To safeguard the public from fraud in the financial services industry, to streamline and facilitate the antifraud information-sharing efforts of Federal and State regulators, and for other purposes.

To safeguard the public from fraud in the financial services industry, to streamline and facilitate the antifraud information-sharing efforts of Federal and State regulators, 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; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the `Financial Services Antifraud Network Act of 2001'.

(b) TABLE OF CONTENTS- The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Purposes.

TITLE I--ANTIFRAUD SUBCOMMITTEE

Sec. 101. Establishment.

Sec. 102. Duties of the Subcommittee.

Sec. 103. Chairperson; term of chairperson; meetings; officers and staff.

Sec. 104. Purposes of the Subcommittee.

Sec. 105. Powers of the Subcommittee.

Sec. 106. Agreement on cost structure.

Sec. 107. Agency supervisory privilege.

Sec. 108. Confidentiality of information.

Sec. 109. Liability provisions.

Sec. 110. Authorization for identification and criminal background check.

Sec. 111. Definitions.

Sec. 112. Technical and conforming amendments to other Acts.

TITLE II--SECURITIES INDUSTRY COORDINATION

Subtitle A--Disciplinary Information

Sec. 201. Investment Advisers Act of 1940.

Sec. 202. Securities Exchange Act of 1934.

Subtitle B--Preventing Migration of Rogue Financial Professionals to the Securities Industry

Sec. 211. Securities Exchange Act of 1934.

Sec. 212. Investment Advisers Act of 1940.

SEC. 2. PURPOSES.

The purposes of this Act are--

(1) to safeguard the public from fraud in the financial services industry;

(2) to streamline the antifraud coordination efforts of Federal and State regulators and prevent failure to communicate essential information;

(3) to reduce duplicative information requests by, and other inefficiencies of, financial services regulation;

(4) to assist financial regulators in detecting patterns of fraud, particularly patterns that only become apparent when viewed across the full spectrum of the financial services industry; and

(5) to take advantage of Internet technology and other advanced data-sharing technology to modernize the fight against fraud in all of its evolving manifestations and permutations.

SEC. 101. ESTABLISHMENT.

(a) IN GENERAL- There shall be within the President's Working Group on Financial Markets (as established by Executive Order Numbered 12631) a subcommittee to be known as the `Antifraud Subcommittee' (hereafter in this title referred to as the `Subcommittee') which shall consist of the following members:

`(1) The Secretary of the Treasury, or a designee of the Secretary.

`(2) The Chairman of the Securities and Exchange Commission or a designee of the Chairman.

`(3) A State insurance commissioner designated by the National Association of Insurance Commissioners, or a designee of such commissioner.

(b) FINANCIAL LIAISONS- The following shall serve as liaisons between the Subcommittee and the agencies represented by each such liaison:

(1) A representative of each Federal banking agency appointed by the head of each such agency.

(2) A representative of the Commodity Futures Trading Commission appointed by the Commodity Futures Trading Commission.

(3) A representative of the National Credit Union Administration appointed by the National Credit Union Administration Board.

(4) A representative of the Farm Credit Administration, appointed by the Farm Credit Administration Board.

(5) A representative of the Federal Housing Finance Board, appointed by such Board.

(6) A representative of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development appointed by the Director of such Office.

(7) A representative of State bank supervisors designated by the Conference of State Bank Supervisors.

(8) A representative of State credit union supervisors designated by the National Association of State Credit Union Supervisors.

(9) A representative of State securities administrators designated by the North American Securities Administrators Association.

(10) A representative of State insurance commissioners designated by the National Association of Insurance Commissioners.

(11) A representative of the National Association of Securities Dealers appointed by the National Association of Securities Dealers.

(12) A representative of the National Futures Association appointed by the National Futures Association.

(13) Any other financial liaison as the Subcommittee may provide to represent any other financial regulator, including self-regulatory agencies or organizations that maintain significant databases on persons engaged in the business of conducting financial activities, designated in the manner provided by the Subcommittee.

(c) OTHER LIAISONS- The following shall serve as liaisons between the Subcommittee and the agencies represented by each such liaison:

(1) A representative of the Department of Justice appointed by the Attorney General.

(2) A representative of the Federal Bureau of Investigation appointed by the Director of such Bureau.

(3) A representative of the United States Secret Service appointed by the Director of such Service.

(4) Any other liaison as the Subcommittee may provide to represent any other regulator, including self-regulatory agencies or organizations that maintain significant databases on persons engaged in the business of conducting financial activities, designated in the manner provided by the Subcommittee.

(d) VACANCY- If, for any reason, the position of any member of or liaison to the Subcommittee is not filled within a reasonable period of time after being created or becoming vacant, the President shall appoint a person to fill the position after consulting the agency or entity to be represented by such member or liaison, and to the extent possible, shall appoint such person from a list of possible representatives submitted by such agency or entity.

(e) REORGANIZATION AUTHORITY- If the President disbands the Working Group referred to in subsection (a), the President shall provide for the reorganization of the Subcommittee in such manner as the President determines to be appropriate.

SEC. 102. DUTIES OF THE SUBCOMMITTEE.

(a) IN GENERAL- The duties of the Subcommittee are as follows:

(1) To coordinate access by the participants to antifraud databases of various regulators, by facilitating the establishment, maintenance, and use of a computer network of existing antifraud information maintained by such regulators with respect to persons engaged in the business of conducting financial activities.

(2) Coordinate access by each participating regulator to such computer network in a manner that allows the regulator to review, at a minimal cost, existing information in the databases of other regulators, as a part of licensure, change of control, or investigation, of any person engaged in the business of conducting financial activities.

(3) Coordinate information-sharing, where appropriate, among State, Federal, and international financial regulators and law enforcement agencies where sufficient privacy and confidentiality safeguards exist.

(4) Coordinate development by participants of a name-relationship index for persons engaged in the business of conducting financial activities using existing information from the databases of regulators.

(5) Advise regulators in updating their antifraud databases to better coordinate with the computer network.

(6) Consider establishing a tracking and recordkeeping procedure that allows a record of the inquiries made through the network and the information transferred through the network by one regulator to another to be maintained, in such manner as the Subcommittee considers to be appropriate.

(7) After the end of each year, transmit to the Congress a summary of the coordination efforts undertaken by the Subcommittee during the preceding year and a description of any impediments to or recommended legislation for facilitating such efforts.

(b) CRITERIA FOR NETWORK WITH RESPECT TO ANY PERSON ENGAGED IN THE BUSINESS OF CONDUCTING FINANCIAL ACTIVITIES-

(1) FINAL DISCIPLINARY AND FORMAL ENFORCEMENT ACTIONS- Each regulator that is represented by a member of the Subcommittee under section 101(a) or by a financial liaison to the Subcommittee under section 101(b) shall allow any participant access, through the network, to any public final disciplinary or formal enforcement action by the member or financial liaison which is accessible electronically relating to fraudulent, wrongful, or dishonest conduct of persons engaged in the business of conducting financial activities.

(2) OTHER INFORMATION- Subject to such limitations and criteria that may be established by any participant in accordance with subsection (c) regarding the access to information maintained by such participant and the requirements of subsection (d), each participant may permit access through the network to the following information as it relates to persons engaged in the business of conducting financial activities:

(A) To the extent the regulator determines the disclosure to be appropriate and cost-effective, information concerning--

(i) the registrations, licenses, approved applications, or notices that have been granted or approved by, or are otherwise within the regulatory jurisdiction of, the participant and are in effect with respect to any person engaged in the business of conducting financial activities; and

(ii) any significant affiliations or name-relationships of such person on which the participant maintains records.

(B) To the extent the regulator determines the disclosure to be appropriate, information concerning investigations conducted by the participant, such as the issuance of a notice of charges or on-going investigations after notice has been provided to the subject of the investigation, public notice has been given, or some public action has been taken in connection with the investigation.

(C) To the extent the participant determines the disclosure to be appropriate, consumer complaints relating to fraudulent activities or matters within the jurisdiction of the requesting member or liaison.

(D) To the extent the appropriate Federal banking agency and the Secretary of the Treasury may determine the disclosure to be appropriate, suspicious activity reports filed in accordance with section 5318(g) of title 31, United States Code, and regulations prescribed

(E) To the extent the appropriate State insurance commissioner determines the disclosure to be appropriate, special activity reports from any State insurance commissioner, including the National Association of Insurance Commissioners only to the extent such association is acting as the agent of, and is subject to the oversight of, such insurance commissioner.

(F) Any other regulatory or supervisory information that any participant may determine to be appropriate to provide access to through the network, including financial records or examination reports.

(3) USE OF CENTRALIZED DATABASES-

(A) IN GENERAL- A member or financial liaison shall be deemed to have met the requirements of paragraph (1) if the Subcommittee determines that the participants have access to a centralized database that contains information on public final disciplinary or formal enforcement actions sufficiently similar to that described in paragraph (1).

(B) FACTORS FOR DETERMINATION- The Subcommittee shall make the determination under subparagraph (A) on an ongoing basis, considering both short-term costs and technological limitations, as well as the need for long-term comprehensive coverage, and other appropriate factors.

(C) STATE SUPERVISORS- It is the sense of the Congress that the National Association of Insurance Commissioners, the Conference of State Bank Supervisors, the National Association of State Credit Union Supervisors, and the North American Securities Administrators Association should develop model guidelines for their respective regulated financial industries, where appropriate, to promote uniform standards for sharing information with the network under this section.

(c) FINANCIAL REGULATOR CONTROL OF ACCESS-

(1) IN GENERAL- Except as provided in paragraph (4), each participant that allows access to its databases by other participants through the network may establish parameters for controlling or limiting such access, including the regulation of--

(A) the type or category of information that may be accessed by other participants and the extent to which any such type or category of information may be accessed;

(B) the participants that may have access to the database or any specific type or category of information in the database; and

(C) The disclosure by any other participant of any type or category of information that may be accessed by the participant.

(2) PROCEDURES- Any action by a participant under paragraph (1) may be established by regulations, orders, or guidelines or on a case-by-case basis.

(3) DISCLAIMER-

(A) IN GENERAL- The Subcommittee and a participant shall ensure that any transfer of information under this section, other than information described in subsection (b)(1), from such participant to another participant be subject to a disclaimer that the information accessed may be unsubstantiated and may not be relied on as the sole basis for denying any application or license.

(B) SUBCOMMITTEE FLEXIBILITY- The Subcommittee may prescribe such guidelines or procedures as the Subcommittee determines to be appropriate governing the location and frequency of disclaimers under this paragraph and the manner in which any such disclaimer shall be made.

(4) FINAL DISCIPLINARY AND FORMAL ENFORCEMENT ACTIONS NOT SUBJECT TO LIMITATION- This subsection, and standards or procedures adopted by any participant under this subsection, shall not apply with respect to information described in subsection (b)(1).

(5) NO EFFECT ON PUBLIC OR COMPANY ACCESS- It is the sense of the Congress that it is not the intent of this section to replace, supersede, or otherwise affect access to any databases existing on the date of the enactment of this Act which are accessible by the public or persons engaged in the business of conducting financial activities.

(d) ELIGIBILITY REQUIREMENTS FOR STATE SECURITIES ADMINISTRATORS- No State securities administrator shall be eligible to be a participant and access the network maintained by the Subcommittee unless--

(1) such State securities administrator participates in a centralized database for broker-dealers, broker-dealer agents, investment advisers, and investment advisor representatives, registered or required to be registered, as designated by the North American Securities Administrators Association; and

(2) such State securities administrator requires the broker-dealer, broker-dealer agent, investment adviser, or investment adviser representative, currently registered or required to be registered, to file any application, amendment to an application, or a renewal of an application through the centralized registration database.

(e) ELIGIBILITY REQUIREMENTS FOR STATE INSURANCE COMMISSIONERS-

(1) IN GENERAL- No State insurance commissioner shall be eligible to access the network maintained by the Subcommittee unless--

(A) such State insurance commissioner participates with other State insurance commissioners in a centralized database that, with respect to persons engaged in the business of insurance, address--

(i) disciplinary actions taken against persons engaged in the business of insurance;

(ii) suspicious activities or ongoing investigations of persons engaged in the business of insurance;

(iii) consumer complaints concerning a person engaged in the business of insurance; and

(iv) corporate and other business affiliations or relationships; and

(B) the State insurance department which such commissioner represents meets one of the following accreditation requirements at the time of access to the network:

(i) Is accredited by the National Association of Insurance Commissioners.

(ii) Has an application for accredited status pending with the National Association of Insurance Commissioners.

(iii) Has a determination by the Subcommittee in effect that such State insurance department meets or exceeds the standards established by the National Association of Insurance Commissioners for accreditation.

(2) QUALIFICATION OF NAIC NETWORKS- A State insurance commissioner shall be deemed to have met the requirements of paragraph (1)(A) if the commissioner participates in--

(A) the following networks maintained by the National Association of Insurance Commissioners:

(i) Producer Database.

(ii) Regulatory Information Retrieval System.

(iii) Special Activities Database.

(iv) Complaints Database; or

(B) each network or database designated by the National Association of Insurance Commissioners as a successor to any network described in subparagraph (A).

(f) SUBCOMMITTEE STANDARDS- The Subcommittee shall consider developing policies or guidelines for participants setting forth--

(1) how to denote which types of information are to receive different levels of privileges or confidential treatment; and

(2) how entities or associations that act as agents for financial regulators should denote such agency status when acting in that capacity.

(g) DEADLINE FOR ESTABLISHING NETWORK- The computer network which is required under subsection (a)(1) shall be established before the end of the 2-year period beginning on the date of the enactment of the Financial Services Antifraud Network Act of 2001 or such other time as the Subcommittee may determine to be appropriate.

(h) OTHER SHARING ARRANGEMENTS NOT AFFECTED- No provision of this section shall be construed as limiting or otherwise affecting the authority of a participant to provide any person, including another participant, access to any information in accordance with any provision of law other than this Act.

SEC. 103. CHAIRPERSON; TERM OF CHAIRPERSON; MEETINGS; OFFICERS AND STAFF.

(a) CHAIRPERSON-

(1) SELECTION- The Subcommittee shall select the Chairperson of the Subcommittee from among the members of the Subcommittee.

(2) TERM- The term of the Chairperson shall be 2 years.

(b) MEETINGS- The Subcommittee shall meet at the call of the Chairperson or a majority of the members when there is business to be conducted.

(c) QUORUM- A majority of members of the Subcommittee shall constitute a quorum.

(d) MAJORITY VOTE- Decisions of the Subcommittee shall be made by the vote of a majority of the members of the Subcommittee.

(e) OFFICERS AND STAFF- The Chairperson of the Subcommittee shall appoint such officers and staff as may be necessary to carry out the functions of this title.

SEC. 104. PURPOSES OF THE SUBCOMMITTEE.

The purposes of the Subcommittee shall include the purposes of this Act and the promotion of greater cross-industry efficiency, effectiveness, and coordination, in general, across all sectors of our Nation's financial markets.

SEC. 105. POWERS OF THE SUBCOMMITTEE.

(a) IN GENERAL- The Subcommittee shall have such powers as are necessary to carry out the duties and functions under this section.

(b) INFORMATION TO FACILITATE COORDINATION- Each agency and entity represented by a member or liaison shall, to the extent permitted by law, provide the Subcommittee such information, concerning the databases maintained by the agency or entity, as the Subcommittee

(c) SERVICE OF MEMBERS AND LIAISONS- Members of and liaisons to the Subcommittee shall serve without additional compensation for their work on the Subcommittee.

(d) ADMINISTRATIVE AND TECHNICAL SUPPORT- The Subcommittee may request that any agency or entity represented by a member or liaison provide the Subcommittee with any administrative, technical, or other support service that the Subcommittee determines is necessary or appropriate for it to perform the duties described in section 102(a).

SEC. 106. AGREEMENT ON COST STRUCTURE.

(a) IN GENERAL- The Subcommittee shall determine the means for providing for the necessary costs of carrying out the purposes of this title.

(b) CONSULTATION AND AGREEMENT ON FEES AND CONTRIBUTIONS- Notwithstanding any other provision of this title, the Subcommittee may not impose any fee or assessment on, or apportion any contribution against, any member or liaison under this section in connection with allowing such member or liaison access through the network unless--

(1) the Subcommittee consults with such member or liaison; and

(2) the member or liaison consents to the amounts, or on a schedule, of such fees, assessments, or contributions.

(c) REIMBURSEMENT OF PARTICIPANT COSTS- Before allowing access by the Subcommittee or a participant to any information described in section 102, other than access described in subsection (b)(1) of such section, a member or liaison may request the reimbursement of reasonable costs for providing such access.

(d) REVIEW OF OPTIMAL NETWORKING METHODS- Before the end of the 120-day period beginning on the date of the enactment of this Act, the Comptroller General shall submit a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate regarding the most efficient and cost-effective methods for the Subcommittee to fulfill its duties under this title.

SEC. 107. AGENCY SUPERVISORY PRIVILEGE.

(a) DEFINITIONS- For purposes of this section, the following definitions shall apply:

(1) SUPERVISORY PROCESS- The term `supervisory process' means any activity engaged in by a financial regulator to carry out the official responsibilities of the financial regulator with regard to the regulation or supervision of persons engaged in the business of conducting financial activities.

(2) CONFIDENTIAL SUPERVISORY INFORMATION- Subject to paragraph (3), the term `confidential supervisory information' means any of the following information, or any portion of any such information, which is treated as, or considered to be, confidential information by a financial regulator, regardless of the form or format in which the information is created, conveyed, or maintained:

(A) Any report of examination, inspection, visitation, or investigation, and information prepared or collected by the financial regulator in connection with the supervisory process, including any computer file, work paper, or similar information.

(B) Any correspondence or communication from a financial regulator to a person engaged in the business of conducting financial activities relating to an examination, inspection, visitation, or investigation by a financial regulator.

(C) Any correspondence, communication, or document, including any compliance and other reports, created by or on behalf of a person engaged in the business of conducting financial activities in response to any request, inquiry, or directive from a financial regulator in connection with any examination, inspection, visitation, or investigation and provided to a financial regulator.

(D) Any record of a financial regulator to the extent it contains information derived from any report, correspondence, communication or other information described in subparagraph (A), (B), or (C).

(3) ORDINARY BUSINESS RECORDS EXCLUDED- The term `confidential supervisory information' shall not include--

(A) any book or record in the possession of the person engaged in the business of conducting financial activities that is routinely prepared by or on behalf of such person and maintained in the ordinary course of business; or

(B) any information required to be made publicly available--

(i) by any applicable Federal law or regulation; or

(ii) in the case of confidential supervisory information of a State financial regulator, any applicable State law or regulation that specifically refers to such type of information.

(b) FINANCIAL REGULATOR SUPERVISORY PRIVILEGE-

(1) PRIVILEGE ESTABLISHED-

(A) IN GENERAL- All confidential supervisory information shall be the property of the financial regulator that created the information, or requested the information from a person engaged in the business of conducting financial activities, and shall be privileged from disclosure to any other person.

(B) PROHIBITION ON UNAUTHORIZED DISCLOSURES- No person in possession of confidential supervisory information may disclose such information, in whole or in part, without the prior authorization of the financial regulator that created the information, or requested the information from a person engaged in the business of conducting financial activities, except for a disclosure made in published statistical material that does not disclose, either directly or when used in conjunction with publicly available information, the affairs of any person.

(C) AGENCY WAIVER- The financial regulator described in subparagraph (A) may waive, in whole or in part, in the discretion of the regulator, any privilege established under this paragraph.

(2) EXCEPTIONS-

(A) IN GENERAL- No provision of paragraph (1) shall be construed as preventing access to confidential supervisory information by duly authorized committees of the United States Congress or the Comptroller General of the United States.

(B) AGENCY OVERSIGHT- No financial regulator which is subject to the oversight of a Federal agency may assert the privilege described in paragraph (1) to prevent access to confidential supervisory information by such Federal agency.

(c) TREATMENT OF FOREIGN SUPERVISORY INFORMATION- In any proceeding before a Federal or State court of the United States, in which a person seeks to compel production or disclosure by a foreign financial regulator with network access in accordance with section 102(a)(3), any other financial regulator, or any other person, of information or a document prepared or collected by a foreign financial regulator that would, had they been prepared or collected by a Federal financial regulator, be confidential supervisory information for purposes of this section, the information or document shall be privileged to the same extent that the information and documents of Federal financial regulators are privileged under this title.

(d) OTHER PRIVILEGES NOT WAIVED BY DISCLOSURE TO FINANCIAL REGULATOR- The submission by a person engaged in the business of conducting financial activities of any information to a Federal financial regulator, a State financial regulator, or a foreign financial regulator described in subsection (c) for any purpose in the course of the supervisory process of such financial regulator shall not waive, destroy, or otherwise affect any privilege such person may claim with respect to such information under Federal or State law.

(e) DISCOVERY AND DISCLOSURE OF INFORMATION-

(1) INFORMATION AVAILABLE ONLY FROM FINANCIAL REGULATOR-

(A) IN GENERAL- No person or financial regulator may disclose, in whole or in part, any confidential supervisory information to any person who seeks such information through subpoena, discovery procedures, or other process from any such person or regulator, except that such information may be sought in accordance with this section from the financial regulator that created the information or requested the information from a person engaged in the business of conducting financial activity.

(B) PROCEDURE FOR REQUESTS SUBMITTED TO FINANCIAL REGULATOR- Any request for discovery or disclosure of confidential supervisory information shall be made to the financial regulator that created the information, or requested the information from a person engaged in the business of conducting financial activities, which shall determine within a reasonable time period whether to disclose such information pursuant to procedures and criteria established by the financial regulator.

(C) NOTIFICATION-

(i) IN GENERAL- Before any financial regulator releases information that was requested from a person engaged in the business of conducting financial activities to a person under subparagraph (B), notice and a reasonable time for comment shall be provided to the person from whom such information was requested unless such information--

(I) is being provided to another financial regulator, liaison, or Federal or State government (or any agency or instrumentality of any such government);

(II) is being sought for use in a criminal proceeding or investigation or a regulatory or supervisory enforcement or disciplinary action or investigation; or

(III) was originally created, or included in information created, by the financial regulator.

(ii) PROCEDURES AND REQUIREMENTS- The notice and time period required by clause (i) shall be in accordance with the procedures and requirements that the financial regulator releasing the information may establish by regulation or otherwise.

(2) FEDERAL COURT JURISDICTION OVER DISPUTES-

(A) IN GENERAL- In any action or proceeding in which a party seeks to compel disclosure of confidential supervisory information, a financial regulator may, in its sole discretion, elect to remove the action or proceeding on the disclosure issue to Federal court, and any such Federal court shall have exclusive jurisdiction.

(B) JUDICIAL REVIEW- Judicial review of the final action of a financial regulator with regard to the disposition of a request for confidential supervisory information shall be before a district court of the United States of competent jurisdiction, subject to chapter 7 of part I of title 5, United States Code.

(f) AUTHORITY TO INTERVENE- In the case of any action or proceeding to compel compliance with a subpoena, order, discovery request, or other judicial or administrative process with respect to any confidential supervisory information relating to any person engaged in the business of conducting financial activities, a financial regulator may intervene in such action or proceeding, and such person may intervene with such regulator, for the purpose of--

(1) enforcing the limitations established in paragraph (1) of subsections (b) and (e);

(2) seeking the withdrawal of any compulsory process with respect to such information; and

(3) registering appropriate objections with respect to the action or proceeding to the extent the action or proceeding relates to or involves such information.

(g) RIGHT TO APPEAL- Any court order that compels production of confidential supervisory information may be immediately appealed by the financial regulator and the order compelling production shall be automatically stayed, pending the outcome of such appeal.

(h) REGULATIONS-

(1) AUTHORITY TO PRESCRIBE- Each financial regulator may prescribe such regulations as the regulator considers to be appropriate, after consultation with the other financial regulators (to the extent the prescribing financial regulator considers appropriate and feasible), to carry out the purposes of this section.

(2) AUTHORITY TO REQUIRE NOTICE- Any regulations prescribed by a financial regulator under paragraph (1) may require any person in possession of confidential supervisory information to notify the financial regulator whenever the person is served with a subpoena, order, discovery request, or other judicial or administrative process requiring the personal attendance of such person as a witness or requiring the production of such information in any proceeding.

(i) ACCESS IN ACCORDANCE WITH REGULATIONS AND ORDERS- Notwithstanding any other provision of this section, a financial regulator may, without waiving any privilege, authorize access to confidential supervisory information created by such agency, or requested by such regulator from any person engaged in the business of conducting financial activities, for any appropriate governmental, law enforcement, or public purpose in accordance with agency regulations or orders.'.

SEC. 108. CONFIDENTIALITY OF INFORMATION.

(a) IN GENERAL-

(1) FINANCIAL REGULATORS- Except as otherwise provided in this section or section 107, any requirement under Federal or State law regarding the privacy or confidentiality of any information or material in the possession of any participant to the Subcommittee, and any privilege arising under Federal or State law (including the rules of any Federal or State court) with respect to such information or material, shall continue to apply to such information or material--

(A) after the information or material has been disclosed to another participant through the network; and

(B) while the information or material is held by the Subcommittee, whether acquired directly or through the network.

(2) CERTAIN INSURANCE INFORMATION- Except as otherwise provided in this section or section 107, any requirement under Federal or State law regarding the privacy or confidentiality of any information or material in the possession of the National Association of Insurance Commissioners, or any member or affiliate of the Association, and any privilege arising under Federal or State law (including the rules of any Federal or State court) with respect to such information or material, shall continue to apply to such information or material after the information has been disclosed to the Association, or any other member or affiliate of the Association, through the computer network maintained by the Association.

(3) NONAPPLICABILITY OF CERTAIN REQUIREMENTS-

(A) IN GENERAL- Information or material that is subject to a privilege or confidentiality under any other paragraph of this subsection shall not be subject to--

(i) disclosure under any Federal or State law governing the disclosure to the public of information held by an officer or an agency of the Federal Government or the respective State; or

(ii) subpoena or discovery, or admission into evidence, in any private civil action or administrative process,

unless with respect to any privilege held by a participant with respect to such information or material, the participant waives, in whole or in part, in the discretion of the participant, such privilege.

(4) TREATMENT OF CERTAIN INTERNATIONAL FINANCIAL REGULATORS- Except as otherwise provided in this section or section 107, any international regulator that is allowed by the Subcommittee, pursuant to section 103(a)(3), to access the network shall be considered to be a participant financial regulator for purposes of this section and section 107.

(b) PREEMPTION OF STATE LAW- Any State law relating to the disclosure of confidential supervisory information that is the property of any participant or any information or material to which subsection (a) applies that is inconsistent with any provision of section 107 or subsection (a) of this section shall be superseded by the requirements of such provision to the extent of the inconsistency.

(c) DUTY OF FINANCIAL REGULATOR TO MAINTAIN CONFIDENTIALITY- A participant may not receive, download, copy, or otherwise maintain any information or material from any other member of or liaison to the Subcommittee through the network unless--

(1) the participant maintains a system that enables the participant to maintain full compliance with the requirements of sections 102 and 107 and this section, with respect to such information and material; and

(2) if and to the extent required by the Subcommittee, a record is maintained of each attempt to access such information and material, and the identity of the person making the attempt, in order to prevent evasions of such requirements.

SEC. 109. LIABILITY PROVISIONS.

(a) NO LIABILITY FOR GOOD FAITH DISCLOSURES-

(1) IN GENERAL- An entity described in paragraph (2), the members and affiliates of such entity, the officers and employees of such entity, member, or affiliate, the Subcommittee, and officers and employees of the Subcommittee shall not be subject to any civil action or proceeding for monetary damages by reason of the action or omission of any officer or employee of such entity, member, affiliate, or Subcommittee, while acting within the scope of his or her office or employment, relating to collecting, furnishing, or disseminating, directly or through any network maintained by the entity or the Subcommittee, regulatory information, including suspicious or special activity reports, concerning or related to persons engaged in the business of conducting financial activities.

(2) ENTITIES DESCRIBED- The entities referred to in paragraph (1) are as follows:

(A) The National Association of Insurance Commissioners.

(B) The Conference of State Bank Supervisors.

(C) The North American Securities Administrators Association.

(D) The National Association of Securities Dealers.

(E) The National Futures Association.

(F) The National Association of State Credit Union Supervisors.

(b) CRIMINAL LIABILITY FOR INTENTIONAL UNLAWFUL DISCLOSURES- Whoever willfully discloses to any person any information or material maintained by a participant concerning any person engaged in the business of conducting financial activities knowing the disclosure to be in violation of any provision of this title requiring the confidentiality of such information or material, or establishing a privilege from disclosure for any participant which has not been waived by the participant, shall be fined in accordance with title 18, United States Code, or imprisoned not more than 5 years, or both.

(c) FULL, CONTINUED PROTECTION UNDER THE SO-CALLED `FEDERAL TORT CLAIMS ACT'- No provision of this Act shall be construed as reducing or limiting any protection provided for any Federal agency, or any officer or employee of any Federal agency, under section 2679 of title 28, United States Code.

SEC. 110. AUTHORIZATION FOR IDENTIFICATION AND CRIMINAL BACKGROUND CHECK.

(a) AUTHORIZATION AND DUTIES OF THE ANTIFRAUD SUBCOMMITTEE- Upon the request of a financial regulator, the Antifraud Subcommittee shall--

(1) obtain from the Attorney General criminal background records corresponding to fingerprints or other biometric identification provided by the Subcommittee; and

(2) screen the records obtained under paragraph (1) to provide to the requesting financial regulator (or such regulator's designated representative under subsection (i)(1)) any information relating to any crime for which a person could be barred under Federal law by such regulator with respect to the financial activities over which the regulator has jurisdiction.

(b) FORM OF REQUEST- A request under subsection (a) shall include a copy of any necessary identification information required by the Attorney General, such as the name and fingerprints of the person about whom the record is requested and a statement signed by the person acknowledging that the regulator (or such regulator's designated representative under subsection (i)(1)) may request the search.

(c) ATTORNEY GENERAL AUTHORIZATION- Upon receiving a request described in subsection (b), the Attorney General shall--

(1) search the records of the Criminal Justice Information Services Division of the Federal Bureau of Investigation, and any other similar database over which the Attorney General has authority and deems appropriate, for any criminal background records (including wanted persons information) corresponding to the identification information provided under subsection (b); and

(2) provide such records to the Subcommittee for screening.

(d) PERMISSIBLE USES OF INFORMATION- A financial regulator may use information obtained under this section for regulatory or law enforcement purposes and disclose such information to any other financial regulator or Federal or State governmental agency, for regulatory or law enforcement purposes, if the recipient agrees to maintain the confidentiality of such records.

(e) LIMITATION ON USE OF INFORMATION- Information obtained under this section may be used only--

(1) by the authorized recipient of such information; and

(2) for the purpose of determining the suitability of the person about whom the information is obtained for engaging in the business of conducting financial activities.

(f) PENALTY FOR IMPROPER USE- Whoever knowingly uses any information obtained under this section for an unauthorized purpose shall be imprisoned for not more than 2 years or fined under title 18, United States Code, or both.

(g) RELIANCE ON INFORMATION- A financial regulator (or such regulator's designated representative under subsection (i)(1)) who reasonably relies on information provided under this section shall not be liable in any action based on an employment determination resulting from the incompleteness or inaccuracy of such information.

(h) SAFE HARBOR- No person engaged in the business of conducting financial activities shall be subject to any civil action or proceeding for monetary damages or any action brought under section 1033(e)(1)(B) of title 18, United States Code, for permitting an individual to engage in the business of conducting financial activities in violation of section 1033(e)(1)(A) of such title, if such individual is licensed, or approved (as part of an application or otherwise), by a financial regulator that performs criminal background checks under this section, unless

(i) DESIGNATION OF REPRESENTATIVE-

(1) IN GENERAL- A financial regulator may designate a representative, to be approved by the Antifraud Subcommittee, for facilitating requests and exchanges of information under this section between the financial regulator and the Subcommittee.

(2) SENSE OF CONGRESS REGARDING REPRESENTATIVES OF INSURANCE REGULATORS- It is the sense of the Congress that--

(A) each State insurance commissioner should designate the National Association of Insurance Commissioners as a representative under paragraph (1);

(B) persons engaged in the business of insurance should be able to use the National Association of Insurance Commissioners to facilitate obtaining fingerprints and supplying identification information for use in background checks under this section on a multijurisdictional basis;

(C) the National Association of Insurance Commissioners should maintain a database to obtain records under this section for use by State insurance commissioners to reduce multiple or duplicative fingerprinting requirements and criminal background checks; and

(D) other financial regulators that require fingerprints and criminal background checks should similarly coordinate efforts to reduce duplication for persons engaged in the business of conducting multiple types financial activities.

(j) SENSE OF CONGRESS REGARDING USE OF DETAILEES- It is the sense of the Congress that a criminal background records screening described in subsection (a)(2) may be performed by a detailee of the requesting financial regulator (or such regulator's designated representative under subsection (i)(1)), if such detailee does not disclose to such regulator (or representative) information from such records other than the resulting screened information described in subsection (a)(2).

(k) FEES- The Attorney General and the Antifraud Subcommittee may charge a reasonable fee for the provision of information under this section.

(l) RULE OF CONSTRUCTION- This section shall not be interpreted--

(1) to provide independent authorization for a financial regulator to require fingerprinting as a part of a licensure or other application; or

(2) to require a financial regulator to perform criminal background checks under this section.

(m) REGULATIONS- The Attorney General may prescribe regulations to carry out this section.

SEC. 111. DEFINITIONS.

For purposes of this title, the following definitions shall apply:

(1) FEDERAL BANKING AGENCY- The term `Federal banking agency' has the same meaning as given in section 3(z) of the Federal Deposit Insurance Act.

(2) FINANCIAL ACTIVITIES- The term `financial activities' means activities that are financial in nature or are incidental to a financial activity (as defined under section 4(k) of the Bank Holding Company Act of 1956).

(3) FINANCIAL REGULATOR- The term `financial regulator' means--

(A) each Federal banking agency;

(B) the Securities and Exchange Commission;

(C) the Commodity Futures Trading Commission;

(D) the National Credit Union Administration;

(E) the Farm Credit Administration;

(F) the Federal Housing Finance Board;

(G) the Federal Trade Commission, with respect to creditors subject to the jurisdiction of the Commission under section 108(c) of the Truth in Lending Act;

(H) the Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development;

(I) any State bank supervisor (as defined in section 3(r) of the Federal Deposit Insurance Act), including the Conference of State Bank Supervisors only to the extent--

(i) such conference is acting as an agent of, and is subject to the oversight of, any such State bank supervisor; and

(ii) the conference provides notice to the Subcommittee when it is acting in such capacity as an agent;

(J) any State insurance commissioner, including the National Association of Insurance Commissioners only to the extent--

(i) such association is acting as the agent of, and is subject to the oversight of, any such insurance commissioner; and

(ii) the association provides notice to the Subcommittee when it is acting in such capacity as an agent;

(K) any State securities administrator, including the North American Securities Administrators Association only to the extent--

(i) such association is acting as the agent of, and is subject to the oversight of, any such securities administrator; and

(ii) the association provides notice to the Subcommittee when it is acting in such capacity as an agent;

(L) any State credit union supervisor, including the National Association of State Credit Union Supervisors only to the extent--

(i) such association is acting as the agent of, and is subject to the oversight of, any such credit union supervisor; and

(ii) the association provides notice to the Subcommittee when it is acting in such capacity as an agent;

(M) the National Association of Securities Dealers, only to the extent that--

(i) such association is acting in connection with the financial services industry and is subject to the oversight of the Securities and Exchange Commission; and

(ii) the association provides notice to the Subcommittee when it is acting in such capacity;

(N) the National Futures Association, only to the extent that--

(i) such association is acting in connection with the financial services industry and is subject to the oversight of the Commodity Futures Trading Commission or the Securities and Exchange Commission; and

(ii) the association provides notice to the Subcommittee when it is acting in such capacity; and

(O) any other self-regulatory organization that engages in or coordinates regulatory and enforcement activities, with respect to any person engaged in the business of conducting financial activities, that is subject to the oversight of the Securities and Exchange Commission or the Commodity Futures Trading Commission.

(4) PARTICIPANT- The term `participant' means any regulator which--

(A) is represented by a member of, or a liaison to, the Subcommittee; and

(B) is allowed access to the network by the Subcommittee.

(5) PERSON ENGAGED IN THE BUSINESS OF CONDUCTING FINANCIAL ACTIVITIES- The term `person engaged in the business of conducting financial activities' includes, to the extent appropriate under the laws applicable to the jurisdiction of a financial regulator over such person--

(A) any director, officer, employee, or controlling stockholder of, or agent for, any such person;

(B) any other person who has filed or is required to file a change-in-control notice with the appropriate financial regulator before acquiring control of such person; and

(C) any shareholder, consultant, joint venture partner, and any other person, including an independent contractor, as determined by the appropriate financial regulator (by regulation or case-by-case) who participates in the conduct of the affairs of such person.

(6) STATE INSURANCE COMMISSIONER- The term `State insurance commissioner' means any officer, agency, or other entity of any State which has primary regulatory authority over the business of insurance and over any person engaged in the business of insurance to the extent of such activities, in such State.

(7) STATE SECURITIES ADMINISTRATOR- The term `State securities administrator' means the securities commission (or any agency or office performing like functions) of any State.

SEC. 112. TECHNICAL AND CONFORMING AMENDMENTS TO OTHER ACTS.

(a) Subsection (b) of section 552a of title 5, United States Code, is amended--

(1) by striking `or' at the end of paragraph (11);

(2) by striking the period at the end of paragraph (12) and inserting `; or'; and

(3) by inserting after paragraph (12) the following new paragraph:

`(13) for recordkeeping, licensing, and other regulatory and law enforcement purposes in accordance with title I of the Financial Services Antifraud Network Act of 2001--

`(A) through a computer network or name-relationship index maintained by the Antifraud Subcommittee under such title; or

`(B) to a multistate database maintained by the National Association of Insurance Commissioners and any subsidiary or affiliate of such association, subject to the requirements of such title.'.

(b) Section 1113 of the Financial Institutions Regulatory and Interest Rate Control Act of 1978 (12 U.S.C. 3413) is amended by adding at the end the following new subsection:

`(r) This title shall not apply to disclosure by a financial regulator represented by a member of or liaison to the Antifraud Subcommittee of information which is subject to section 107 or 108 of the Financial Services Antifraud Network Act of 2001 to the extent the disclosure is made in accordance with the requirements of such Act.'.

SEC. 201. INVESTMENT ADVISERS ACT OF 1940.

Section 204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-4) is amended--

(1) by striking `Every investment' and inserting the following:

`(a) IN GENERAL- Every investment'; and

(2) by adding at the end the following:

`(b) FILING DEPOSITORIES- The Commission, by rule, may require an investment adviser--

`(1) to file with the Commission any fee, application, report, or notice required to be filed by this title or the rules issued under this title through any entity designated by the Commission for that purpose; and

`(2) to pay the reasonable costs associated with such filing and the establishment and maintenance of the systems required by subsection (c).

`(c) ACCESS TO DISCIPLINARY AND OTHER INFORMATION-

`(1) MAINTENANCE OF SYSTEM TO RESPOND TO INQUIRIES- The Commission shall require the

`(A) to establish and maintain a toll-free telephone listing or other readily accessible electronic process to receive inquiries regarding disciplinary actions and proceedings and other information involving investment advisers and persons associated with investment advisers; and

`(B) to respond promptly to such inquiries.

`(2) RECOVERY OF COSTS- An entity designated by the Commission under subsection (b)(1) may charge persons, other than individual investors, reasonable fees for responses to inquiries made under paragraph (1).

`(3) LIMITATION ON LIABILITY- An entity designated by the Commission under subsection (b)(1) shall not have any liability to any person for any actions taken or omitted in good faith under this subsection.'.

SEC. 202. SECURITIES EXCHANGE ACT OF 1934.

Subsection (i) of section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o-3) is amended to read as follows:

`(i) OBLIGATION TO MAINTAIN DISCIPLINARY AND OTHER DATA-

`(1) MAINTENANCE OF SYSTEM TO RESPOND TO INQUIRIES- A registered securities association shall--

`(A) establish and maintain a toll-free telephone listing or other readily accessible electronic process to receive inquiries regarding disciplinary actions and proceedings and other information involving its members and their associated persons and regarding disciplinary actions and proceedings and other information that has been reported to the Central Registration Depository by any registered national securities exchange involving its members and their associated persons; and

`(B) promptly respond to such inquiries.

`(2) RECOVERY OF COSTS- Such association may charge persons, other than individual investors, reasonable fees for responses to such inquiries.

`(3) LIMITATION ON LIABILITY- Such an association or exchange shall not have any liability to any person for any actions taken or omitted in good faith under this subsection.'.

SEC. 211. SECURITIES EXCHANGE ACT OF 1934.

(a) BROKERS AND DEALERS- Section 15(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)) is amended--

(1) in paragraph (4), by striking subparagraphs (F) and (G) 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.

`(G) has been found by a foreign financial regulatory authority to have--

`(i) made or caused to be made in any application for registration or report required to be filed with a foreign financial regulatory authority, or in any proceeding before a foreign financial regulatory authority with respect to registration, any statement that was at the time and in the light of the circumstances under which it was made false or misleading with respect to any material fact, or omitted to state in any such application, report, or proceeding any material fact that is required to be stated therein;

`(ii) violated any foreign statute or regulation regarding securities, banking, thrift activities, credit union activities, insurance, or contracts of sale of a commodity for future delivery, traded on or subject to the rules of a contract market or any board of trade; or

`(iii) aided, abetted, counseled, commanded, induced, or procured the violation by any other person of any provision of any statutory provisions enacted by a foreign government, or rules or regulations thereunder, regarding securities, banking, thrift activities, credit union activities, insurance, or contracts of sale of a commodity for future delivery traded on or subject to the rules of a contract market or any board of trade, or to have failed reasonably to supervise, with a view to preventing violations of such statutory provisions, rules, and regulations, another person who commits such a violation, if such other person is subject to his supervision.

`(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, thrifts, 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, thrift 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.'; and

(2) in paragraph (6)(A)(i), by striking `or omission enumerated in subparagraph (A), (D), (E), or (G)' and inserting `, or is subject to an order or finding, enumerated in subparagraph (A), (D), (E), (G), or (H)'.

(b) MUNICIPAL SECURITIES BROKERS AND DEALERS- Section 15B(c) of the Securities Exchange Act of 1934 (15 U.S.C. 78o-4(c)) is amended--

(1) in paragraph (2)--

(A) by striking `or omission enumerated in subparagraph (A), (D), (E), or (G)' and inserting `, or is subject to an order or finding, enumerated in subparagraph (A), (D), (E), (G), or (H)'; and

(B) by striking `ten' and inserting `10';

(2) in paragraph (4)--

(A) by striking `or omission enumerated in subparagraph (A), (D), (E), or (G)' and inserting `, or is subject to an order or finding, enumerated in subparagraph (A), (D), (E), (G), or (H)' and

(B) by striking `ten' and inserting `10';

(c) GOVERNMENT SECURITIES BROKERS AND DEALERS- Section 15C(c)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78o-5(c)(1)) is amended--

(1) in subparagraph (A), by striking `or omission enumerated in subparagraph (A), (D), (E), or (G)' and inserting `, or is subject to an order or finding, enumerated in subparagraph (A), (D), (E), (G), or (H)'; and

(2) in subparagraph (C), by striking `or omission enumerated in subparagraph (A), (D), (E), or (G)' and inserting `, or is subject to an order or finding, enumerated in subparagraph (A), (D), (E), (G), or (H)'.

(d) CLEARANCE AND SETTLEMENT- Section 17A(c) of the Securities Exchange Act of 1934 (15 U.S.C. 78q-1(c)) is amended--

(1) in paragraph (3)(A), by striking `enumerated in subparagraph (A), (D), (E), or (G)' and inserting `, or is subject to an order or finding, enumerated in subparagraph (A), (D), (E), (G), or (H)'; and

(2) in paragraph (4)(C)--

(A) by striking `enumerated in subparagraph (A), (D), (E), or (G)' and inserting `, or is subject to an order or finding, enumerated in subparagraph (A), (D), (E), (G), or (H)'; and

(B) by striking `ten years' and inserting `10 years'.

(e) DEFINITION OF STATUTORY DISQUALIFICATION- Section 3(a)(39)(F) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(39)(F)) is amended by striking `has committed or omitted any act enumerated in subparagraph (D), (E), or (G)' and inserting `has committed or omitted any act, or is subject to an order or finding, enumerated in subparagraph (D), (E), (G), or (H)'.

SEC. 212. INVESTMENT ADVISERS ACT OF 1940.

(a) AUTHORITY TO DENY OR REVOKE REGISTRATION BASED ON STATE (AND OTHER GOVERNMENTAL) ADMINISTRATIVE ACTIONS- Section 203(e) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(e)) is amended by striking paragraphs (7) and (8) 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.

`(8) has been found by a foreign financial regulatory authority, State securities commission (or any State agency or officer performing similar functions), State authority that supervises or examines banks, thrifts, or credit unions, State insurance commission (or any State agency or officer performing similar functions), any appropriate Federal banking agency (as such term is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), or the National Credit Union Administration to have--

`(A) made or caused to be made in any application for registration or report required to be filed with, or in any proceeding before, the authority, commission, or agency any statement that was, at the time and in light of the circumstances under which it was made, false or misleading with respect to any material fact, or omitted to state in any application or report filed with, or in any proceeding before, the authority, commission, or agency any material fact that is required to be stated in the application, report, or proceeding;

`(B) violated any foreign, State, or Federal statute or regulation regarding securities, insurance, banking, thrift activities, credit union activities, or contracts of sale of a commodity for future delivery traded on or subject to the rules of a contract market or any board of trade; or

`(C) aided, abetted, counseled, commanded, induced, or procured the violation by any other person of any foreign, State, or Federal statute or regulation regarding securities, insurance, banking, thrift activities, credit union activities, or contracts of sale of a commodity for future delivery traded on or subject to the rules of a contract market or any board of trade, or failed reasonably to supervise, with a view to preventing violations of any such statute or regulation, another person who commits such a violation, if the other person is subject to his or its supervision.'.

(b) BARS ON FELONS ASSOCIATED WITH INVESTMENT ADVISERS- Section 203(f) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3(f)) is amended by inserting `or (3)' after `paragraph (2)'.