Securities Lawyer's Deskbook
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The

Sarbanes-Oxley Act of 2002





Section 604 -- Qualifications of Associated Persons of Brokers and Dealers


  1. Brokers and Dealers. Section 15(b)(4) of the Securities Exchange Act of 1934 is amended--

    1. by striking subparagraph (F) and inserting the following:

      "(F) is subject to any order of the Commission barring or suspending the right of the person to be associated with a broker or dealer;"; and



    2. in subparagraph (G), by striking the period at the end and inserting the following: "; or

      "(H) is subject to any final order of a State securities commission (or any agency or officer performing like functions), State authority that supervises or examines banks, savings associations, or credit unions, State insurance commission (or any agency or office performing like functions), an appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))), or the National Credit Union Administration, that--
        "(i) bars such person from association with an entity regulated by such commission, authority, agency, or officer, or from engaging in the business of securities, insurance, banking, savings association activities, or credit union activities; or
        "(ii) constitutes a final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct.".




  2. Investment Advisers. Section 203(e) of the Investment Advisers Act of 1940 is amended--

    1. by striking paragraph (7) and inserting the following:

      "(7) is subject to any order of the Commission barring or suspending the right of the person to be associated with an investment adviser;";



    2. in paragraph (8), by striking the period at the end and inserting "; or"; and

    3. by adding at the end the following:

      "(9) is subject to any final order of a State securities commission (or any agency or officer performing like functions), State authority that supervises or examines banks, savings associations, or credit unions, State insurance commission (or any agency or office performing like functions), an appropriate Federal banking agency (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))), or the National Credit Union Administration, that--
        "(A) bars such person from association with an entity regulated by such commission, authority, agency, or officer, or from engaging in the business of securities, insurance, banking, savings association activities, or credit union activities; or
        "(B) constitutes a final order based on violations of any laws or regulations that prohibit fraudulent, manipulative, or deceptive conduct.".



  3. Conforming Amendments.

    1. Securities Exchange Act of 1934. The Securities Exchange Act of 1934 is amended--

      1. in section 3(a)(39)(F)--

        1. by striking "or (G)" and inserting "(H), or (G)"; and

        2. by inserting ", or is subject to an order or finding," before "enumerated";

      2. in each of section 15(b)(6)(A)(i), paragraphs (2) and (4) of section 15B(c), and subparagraphs (A) and (C) of section 15C(c)(1)--

        1. by striking "or (G)" each place that term appears and inserting "(H), or (G)"; and

        2. by striking "or omission" each place that term appears, and inserting ", or is subject to an order or finding,"; and

      3. in each of paragraphs (3)(A) and (4)(C) of section 17A(c)--

        1. by striking "or (G)" each place that term appears and inserting "(H), or (G)"; and

        2. by inserting ", or is subject to an order or finding," before "enumerated" each place that term appears.

    2. Investment Advisers Act of 1940. Section 203(f) of the Investment Advisers Act of 1940 is amended--

      1. by striking "or (8)" and inserting "(8), or (9)"; and

      2. by inserting "or (3)" after "paragraph (2)".


Legislative History


July 30, 2002, 107 P.L. 204, Title VI, § 604, 116 Stat. 745.

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