrangements, and every material patent or contract

for a material patent right, and every contract by or with a public
utility company or an affiliate thereof, providing for the giving or
receiving of technical or financial advice or service (if such contract
may involve a charge to any party thereto at a rate in excess of
$2,500 per year in cash or securities or anything else of value),
shall be deemed a material contract;
(25) a balance sheet as of a date not more than ninety days
prior to the date of the filing of the registration statement showing
all of the assets of the issuer, the nature and cost thereof, when-
ever determinable, in such detail and in such form as the Commis-
sion shall prescribe (with intangible items segregated), including
any loan in excess of $20,000 to any officer, director, stockholder
or person directly or indirectly controlling or controlled by the
issuer, or person under direct or indirect common control with the
issuer. All the liabilities of the issuer in such detail and such form
as the Commission shall prescribe, including surplus of the issuer
showing how and from what sources such surplus was created, all
as of a date not more than ninety days prior to the filing of the
registration statement. If such statement be not certified by an
independent public or certified accountant, in addition to the bal-
ance sheet required to be submitted under this schedule, a similar
detailed balance sheet of the assets and liabilities of the issuer, cer-
tified by an independent public or certified accountant, of a date
not more than one year prior to the filing of the registration state-
ment, shall be submitted;
(26) a profit and loss statement of the issuer showing earnings
and income, the nature and source thereof, and the expenses and
fixed charges in such detail and such form as the Commission shall
prescribe for the latest fiscal year for which such statement is
available and for the two preceding fiscal years, year by year, or,
if such issuer has been in actual business for less than three years,
then for such time as the issuer has been in actual business, year
by year. If the date of the filing of the registration statement is
more than six months after the close of the last fiscal year, a state-
ment from such closing date to the latest practicable date. Such
statement shall show what the practice of the issuer has been dur-
ing the three years or lesser period as to the character of the
charges, dividends or other distributions made against its various
surplus accounts, and as to depreciation, depletion, and mainte-
nance charges, in such detail and form as the Commission shall
prescribe, and if stock dividends or avails from the sale of rights
have been credited to income, they shall be shown separately with
a statement of the basis upon which the credit is computed. Such
statement shall also differentiate between any recurring and non-
recurring income and between any investment and operating in-
come. Such statement shall be certified by an independent public
or certified accountant;
(27) if the proceeds, or any part of the proceeds, of the security
to be issued is to be applied directly or indirectly to the purchase
of any business, a profit and loss statement of such business cer-
tified by an independent public or certified accountant, meeting the
requirements of paragraph (26) of this schedule, for the three pre-
ceding fiscal years, together with a balance sheet, similarly cer-
tified, of such business, meeting the requirements of paragraph

(25) of this schedule of a date not more than ninety days prior to
the filing of the registration statement or at the date such business
was acquired by the issuer if the business was acquired by the
issuer more than ninety days prior to the fiing of the registration
statement;
(28) a copy of any agreement or agreements (or, if identical
agreements are used, the forms thereof) made with any under-
writer, including all contracts and agreements referred to in para-
graph (17) of this schedule;
(29) a copy of the opinion or opinions of counsel in respect to
the legality of the issue, with a translation of such opinion, when
necessary, into the English language;
(30) a copy of all material contracts referred to in paragraph
(24) of this schedule, but no disclosure shall be required of any por-
tion of any such contract if the Commission determines that disclo-
sure of such portion would impair the value of the contract and
would not be necessary for the protection of the investors;
(31) unless previously filed and registered under the provisions
of this title, and brought up to date, (a) a copy of its articles of in-
corporation, with all amendments thereof and of its existing bylaws
or instruments corresponding thereto, whatever the name, if the
issuer be a corporation; (b) copy of all instruments by which the
trust is created or declared, if the issuer is a trust; (c) a copy of
its articles of partnership or association and all other papers per-
taining to its organization, if the issuer is a partnership, unincor-
porated association, joint-stock company, or any other form of orga-
nization; and
(32) a copy of the underlying agreements or indentures affect-
ing any stock, bonds, or debentures offered or to be offered.
In case of certificates of deposit, voting trust certificates, collat-
eral trust certificates, certificates of interest or shares in unincor-
porated investment trusts, equipment trust certificates, interim or
other receipts for certificates, and like securities, the Commission
shall establish rules and regulations requiring the submission of
information of a like character applicable to such cases, together
with such other information as it may deem appropriate and nec-
essary regarding the character, financial or otherwise, of the actual
issuer of the securities and/or the person performing the acts and
assuming the duties of depositor or manager.
(May 27, 1933, ch. 38, title I, schedule A, 48 Stat. 88; Pub. L. 105-
353, title III, Sec. 301(a)(6), Nov. 3, 1998, 112 Stat. 3235.)
AMENDMENTS
1998 Schedule A, par. (28). Pub. L. 105-353 substituted

identical for identic.

1950, 15 F.R. 3175, 64 Stat. 1265.
Sched. B SECURITIES ACT OF 1933 92
SCHEDULE B
(1) Name of borrowing government or subdivision thereof;
(2) specific purposes in detail and the approximate amounts to
be devoted to such purposes, so far as determinable, for which the
security to be offered is to supply funds, and if the funds are to be
raised in part from other sources, the amounts thereof and the
sources thereof, shall be stated;
(3) the amount of the funded debt and the estimated amount
of the floating debt outstanding and to be created by the security
to be offered, excluding intergovernmental debt, and a brief de-
scription of the date, maturity, character of such debt, rate of inter-
est, character of amortization provisions, and the security, if any,
therefor. If substitution of any security is permissible, a statement
of the conditions under which such substitution is permitted. If
substitution is permissible without notice, a specific statement to
that effect;
(4) whether or not the issuer or its predecessor has, within a
period of twenty years prior to the filing of the registration state-
ment, defaulted on the principal or interest of any external secu-
rity, excluding intergovernmental debt, and, if so, the date,
amount, and circumstances of such default, and the terms of the
succeeding arrangement, if any;
(5) the receipts, classified by source, and the expenditures,
classified by purpose, in such detail and form as the Commission
shall prescribe for the latest fiscal year for which such information
is available and the two preceding fiscal years, year by year;
(6) the names and addresses of the underwriters;
(7) the name and address of its authorized agent, if any, in the
United States;
(8) the estimated net proceeds to be derived from the sale in
the United States of the security to be offered;
(9) the price at which it is proposed that the security shall be
offered in the United States to the public or the method by which
such price is computed. A variation in price may be proposed prior
to the date of the public offering of the security, but the Commis-
sion shall immediately be notified of such variation;
(10) all commissions paid or to be paid, directly or indirectly,
by the issuer to the underwriters in respect of the sale of the secu-
rity to be offered. Commissions shall include all cash, securities,
contracts, or anything else of value, paid, to be set aside, disposed
of, or understandings with or for the benefit of any other persons
in which the underwriter is interested, made, in connection with
the sale of such security. Where any such commission is paid, the
amount of such commission paid to each underwriter shall be stat-
ed;
(11) the amount or estimated amounts, itemized in reasonable
detail, of expenses, other than the commission specified in para-
graph (10) of this schedule, incurred or borne by or for the account
of the issuer in connection with the sale of the security to be of-
fered or properly chargeable thereto, including legal, engineering,
certification, and other charges;
(12) the names and addresses of counsel who have passed upon
the legality of the issue;
93 SECURITIES ACT OF 1933 Sched. B
(13) a copy of any agreement or agreements made with any un-

derwriter governing the sale of the security within the United
States; and
(14) an agreement of the issuer to furnish a copy of the opinion
or opinions of counsel in respect to the legality of the issue, with
a translation, where necessary, into the English language. Such
opinion shall set out in full all laws, decrees, ordinances, or other
acts of Government under which the issue of such security has
been authorized.
(May 27, 1933, ch. 38, title I, schedule B, 48 Stat. 91.)


1950, 15 F.R. 3175, 64 Stat. 1265.

Securities Act of 1933: S Mended Through Approved Pril

Uploaded by

Copyright:

Available Formats

Securities Act of 1933: S Mended Through Approved Pril

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Securities Act of 1933: S Mended Through Approved Pril

Uploaded by

Copyright:

Available Formats

SECURITIES ACT OF 1933

[AS AMENDED THROUGH P.L. 112-106, APPROVED APRIL 5, 2012]

SEC. 1. This title may be cited as the Securities Act of 1933.

(May 27, 1933, ch. 38, title I, Sec. 1, 48 Stat. 74.)

SEC. 2. (a) DEFINITIONS.When used in this title, unless the

in any profit-sharing agreement, collateral-trust certificate,

based or is referenced, an affiliate of the issuer, or an under-

any State, Territory, or the District of Columbia, or within the

missioner, or a similar official or agency, of a State or territory

of that fiscal year shall continue to be deemed an emerging

The Investment Company Act of 1940, referred to in text,

The Securities Exchange Act of 1934, referred to in text,

2012 Subsec. (a)(3). Pub. L. 112-106, Sec. 105(a), added

1987 Par. (5). Pub. L. 100-181, Sec. 201, substituted

Pub. L. 112-106, title I, Sec. 101(d), Apr. 5, 2012, 126 Stat.

Amendment by Pub. L. 91-547 effective Dec. 14, 1970, see

Amendment by act Aug. 10, 1954, ch. 667, effective 60

For transfer of functions of Securities and Exchange Com-

SEC. 2A. SWAP AGREEMENTS.

The Securities Exchange Act of 1934, referred to in text,

2010 Subsec. (a). Pub. L. 111-203, Sec. 762(c)(1)(A), re-

Amendment by section 761(c)(1) of Pub. L. 111-203 effec-

SEC. 3. (a) Except as hereinafter expressly provided, the provi-

of a contract issued by an insurance company, which interest,

which have been or are to be used for current transactions, and

any court, or by any official or agency of the United States, or

in this section, if it finds that the enforcement of this title with

(4) PERIODIC DISCLOSURES.Upon such terms and condi-

The Internal Revenue Code of 1954, referred to in text,

2012 Subsec. (b). Pub. L. 112-106, Sec. 401(a), des-

2010 Subsec. (a)(4). Pub. L. 111-203, Sec. 985(a)(1), sub-

which were funded by annuity contracts described in section

duciary capacity interests or participations in bank collective

EFFECTIVE DATE OF 2010 AMENDMENT

Amendment by Pub. L. 111-203 effective 1 day after July

Amendment by section 221(a) of Pub. L. 106-102 effective

Amendments by Pub. L. 104-62 applicable in all adminis-

Amendments by Pub. L. 97-261 effective on the 60th day

Amendment by Pub. L. 95-598 effective Oct. 1, 1979, see

Amendments by section 308(a) of Pub. L. 94-210 effective

Amendments by section 6 of Pub. L. 91-657 applicable with

Amendment by act Aug. 10, 1954, effective 60 days after

Section 214 of act Feb. 4, 1887 (the Interstate Commerce

For transfer of functions of Securities and Exchange Com-

SEC. 4. (a) The provisions of section 5 shall not apply to

graph does not exceed the amount allowed under section

(C) that person or any person associated with that per-

The Jumpstart Our Business Startups Act, referred to in

2012 Pub. L. 112-106, Sec. 201(b)(1), (c)(1), made iden-

because of intervening amendments by Pub. L. 112-106, Sec.

Amendment by Pub. L. 111-203 effective 1 day after July

Amendment by Pub. L. 94-29 effective June 4, 1975, see

Amendment by Pub. L. 88-467 effective Aug. 20, 1964, see

Amendment by act Aug. 10, 1954, ch. 667, effective 60

For transfer of functions of Securities and Exchange Com-

SEC. 4A. REQUIREMENTS WITH RESPECT TO CERTAIN SMALL

all investors to cancel their commitments to invest, as the

(E) a description of the stated purpose and intended