Code of Federal Regulations: Containing a Codification of Documents of ...

on its fitness to participate in the market for 504 debentures or 505 certificates, such broker or dealer may be suspended while the charge is pending. Upon conviction, participation may be terminated.

(iii) When such broker or dealer has suffered an adverse final civil judgment, holding that such broker or dealer has committed a breach of trust or violation of law or regulation protecting the integrity of business transactions or relationships, participation in the market for 504 debentures or 505 certificates may be terminated.

(iv) When such broker or dealer has failed to make full disclosure of the information required by § 108.505(j) of this part, such broker's or dealer's participation in the market for 504 debentures or 505 certificates may be terminated.

(2) Proceedings to terminate such broker's or dealer's participation in the market for such certificates shall be conducted in accordance with part 134 of this title. SBA may, for any of the reasons stated above, suspend the privilege of any broker or dealer to participate in this market. SBA shall give written notice at least ten (10) business days prior to the effective date of such suspension. Such notice shall inform the broker or dealer of the opportunity for a hearing pursuant to part 134 of this chapter. The Assistant Administrator of the Office of Hearings and Appeals or an Administrative Law Judge of such office shall be the reviewing official for purposes of §§ 134.32(b)(7) and 134.34.

[51 FR 20782, June 6, 1986, as amended at 52 FR 27679, July 23, 1987; 53 FR 1468, Jan. 20, 1988; 53 FR 10243, Mar. 30, 1988; 54 FR 15920, Apr. 20, 1989]

ASSISTANCE BY OTHER GOVERNMENT AGENCIES

§ 108.506 Restriction on development company assistance.

Prior to May 1, 1991 no department or agency of the United States government which provides funding to any State or local development company (including a 503 company) shall impose any condition, priority or restriction upon the type of small business which receives financing under

this part nor shall it include any condition or impose any requirement, directly or indirectly, upon any recipient of assistance under this part: Provided, That the foregoing shall not affect any such conditions, priorities or restrictions if the department or agency also provides all of the financial assistance to be delivered by the development company to the small business and such conditions, priorities or restrictions are limited solely to the financial assistance so provided. On or after May 1, 1991, no development company may accept funding from any source, including but not limited to any department or agency of the United States Government, if such funding includes any conditions, priorities or restrictions upon the types of small businesses to which they may provide financial assistance under this part or if it includes any conditions or imposes any requirements, directly or indirectly, upon any recipient of assistance under this part: Provided, That the foregoing shall not affect any such conditions, priorities or restrictions if the department or agency also provides all of the financial assistance to be delivered by the development company to the small business and such conditions, priorities or restrictions are limited solely to the financial assistance so provided.

[54 FR 6267, Feb. 9, 1989; 54 FR 11937, Mar. 23, 1989]

PART 110-INVESTIGATIONS; SMALL BUSINESS INVESTMENT COMPANIES

Sec.

110.1 Scope of rules.

110.2 Right to copy of data or transcript of testimony.

110.3 Counsel for witnesses in investiga

tions.

110.4 Suspension or disbarment of counsel. 110.5 Information obtained in investigations.

110.6 Service of subpoena.

110.7 Witness fees.

AUTHORITY: Sec. 308, 72 Stat. 694, as amended, sec. 310, 75 Stat. 755, as amended (15 U.S.C. 687, 687b).

SOURCE: 27 FR 464, Jan. 17, 1962, unless otherwise noted.

(C) Brokers and dealers in 505 Certificates and commissions, fees or discounts granted to such brokers of or dealers in such Certificates, and

(D) Other information as SBA may from time to time prescribe.

(v) Receive semi-annual payments of amounts due on 504 Debentures, or amounts paid under voluntary prepayments or prepayments by SBA pursuant to § 108.504 (f), (h) and (j) of this part.

(vi) Make periodic payments to registered holders of 504 Debentures or 505 Certificates as scheduled or required by their terms and pay all amounts required to be paid upon prepayment of 504 Debentures.

(vii) Before any resale of such Debenture(s) or Certificate(s) is recorded on the registry, assure that the seller has disclosed to each purchaser in writing information required to be disclosed by § 108.505(j) of this part. Each Agent and Trustee shall provide a fidelity bond or insurance in such amount as necessary to fully protect the interest of the government.

(4)

Central servicing agent. See § 108.504(e) of this part.

(g) Pooler. Each Pooler shall:

(1) Be regulated by a Federal financial regulatory agency, or be a member of the National Association of Securities Dealers (NASD);

(2) Have a net worth in accordance with the requirements of the appropriate regulatory authority and have the financial capability to market 504 Debentures and 505 Certificates;

(3) Maintain its books and records in accordance with generally accepted accounting principles and in accordance with the guidelines promulgated by the regulatory body governing its activities;

(4) Conduct its business operations in accordance with accepted securities or banking industry practices, ethics, and standards and applicable SBA regulations;

(5) Be in good standing with SBA as determined by the SBA Associate Administrator for Finance and Investment (see paragraph (1) of this section) and with any Federal regulatory body governing the entity's activities or with NASD, if it is a member.

(h) Access to records. The agents appointed pursuant to §§ 108.504(e) and 108.505(f) shall make all books, records, and related materials associated with 504 Debentures or 505 Certificates available to SBA for review and copying purposes. Such access shall be at the place of business during normal business hours.

(i) Fees and charges. In addition to those fees delineated in § 108.503-6 of this part, fiscal or transfer Agent fees and other fees and charges necessary to market and service debentures sold pursuant to § 108.504(b) of this part or 505 Certificates pursuant to

§ 108.505(b) of this part may be assessed to the recipient of the 504 loan or charged to the purchaser of the debenture or certificate. Such fees shall be approved by SBA and shall be published from time to time in the FEDERAL REGISTER.

(j) Disclosure statement. Prior to any sale of a 505 Certificate, the seller, or the broker or dealer as agent for the seller, shall in the form prescribed or approved by SBA, disclose to the purchaser of such certificate information on the terms, conditions and yield of such certificate including information on any premium or other characteristics not guaranteed by SBA.

(k) Prohibition. In addition to § 108.4(d) of this part, a 504 loan recipient or any associate of such small concern, as defined in § 108.2 of this part, may not purchase the Debenture which funded its 504 loan. In such cases, SBA shall have the option of canceling its guarantee of such 504 Debenture. Also see §§ 108.7 and 108.50315(e) of this part.

(1) Suspension or revocation of brokers and dealers. (1) SBA may exclude from the sale and all other dealings in, 504 debentures or 505 certificates, any broker or dealer:

(i) If such broker's or dealer's authority to engage in the securities business has been revoked or suspended by a supervisory agency. When such authority has been suspended, such broker or dealer will be suspended by SBA for the duration of such suspension by the supervisory agency.

(ii) If such broker or dealer has been indicted or otherwise formally charged with a misdemeanor or felony bearing

[51 FR 20782, June 6, 1986, as amended at 52 FR 27679, July 23, 1987; 53 FR 1468, Jan. 20, 1988; 53 FR 10243, Mar. 30, 1988; 54 FR 15920, Apr. 20, 1989]

ASSISTANCE BY OTHER GOVERNMENT AGENCIES

§ 108.506 Restriction on development company assistance.

§ 110.1 Scope of rules.

(a) The following rules govern investigations under section 310(a) of the Act. Where, from examinations made pursuant to section 310(b) of the Small Business Investment Act, as amended, complaints received from members of the public, examination of filings and reports made with the Administration, or otherwise, it appears that there may be a violation of the Small Business Investment Act, as amended, or the regulations thereunder, or where it appears that there is a likelihood that a violation has been or is about to be committed, the Administration may order a formal investigation if it is deemed necessary. Unless otherwise ordered by the Administration, the investigation is nonpublic and the reports thereon are for the Administration's use only.

(b) Where it appears after investigation or otherwise that there has been a violation of the provisions of the Small Business Investment Act, as amended, or SBA regulations pursuant thereto, the Administration is authorized to institute adjudicative proceedings for (1) the revocation or suspension of the license of a licensee for false statements knowingly made or willful and repeated violations, under section 309(a) of the Act; (2) the entry of cease and desist orders against a licensee or other person for completed or incipient violations, under section 309(b) of the Act; and (3) the entry of an order under section 313 of the Act removing from office a director or officer of a licensee for willfully and knowingly committing a substantial violation or substantial breach of fiduciary duty which involves personal dishonesty (the respondent also being subject to suspension from office in order to protect the licensee or the interests of SBA, pending completion of formal removal proceedings). Such proceedings shall be conducted in accordance with the provisions of part 134 of this chapter by an Administrative Law Judge of the Office of Hearings and Appeals, who shall issue an initial decision in the case. The Administrator shall be the reviewing official for purposes of § 134.34. The respondent's failure to file a timely motion in accordance with §§ 134.19

and 134.21, requesting that the matter be scheduled for an oral hearing, shall constitute waiver of the right to an oral hearing but shall not prevent the submission of written information and argument for the record in accordance with the provisions of part 134. By service of written notice under section 313(e) of the Act, SBA may also suspend from office a director or officer of a licensee who is charged with a felony in any indictment, information, or complaint authorized by a U.S. attorney, such suspension from office to remain in effect pending the final disposition of the criminal charges involved. SBA may bring a civil action under section 308(d) of the Act for a judicial determination of licensee's violations as a basis for SBA's revocation of its license. A civil action may be instituted by SBA under section 315(a) of the Act for the recovery of civil penalties based on licensee's failure to file reports required by any regulation or written directive of the Administrator. SBA may institute a civil action under section 311 of the Act for injunctive relief against a licensee or other person which has engaged or is about to engage in acts or practices constituting violations and, wherever appropriate, for the appointment of a receiver to administer the licensee's assets under the direction and pursuant to the exclusive jurisdiction of the court. SBA may also bring a civil action under section 311 or administrative proceedings against a director, officer, or other principal of a licensee who is ineligible to serve for the reasons stated in section 314(c) of the Act.

[32 FR 6091, Apr. 18, 1967, as amended at 49 FR 33628, Aug. 24, 1984]

§ 110.2 Right to copy of data or transcript of testimony.

A person who has submitted data or evidence in such investigations shall be entitled to retain or procure a copy of his data or a transcript of his testimony on payment of the prescribed fees; provided, however, in the case of nonpublic investigations such person shall file a written request stating the reason for desiring to procure such copy or transcript. The Administration

may in any nonpublic investigatory proceeding for good cause deny such request. In the latter event, such person, upon proper identification, shall have the right to inspect the official transcript of his testimony.

§ 110.3 Counsel for witnesses in investigations.

Any person compelled to appear in person at an investigation designated in paragraph (a) of § 110.1 may be accompanied, represented and advised by counsel, but such counsel may not represent any other witness or any person being investigated, unless permitted in the discretion of the officer conducting the investigation or of the Administration upon being satisfied that there is no conflict of interest in such representation and that the presence of identical counsel for other witnesses or persons being investigated would not tend to hinder the course of the investigation.

§ 110.4 Suspension or disbarment of counsel.

The Administrator for good cause shown may, in accordance with the procedures set forth in part 134 of this chapter, reprimand, suspend or disbar counsel from practice before the Administration because of contemptuous conduct, dilatory tactics or other improper conduct in the course of an investigation.

[29 FR 15199, Nov. 11, 1964, as amended at 49 FR 33629, Aug. 24, 1984]

§ 110.5 Information obtained in investigations.

Information or documents obtained by the Administration in the course of any investigation shall, unless made a matter of public record, be deemed confidential. Officers and employees are hereby prohibited from making such confidential information or documents or any other non-public records of the Administration available to anyone other than an officer or employee of the Administration, unless the Administration authorizes the disclosure of such information or the production of such documents as not being contrary to the public interest. Any officer or employee who is served with a subpoena requiring the disclo

sure of such information or the production of such documents shall appear in court and, unless the authorization described in the preceding sentence shall have been given, shall respectfully decline to disclose the information or produce the documents called for, basing his refusal upon this section. Any officer or employee who is served with such a subpoena shall promptly advise the Administrator of the service of such subpoena, the nature of the information or documents sought, and any circumstances which may bear upon the desirability of making available such information or documents.

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