HR 1689 RH.
Securities Litigation Uniform Standards Act.
Enacted by U.S. House of Representatives June 22, 1998.
Source: Library of Congress.

HR 1689 RH

105th CONGRESS

2d Session

H. R. 1689

[Report No. 105-640]

A BILL

To amend the Securities Act of 1933 and the Securities Exchange Act of 1934 to limit the conduct of securities class actions under State law, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Securities Litigation Uniform Standards Act of 1998'.

TITLE I--SECURITIES LITIGATION UNIFORM STANDARDS

SEC. 101. LIMITATION ON REMEDIES.

(a) AMENDMENTS TO THE SECURITIES ACT OF 1933-

(1) AMENDMENT- Section 16 of the Securities Act of 1933 (15 U.S.C. 77p) is amended to read as follows:

`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 addition to any and all other rights and remedies that may exist at law or in equity.

`(b) CLASS ACTION LIMITATIONS- No 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 purchase or sale of a covered security.

`(c) REMOVAL OF CLASS ACTIONS- Any class action brought in any State court involving a covered security, as set forth in subsection (b), shall be removable to the Federal district 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 INCORPORATION-

`(A) ACTIONS PRESERVED- Notwithstanding subsection (b) or (c), a 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 incorporated (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 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 holders of equity securities of the issuer; or

`(ii) any recommendation, position, or other communication 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 securities 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 exercising 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 comprised solely of other States, political subdivisions, or State pension plans that are named plaintiffs, and that have authorized 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 subsection (b) or (c), a 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 maintained 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 1 or more intermediaries, controls or is controlled by or is under common control with, the issuer.

`(2) CLASS ACTION-

`(A) IN GENERAL- The term `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 reference to issues of individualized reliance on an alleged misstatement or omission, predominate over any questions affecting only individual persons or members; or

`(II) 1 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 individual 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 purpose.

`(B) EXCEPTION FOR DERIVATIVE ACTIONS- Notwithstanding subparagraph (A), the term `class action' does not include an exclusively derivative action brought by 1 or more shareholders on behalf of a corporation.

`(C) COUNTING OF CERTAIN CLASS MEMBERS- For purposes of this paragraph, a corporation, investment company, pension plan, partnership, or other entity, shall be treated as 1 person or prospective class member, but only if the entity is not established for the purpose of participating in the action.

`(D) RULE OF CONSTRUCTION- Nothing in this paragraph 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 proceed as a single action.

`(3) COVERED SECURITY- The term `covered security' means a security that satisfies the standards for a covered security specified in section 18(b)(1) 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 exempt from registration under this title pursuant to rules issued by the Commission under section 4(2) of this title.'.

(2) CIRCUMVENTION OF STAY OF DISCOVERY- Section 27(b) of the Securities Act of 1933 (15 U.S.C. 77z-1(b)) is amended by inserting after paragraph (3) the following new paragraph:

`(4) CIRCUMVENTION OF STAY OF DISCOVERY- Upon a proper showing, a court may stay discovery proceedings in any private action in a State court as necessary in aid of its jurisdiction, or to protect or effectuate its judgments, in an action subject to a stay of discovery pursuant to this subsection.'.

(3) CONFORMING AMENDMENTS- Section 22(a) of the Securities Act of 1933 (15 U.S.C. 77v(a)) is amended--

(A) by inserting `except as provided in section 16 with respect to class actions,' after `Territorial courts,'; and

(B) by striking `No case' and inserting `Except as provided in section 16(c), no case'.

(b) AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934-

(1) AMENDMENT- Section 28 of the Securities Exchange Act of 1934 (15 U.S.C. 78bb) is amended--

(A) in subsection (a), by striking `The rights and remedies' and inserting `Except as provided in subsection (f), the rights and remedies'; and

(B) by adding at the end the following new subsection:

`(f) LIMITATIONS ON REMEDIES-

`(1) CLASS ACTION LIMITATIONS- No 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--

`(A) a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security; or

`(B) that the defendant used or employed any manipulative or deceptive device or contrivance in connection with the purchase or sale of a covered security.

`(2) REMOVAL OF CLASS ACTIONS- Any class action brought in any State court involving a covered security, as set forth in paragraph (1), shall be removable to the Federal district court for the district in which the action is pending, and shall be subject to paragraph (1).

`(3) PRESERVATION OF CERTAIN ACTIONS-

`(A) ACTIONS UNDER STATE LAW OF STATE OF INCORPORATION-

`(i) ACTIONS PRESERVED- Notwithstanding paragraph (1) or (2), a class action described in clause (ii) of this subparagraph that is based upon the statutory or common law of the State in which the issuer is incorporated (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.

`(ii) PERMISSIBLE ACTIONS- A class action is described in this clause if it involves--

`(I) the purchase or sale of securities by the issuer or an affiliate of the issuer exclusively from or to holders of equity securities of the issuer; or

`(II) any recommendation, position, or other communication with respect to the sale of securities of an issuer that--

`(aa) is made by or on behalf of the issuer or an affiliate of the issuer to holders of equity securities of the issuer; and

`(bb) concerns decisions of such equity holders with respect to voting their securities, acting in response to a tender or exchange offer, or exercising dissenters' or appraisal rights.

`(B) STATE ACTIONS-

`(i) IN GENERAL- Notwithstanding any other provision of this subsection, nothing in this subsection 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 comprised solely of other States, political subdivisions, or State pension plans that are named plaintiffs, and that have authorized participation, in such action.

`(ii) STATE PENSION PLAN DEFINED- For purposes of this subparagraph, the term `State pension plan' means a pension plan established and maintained for its employees by the government of a State or political subdivision thereof, or by any agency or instrumentality thereof.

`(C) ACTIONS UNDER CONTRACTUAL AGREEMENTS BETWEEN ISSUERS AND INDENTURE TRUSTEES- Notwithstanding paragraph (1) or (2), a 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.

`(D) REMAND OF REMOVED ACTIONS- In an action that has been removed from a State court pursuant to paragraph (2), if the Federal court determines that the action may be maintained in State court pursuant to this subsection, the Federal court shall remand such action to such State court.

`(4) 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.

`(5) DEFINITIONS- For purposes of this subsection, the following definitions shall apply:

`(A) AFFILIATE OF THE ISSUER- The term `affiliate of the issuer' means a person that directly or indirectly, through 1 or more intermediaries, controls or is controlled by or is under common control with, the issuer.

`(B) CLASS ACTION- The term `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 reference to issues of individualized reliance on an alleged misstatement or omission, predominate over any questions affecting only individual persons or members; or

`(II) 1 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 individual 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 purpose.

`(C) EXCEPTION FOR DERIVATIVE ACTIONS- Notwithstanding subparagraph (B), the term `class action' does not include an exclusively derivative action brought by 1 or more shareholders on behalf of a corporation.

`(D) COUNTING OF CERTAIN CLASS MEMBERS- For purposes of this paragraph, a corporation, investment company, pension plan, partnership, or other entity, shall be treated as 1 person or prospective class member, but only if the entity is not established for the purpose of participating in the action.

`(E) COVERED SECURITY- The term `covered security' means a security that satisfies the standards for a covered security specified in section 18(b)(1) of the Securities Act of 1933, 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 exempt from registration under the Securities Act of 1933 pursuant to rules issued by the Commission under section 4(2) of such Act.

`(F) RULE OF CONSTRUCTION- Nothing in this paragraph 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 proceed as a single action.'.

(2) CIRCUMVENTION OF STAY OF DISCOVERY- Section 21D(b)(3) of the Securities Exchange Act of 1934 (15 U.S.C. 78u-4(b)(3)) is amended by inserting after subparagraph (C) the following new subparagraph:

`(D) CIRCUMVENTION OF STAY OF DISCOVERY- Upon a proper showing, a court may stay discovery proceedings in any private action in a State court as necessary in aid of its jurisdiction, or to protect or effectuate its judgments, in an action subject to a stay of discovery pursuant to this paragraph.'.

(c) APPLICABILITY- The amendments made by this section shall not affect or apply to any action commenced before and pending on the date of enactment of this Act

SEC. 102. ISSUANCE OF SUBPOENAS IN JUDICIAL ACTIONS.

(a) SECURITIES ACT- Section 22(a) of the Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by inserting after the second sentence the following: `In any action or proceeding instituted by the Commission under this title in the district court of the United States for any judicial district, subpoenas issued by such court to compel the attendance of witnesses may be served in any other district.'.

(b) SECURITIES EXCHANGE ACT- Section 27 of the Securities Act of 1934 (15 U.S.C. 78aa) is amended by inserting after the third sentence the following: `In any action or proceeding instituted by the Commission under this title in the district court of the United States for any judicial district, subpoenas issued by such court to compel the attendance of witnesses may be served in any other district.'.

(c) INVESTMENT COMPANY ACT- Section 44 of the Investment Company Act of 1940 (15 U.S.C. 80a-43) is amended by inserting after the fourth sentence the following: `In any action or proceeding instituted by the Commission under this title in the district court of the United States for any judicial district, subpoenas issued by such court to compel the attendance of witnesses may be served in any other district.'.

(d) INVESTMENT ADVISERS ACT- Section 214 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-14) is amended by inserting after the third sentence the following: `In any action or proceeding instituted by the Commission under this title in the district court of the United States for any judicial district, subpoenas issued by such court to compel the attendance of witnesses may be served in any other district.'.

(e) PUBLIC UTILITY HOLDING COMPANY ACT- Section 25 of the Public Utility Holding Company Act of 1935 (15 U.S.C. 79y) is amended by inserting after the third sentence the following: `In any action or proceeding instituted by the Commission under this title in the district court of the United States for any judicial district, subpoenas issued by such court to compel the attendance of witnesses may be served in any other district.'.

SEC. 103. PROMOTION OF RECIPROCAL SUBPOENA ENFORCEMENT.

(a) COMMISSION ACTION- The Securities and Exchange Commission, in consultation with State securities commissions, shall seek to encourage the adoption of State laws providing for reciprocal enforcement by State securities commissions of subpoenas issued by another State securities commission seeking to compel persons to attend, testify in, or produce documents or records in connection with an action or investigation by a State securities commission of an alleged violation of State securities laws.

(b) REPORT- Within 24 months after the date of enactment of this Act, the Commission shall submit a report to the Congress--

(1) identifying the States that have adopted laws described in subsection (a);

(2) describing the actions undertaken by the Commission and State securities commissions to promote the adoption of such laws; and

(3) identifying any further actions the Commission recommends for such purposes

SEC. 104. REPORT ON CONSEQUENCES.

The Securities and Exchange Commission shall include in each of its first 3 annual reports submitted after the date of enactment of this Act a report regarding--

(1) the nature and the extent of the class action cases that are preempted by, or removed pursuant to, the amendments made by section 101 of this title;

(2) the extent to which that preemption or removal either promotes or adversely affects the protection of securities investors or the public interest; and

(3) if adverse effects are found, alternatives to, or revisions of, such preemption or removal that--

(A) would not have such adverse effects;

(B) would further promote the protection of investors and the public interest; and

(C) would still substantially reduce the risk of abusive securities litigation

TITLE II--REAUTHORIZATION OF THE SECURITIES AND EXCHANGE COMMISSIO

SEC. 201. AUTHORIZATION OF APPROPRIATIONS.

Section 35 of the Securities Exchange Act of 1934 (15 U.S.C. 78kk) is amended to read as follows:

`SEC. 35. AUTHORIZATION OF APPROPRIATIONS.

`(a) IN GENERAL- In addition to any other funds authorized to be appropriated to the Commission, there are authorized to be appropriated to carry out the functions, powers, and duties of the Commission $351,280,000 for fiscal year 1999.

`(b) MISCELLANEOUS EXPENSES- Funds appropriated pursuant to this section are authorized to be expended--

`(1) not to exceed $3,000 per fiscal year, for official reception and representation expenses;

`(2) not to exceed $10,000 per fiscal year, for funding a permanent secretariat for the International Organization of Securities Commissions; and

`(3) not to exceed $100,000 per fiscal year, for expenses for consultations and meetings hosted by the Commission with foreign governmental and other regulatory officials, members of their delegations, appropriate representatives, and staff to exchange views concerning developments relating to securities matters, for development and implementation of cooperation agreements concerning securities matters and provision of technical assistance for the development of foreign securities markets, such expenses to include necessary logistic and administrative expenses and the expenses of Commission staff and foreign invitees in attendance at such consultations and meetings, including--

`(A) such incidental expenses as meals taken in the course of such attendance;

`(B) any travel or transportation to or from such meetings; and

`(C) any other related lodging or subsistence.'.

TITLE III--CLERICAL AND TECHNICAL AMENDMENTS

SEC. 301. CLERICAL AND TECHNICAL AMENDMENTS.

(a) SECURITIES ACT OF 1933- The Securities Act of 1933 (15 U.S.C. 77 et seq.) is amended as follows:

(1) Section 2(a)(15)(i) (15 U.S.C. 77b(a)(15)(i)) is amended by striking `section 2(13) of the Act' and inserting `paragraph (13) of this subsection'.

(2) Section 11(f)(2)(A) (15 U.S.C. 77k(f)(2)(A)) is amended by striking `section 38' and inserting `section 21D(f)'.

(3) Section 13 (15 U.S.C. 77m) is amended--

(A) by striking `section 12(2)' each place it appears and inserting `section 12(a)(2)'; and

(B) by striking `section 12(1)' each place it appears and inserting `section 12(a)(1)'.

(4) Section 18 (15 U.S.C. 77r) is amended--

(A) in subsection (b)(1)(A), by inserting `, or authorized for listing,' after `Exchange, or listed';

(B) in subsection (c)(2)(B)(i), by striking `Capital Markets Efficiency Act of 1996' and inserting `National Securities Markets Improvement Act of 1996';

(C) in subsection (c)(2)(C)(i), by striking `Market' and inserting `Markets';

(D) in subsection (d)(1)(A)--

(i) by striking `section 2(10)' and inserting `section 2(a)(10)'; and

(ii) by striking `subparagraphs (A) and (B)' and inserting `subparagraphs (a) and (b)';

(E) in subsection (d)(2), by striking `Securities Amendments Act of 1996' and inserting `National Securities Markets Improvement Act of 1996'; and

(F) in subsection (d)(4), by striking `For purposes of this paragraph, the' and inserting `The'.

(5) Sections 27, 27A, and 28 (15 U.S.C. 77z-1, 77z-2, 77z-3) are transferred to appear after section 26.

(6) Paragraph (28) of schedule A of such Act (15 U.S.C. 77aa(28)) is amended by striking `identic' and inserting `identical'.

(b) SECURITIES EXCHANGE ACT OF 1934- The Securities Exchange Act of 1934 (15 U.S.C. 78 et seq.) is amended as follows:

(1) Section 3(a)(10) (15 U.S.C. 78c(a)(10)) is amended by striking `deposit, for' and inserting `deposit for'.

(2) Section 3(a)(12)(A) (15 U.S.C. 78c(a)(12)(A)) is amended by moving clause (vi) two em spaces to the left.

(3) Section 3(a)(22)(A) (15 U.S.C. 78c(a)(22)(A)) is amended--

(A) by striking `section 3(h)' and inserting `section 3'; and

(B) by striking `section 3(t)' and inserting `such section 3'.

(4) Section 3(a)(39)(B)(i) (15 U.S.C. 78c(a)(39)(B)(i)) is amended by striking `an order to the Commission' and inserting `an order of the Commission'.

(5) The following sections are each amended by striking `Federal Reserve Board' and inserting `Board of Governors of the Federal Reserve System': subsections (a) and (b) of section 7 (15 U.S.C. 78g(a), (b)); section 17(g) (15 U.S.C. 78q(g)); and section 26 (15 U.S.C. 78z).

(6) The heading of subsection (d) of section 7 (15 U.S.C. 78g(d)) is amended by striking `EXCEPTION' and inserting `EXCEPTIONS'.

(7) Section 14(g)(4) (15 U.S.C. 78n(g)(4)) is amended by striking `consolidation sale,' and inserting `consolidation, sale,'.

(8) Section 15 (15 U.S.C. 78o) is amended--

(A) in subsection (c), by moving paragraph (8) two em spaces to the left;

(B) in subsection (h)(2), by striking `affecting' and inserting `effecting';

(C) in subsection (h)(3)(A)(i)(II)(bb), by inserting `or' after the semicolon;

(D) in subsection (h)(3)(A)(ii)(I), by striking `maintains' and inserting `maintained';

(E) in subsection (h)(3)(B)(ii), by striking `association' and inserting `associated'.

(9) Section 15B(c)(4) (15 U.S.C. 78o-4(c)(4)) is amended by striking `convicted by any offense' and inserting `convicted of any offense'.

(10) Section 15C(f)(5) (15 U.S.C. 78o-5(f)(5)) is amended by striking `any person or class or persons' and inserting `any person or class of persons'.

(11) Section 19(c) (15 U.S.C. 78s(c)) is amended by moving paragraph (5) two em spaces to the right.

(12) Section 20 (15 U.S.C. 78t) is amended by redesignating subsection (f) as subsection (e).

(13) Section 21D (15 U.S.C. 78u-4) is amended--

(A) by redesignating subsection (g) as subsection (f); and

(B) in paragraph (2)(B)(i) of such subsection, by striking `paragraph (1)' and inserting `subparagraph (A)'.

(14) Section 31(a) (15 U.S.C. 78ee(a)) is amended by striking `this subsection' and inserting `this section'.

(c) INVESTMENT COMPANY ACT OF 1940- The Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) is amended as follows:

(1) Section 2(a)(8) (15 U.S.C. 80a-2(a)(8)) is amended by striking `Unitde' and inserting `United'.

(2) Section 3(b) (15 U.S.C. 80a-3(b)) is amended by striking `paragraph (3) of subsection (a)' and inserting `paragraph (1)(C) of subsection (a)'.

(3) Section 12(d)(1)(G)(i)(III)(bb) (15 U.S.C. 80a-12(d)(1)(G)(i)(III)(bb)), by striking `the acquired fund' and inserting `the acquired company'.

(4) Section 18(e)(2) (15 U.S.C. 80a-18(e)(2)) is amended by striking `subsection (e)(2)' and inserting `paragraph (1) of this subsection'.

(5) Section 30 (15 U.S.C. 80a-29) is amended--

(A) by inserting `and' after the semicolon at the end of subsection (b)(1);

(B) in subsection (e), by striking `semi-annually' and inserting `semiannually'; and

(C) by redesignating subsections (g) and (h) as added by section 508(g) of the National Securities Markets Improvement Act of 1996 as subsections (i) and (j), respectively.

(6) Section 31(f) (15 U.S.C. 80a-30(f)) is amended by striking `subsection (c)' and inserting `subsection (e)'.

(d) INVESTMENT ADVISERS ACT OF 1940- The Investment Advisers Act of 1940 (15 U.S.C. 80b et seq.) is amended as follows:

(1) Section 203(e)(8)(B) (15 U.S.C. 80b-3(e)(8)(B)) is amended by inserting `or' after the semicolon.

(2) Section 222(b)(2) of (15 U.S.C. 80b-18a(b)(2)) is amended by striking `principle' and inserting `principal'.

(e) TRUST INDENTURE ACT OF 1939- The Trust Indenture Act of 1939 (15 U.S.C. 77aaa et seq.) is amended as follows:

(1) Section 303 (15 U.S.C. 77ccc) is amended by striking `section 2' each place it appears in paragraphs (2) and (3) and inserting `section 2(a)'.

(2) Section 304(a)(4)(A) (15 U.S.C. 77ddd(a)(4)(A)) is amended by striking `(14) of subsection' and inserting `(13) of section'.

(3) Section 313(a) (15 U.S.C. 77mmm(a)) is amended--

(A) by inserting `any change to' after the paragraph designation at the beginning of paragraph (4); and

(B) by striking `any change to' in paragraph (6).

(4) Section 319(b) (15 U.S.C. 77sss(b)) is amended by striking `the Federal Register Act' and inserting `chapter 15 of title 44, United States Code,'.

SEC. 302. EXEMPTION OF SECURITIES ISSUED IN CONNECTION WITH CERTAIN STATE HEARINGS.

Section 18(b)(4)(C) of the Securities Act of 1933 (15 U.S.C. 77r(b)(4)(C)) is amended by striking `paragraph (4) or (11)' and inserting `paragraph (4), (10), or (11)'.