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LIABILITY FOR MISLEADING STATEMENTS
SEC. 17. (a) Any person, including any director, officer, accountant, or other expert, who shall make or be responsible for the making of any statement in any application, report, or document filed pursuant to this Act or any rule or regulation thereunder, which statement is, in the light of the circumstances under which it was made, false or misleading in respect of any matter sufficiently important to influence the judgment of an average investor shall be liable to any person (not knowing that such statement was false or misleading) who shall have purchased or sold a security to which such statement related, and the person injured thereby may sue in law or in equity in any court of competent jurisdiction for the damages caused by reliance upon such statement, unless the person sued shall prove that he acted in good faith and did not believe that such statement was false or misleading.
(b) Every person who becomes liable to make 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 become liable was, and the other was not, guilty of fraudulent misrepresentation.
(c) No action shall be maintained to enforce any liability created under this section unless brought within two years after the cause of action accrued.
DISCIPLINARY POWERS OVER EXCHANGES
SEC. 18. The Commission is authorized—.
(1) After appropriate notice and opportunity for hearing, by order to suspend for a period not exceeding twelve months or to withdraw altogether the registration of a national securities exchange if the Commission finds that such exchange has violated any provision of this Act or of the rules and regulations thereunder or has failed to enforce, so far as is within its power, compliance therewith by a member or an issuer of a security registered thereon;
(2) After appropriate notice and opportunity for hearing, by order to suspend for a period not exceeding twelve months or to withdraw altogether the registration of a security if the Commission finds that the issuer of such security has failed to comply with any provision of this Act or the rules and regulations made thereunder;
(3) After appropriate notice and opportunity for hearing by order to suspend for a period not exceeding twelve months or to expel altogether from a national securities exchange any member or officer thereof whom the Commission finds has violated any provision of this Act or the rules and regulations thereunder or has effected any transaction for any other person who as he has reason to believe is violating in respect of such transaction any provision of this Act or the rules and regulations thereunder.
(4) If in its opinion the public interest so requires, summarily to suspend trading in any registered security for a period not exceeding ten days, and with the approval of the President, summarily to suspend trading upon any registered exchange for a period not exceeding ninety days.
(5) If after appropriate request in writing to a national securities exchange that such exchange should effect on its own behalf specified changes in its rules and practices, and after appropriate notice and opportunity for hearing, the Commission determines that such exchange has not made the changes so requested and that such changes are necessary for the protection of investors or for the insuring of fair dealing in securities traded in upon such exchange or for the insuring of fair administration of such exchange, to alter or add to the rules, regulations, and practices of such exchange in respect of such matters as the classification of members and the methods of election of officers and committees to insure a fair representation of the membership; the suspension, expulsion, or disciplining of members; safeguards in respect of the financial responsibility of members and adequate provision against the evasion of financial responsibility through the use of corporate forms or special partnerships; the limitation or prohibition of the registration or trading in any security within a specified period after the issuance or primary distribution thereof; the listing or striking from listing of any security; hours of trading; the manner, method, and place of soliciting business; fictitious or numbered ac counts; the time and method of making settlements, payments, and deliveries
by members and customers; the reporting of transactions on the exchange and upon tickers maintained by or with the consent of the exchange, including the method of reporting short sales, stopped sales, sales of securities of issuers in default, in bankruptcy or receivership, and sales involving other special circumstances, the fixing of uniform rates of commission, interest and other charges; minimum units of trading; odd-lot purchases and sales, minimum deposits on margin accounts.
LIABILITIES OF CONTROLLING PERSONS
SEC. 19. (a) Every person who, by or through stock ownership, agency, or otherwise, or who pursuant to or in connection with any agreement or understanding with one or more other persons by or through stock ownership, agency, or otherwise, controls any person liable under any provision of this Act or of any rule or regulation thereunder 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 acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.
(b) It shall be unlawful for any person, directly or indirectly, to do any act or thing which it would be unlawful for such person to do under the provisions of this Act or any rule or regulation thereunder through or by means of any other person who is controlled by such person (or by such person and one or more other persons), by or through stock ownership, agency, or otherwise, for the purpose of avoiding any provision of this Act or any rule or regulation made thereunder.
(c) It shall be unlawful for any director, officer, or security holder of any issuer of any security registered on a national securities exchange to hinder, delay, or obstruct the making or filing of any document or report required to be filed under this Act or any rule or regulation thereunder.
INVESTIGATION; INJUNCTION AND PROSECUTION OF OFFENSES
SEC. 20. (a) Whenever the Commission, either upon complaint or otherwise, shall be of the opinion that in the public interest it should make an investigation to determine whether any person has violated or is about to violate any provision of this Act, or of any rule or regulation thereunder, it may investigate such facts, and it may, in its discretion, either require or permit such person, or any person making such complaint, to file with it a statement in writing, under oath, or otherwise, as to all the facts and circumstances concerning the subject matter which it believes to be in the public interest to investigate.
(b) For the purpose of all investigations which, in the opinion of the Commission, are necessary and proper for the enforcement of this Act, any member of the Commission or any officer or officers designated by it are empowered to administer oaths and affirmations, subpena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, or other records which the Commission deems relevant or material to the inquiry. Such attendance of witnesses and the production of such records may be required from any place in the United States or any State at any designated place of hearing. Such power of subpena and examination shall not abate or terminate by reason of any action or proceeding brought by the Commission under this Act. The Commission shall have authority to investigate and in its discretion to publish information concerning any facts. conditions, or practices which it may deem necessary and proper as an aid in the prescribing of rules and regulations or the recommendation of further legislation concerning exchanges. If any person subpenaed to attend any inquiry fails to obey the command of his subpena without reasonable cause, or if a person in attendance upon such inquiry shall without reasonable cause refuse to be sworn or to be examined or to answer a question or to produce any books, papers, correspondence, memoranda, or other records when ordered so to do by the officer conducting such inquiry, he shall be guilty of a misdemeanor and shall, upon conviction, be fined not more than $1,000 or imprisoned not more than one year, or both.
(c) Whenever it shall appear to the Commission that any person is engaged or about to engage in any acts or practices which constitute or will constitute
a violation of the provisions of this Act, or of any rule or regulation prescribed under authority thereof, it may in its discretion bring an action in any district court of the United States, United States Court of any Territory, or the Supreme Court of the District of Columbia to enjoin such acts or practices, and upon a proper showing a permanent or temporary injunction or restraining order shall be granted without bond. The Commission may transmit such evidence as may be available concerning such acts or practices to the Attorney General, who may, in his discretion, institute the necessary criminal proceedings under this Act. Any such criminal proceeding may be brought in the district wherein the violation complained of occurred.
(d) Upon application of the Commission the district courts of the United States, the United States courts of any Territory, and the Supreme Court of the District of Columbia shall also have jurisdiction to issue writs of mandamus commanding any person to comply with the provisions of this Act or any order of the Commission made in pursuance thereof.
HEARINGS BY COMMISSION
SEC. 21. Hearings may be public and may be held before the Commission, any member or members thereof or an officer or officers of the Commission desig. nated by it, and appropriate records thereof shall be kept,
RULES AND REGULATIONS
SEC. 22. The Commission, the Comptroller of the Currency, the Federal Reserve Board, and the Interstate Commerce Commission shall, respectively, have power to make such rules and regulations as may be necessary for the execution of the functions granted to them under this Act and may for that purpose classify issuers, securities, exchanges, and other persons or subject matters within their jurisdiction. Their rules and regulations shall take effect at such time after publication as they, either by order in special cases or by rules or regulations of general application, shall prescribe.
PUBLIC CHARACTER OF INFORMATION
SEC. 23. The information contained in any application, report, or document filed with the Commission may be made available to the public whenever in the judgment of the Commission a disclosure of such information is in the public interest, and copies thereof, photostat or otherwise, may be furnished to any applicant at such reasonable charge as the Commission may prescribe.
COURT REVIEW OF ORDERS
SEC. 24. (a) Any person aggrieved by an order issued by the Commission in a proceeding under this act to which such person is a party may obtain a review of such order in the Circuit Court of Appeals of the United States, within any circuit wherein such person resides or has his principal place of business, or in the Court of Appeals of 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 may be modified or be set aside in whole or in part. A copy of such petition shall be forthwith served upon the Commission, and thereupon the Commission shall certify and file in the court a transcript of the record upon which the order complained of was entered. 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 conclusive. 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 reasonable grounds for failure to adduce such evidence in the hearing before the Commission, the court may order such additional evidence 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 supported 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 decree, 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 sections 239 and 240 of the Judicial Code, as amended (U.S.C., title 28, secs. 346 and 347).
(b) The commencement of proceedings under subsection (a) shall not, unless specifically ordered by the court, operate as a stay of the Commission's order.
SEC. 25. Any person who willfully violates any provision of this Act or any rule or regulation made thereunder, or any undertaking filed thereunder, or any person who willfully and knowingly makes, or any person, including a director, officer, accountant, or other expert thereof who willfully and knowingly is responsible for any statement in any application, report, or document required to be filed under this Act or any rule or regulation thereunder or in any communication, oral or otherwise, subject to the provisions of section 8(a) (5), which statement is, in the light of the circumstances under which it was made, false or misleading in any matter sufficiently important to influence the judgment of an average investor, shall upon conviction be fined not more than $25,000 or imprisoned not more than ten years, or both, except that when such person is an exchange, a fine not exceeding $500,000 may be imposed.
JURISDICTION OF OFFENSES AND SUITS
SEC. 26. (a) The district courts of the United States, the United States courts of any Territory, and the Supreme Court of the District of Columbia shall have jurisdiction of offenses and violation under this Act and of all suits in equity and actions at law brought (otherwise than against any agency charged with the administration of this Act, or any officer or employer thereof) to enforce any liability or duty created by this Act. Any such criminal proceeding may be brought in the district wherein any act or transaction constituting the offense or violation occurred. Any such civil suit or action may be brought in any such district or in the district wherein the defendant is found or is an inhabitant or transacts business, and process in such cases may be served in any other district of which the defendant is an inhabitant or wherever the defendant may be found. Judgments and decrees so rendered shall be subject to review as provided in sections 128 and 240 of the Judicial Code, as amended (U.S.C., title 28, secs. 225 and 347). No costs shall be assessed for or against the Commission in any proceeding under this Act 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 jurisdiction 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 before the Commission, or one of its examiners designated by it, there to produce documentary evidence if so ordered, or there to give evidence 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) No person shall be excused from attending and testifying to or from producing books, papers, contracts, agreements, and other records before the Commission, or in obedience to the subpena of the Commission or any member thereof or any officer designated by it, or in any cause or proceeding instituted by the Commission, on the ground that the testimony or evidence, documentary or otherwise, required of him may tend to incriminate him or subject him to a penalty of forfeiture; but no individual shall be prosecuted or subject to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which he is compelled, after having claimed his privelege against self-incrimination, to testify or produce evidence, documentary or otherwise, except that such individual so testifying shall not be exempt from prosecution and punishment for perjury committed in so testifying.
EFFECT ON EXISTING LAW
SEC. 27. (a) The rights and remedies provided by this Act shall be in addition to any and all other rights and remedies that may exist at law or in equity. Nothing in this Act shall affect the jurisdiction of the securities commission (or any agency or office performing like function) of any State over any security or any person insofar as does not conflict with the provisions of this Act or the rules and regulations of the Commission thereunder.
(b) Nothing in this Act shall be construed to modify existing law with regard to the binding effect on any member of any exchange of any action taken by the authorities of such exchange to settle disputes between members or with regard to the binding effect of such action on any person who has agreed to be bound thereby or with regard to the binding effect on any member of any disciplinary action taken by the authorities of the exchange as a result of violation of any rule of the exchange, insofar as the action taken is not inconsistent with the provisions of this Act or the rules and regulations of the Commission thereunder.
VALIDITY OF CONTRACTS
SEC. 28. (a) Any condition, stipulation, or provision binding any person to waive compliance with any provision of this Act or of any rule or regulation made thereunder, or of any rule of an exchange required thereby shall be void.
(b) Every contract, including any contract for listing a security on an exchange, made in violation of any provision of this Act or of any rule or regulation thereunder and every contract heretofore made the performance of which involves the continuance of any relationship or practice prohibited by this Act or any rule or regulation thereunder shall be void as regards any cause of action arising after the effective date of such provision, rule, or regulation. This section shall not afford any grounds for defense to any suit brought to enforce the collection of any evidence of indebtedness by any person who acquired the same in good faith for value without actual knowledge of such illegality.
FOREIGN SECURITIES EXCHANGES
SEC. 29. It shall be unlawful for any broker or dealer, directly or indirectly, to make use of the mails or of any means or instrumentality of transportation or communication in interstate commerce for the purpose of effecting on an exchange situated in a place not subject to the jurisdiction of the United States any transaction in any security the issuer of which is a resident of, or is organized under the laws of, or has its principal place of business in, a place subject to the jurisdiction of the United States in contravention of such rules and regulations as the Commission may deem necessary or appropriate in the public interest or for the protection of investors or to prevent the evasion of this Act.
SEC. 30. Every national securities exchange shall pay an annual registration fee for the privilege of doing business as a national securities exchange during the preceding calendar year or any part thereof. Such fee shall be paid to the Commission on or before March 15 of each calendar year. Such fee shall be an amount equal to one five hundredths of 1 per centum of the aggregate dollar amount of the sales of securities transacted on such national securities exchange during the preceding calendar year.
JURISDICTION OF OTHER AGENCIES OF THE UNITED STATES
SEC. 31. All powers given and duties imposed hereunder to or upon the Commission insofar as they apply to national banking associations or to a receiver, conservator, or other liquidating agent thereof shall be exercised or performed by the Comptroller of the Currency, and all applications, reports, and documents to be filed by such associations or persons shall be filed with the Comptroller of the Currency; and all powers given and duties imposed hereunder to or upon the Commission insofar as they apply to state member banks of the Federal Reserve System shall be exercised and performed by the Federal