,i #aaeth ,,congress #ast ,session ,h4 ,r4 #ceai ,,in ,,the ,,house ,,of ,,representatives ,july #bg1 #bjag,ms4 ,maxine ,waters of ,california introduced the following bill2 which was referred to the ,committee on ,financial ,services ,a ,,bill ,to increase accountability of the ,securities and ,exchange ,commission and to require the ,commission to implement a rigorous1 fair1 and public process for waiving bad actor disqualifications in the securities laws4 #a4 ,short title ,this ,act may be cited as the ,bad ,actor ,disqualification ,act of #bjag4 #b4 ,sense of ,congress ,it is the sense of ,congress that3 7#a7 ,the automatic disqualification provisions in the securities laws are valuable tools that protect investors1 the markets1 and the public by deterring misconduct1 reducing recidivism1 promoting market integrity1 and removing bad actors from the market4 7#b7 ,these tools are inappropriately underutilized and waivers of the automatic disqualification provisions are disproportionately granted to the largest financial institutions on ,wall ,street1 many of which are recidivists4 ,between ,july1 #bjjc1 and ,december1 #bjad1 large financial firms received the vast majority of waivers of sanctions1 about #hb percent of #bja total waivers4 7#c7 ,waivers of these automatic sanctions should be granted sparingly and only through an open and transparent process4 #c4 ,increasing transparency and accountability in waiving bad actor disqualifications ,section #cf of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghmm7 is amended by adding at the end the following3 7c7 ,waiver procedure and identification of bad actors 7#a7 ,waiver procedure 7,a7 ,temporary waiver 7i7 ,petition for waiver ,a person may petition the ,commission for a temporary waiver of a disqualification or pending disqualification described under subparagraphs 7,a7 through 7,g7 of paragraph 7#c74 7ii7 ,grant of waiver ,with respect to a petition made by a person under clause 7i71 when such person becomes an ineligible person1 the ,commission may vote to provide such person with a single #ahj-;day temporary waiver1 by order1 if the ,commission determines that such person has demonstrated immediate irreparable injury4 7iii7 ,publication of petition ,the ,commission shall publish any petition for a temporary waiver along with the order containing an explanation for any ,commission determination immediately following the related vote under clause 7ii74 7,b7 ,general waiver ,following the #ahj-;day period provided under subparagraph 7,a71 the ,commission1 by vote during a meeting open to the public1 may not waive any disqualification described under subparagraphs 7,a7 through 7,g7 of paragraph 7#c71 unless the ,commission determines1 without regard to the direct costs to the ineligible person associated with a denial1 that such waiver-- 7i7 is in the public interest2 7ii7 is necessary for the protection of investors2 and 7iii7 promotes market integrity4 7,c7 ,federal ,register notice2 public hearing ,before making a determination under subparagraph 7,b71 the ,commission shall publish adequate notice in the ,federal ,register of the pendency of the waiver determination and shall afford the public and interested persons an opportunity to present their views1 including at a public hearing4 7,d7 ,prohibition on advance advice ,commission staff may not advise any person of the recommendation of staff to the ,commission or on the likelihood of a waiver being granted or denied under this paragraph for such person4 7,e7 ,recordkeeping requirement ,the ,commission shall keep a public record of all requests for a waiver under this paragraph that are later withdrawn4 7#b7 ,database of ineligible persons ,the ,commission shall establish1 and maintain1 a public database of all ineligible persons that the ,commission has voted against providing a waiver under this subsection or that have indicated their ineligibility in any disclosure to the ,commission4 7#c7 ,ineligible person defined ,for purposes of this subsection1 the term ineligible person means any person that-- 7,a7 is an ineligible issuer and not eligible to qualify as a well-known seasoned issuer 7as such terms are defined under section #bcj4dje of title #ag1 ,code of ,federal ,regulations72 7,b7 is not eligible to make use of an exemption provided for certain ,regulation ,d private offerings under section #bcj4eje or #bcj4ejf of title #ag1 ,code of ,federal ,regulations2 7,c7 is not eligible for any safe harbor for forward-looking statements provided for under section #bg;,a7c7 of the ,securities ,act of #aicc2 7,d7 is not eligible for any safe harbor for forward-looking statements provided for under section #ba;,e7c7 of the ,securities ,exchange ,act of #aicd2 7,e7 is disqualified from receiving a cash fee1 directly or indirectly1 from an investment adviser with respect to solicitation activities1 as described under section #bge4bjf7d7-c of title #ag1 ,code of ,federal ,regulations2 7,f7 is not eligible to make use of an exemption provided for certain ,regulation ,a offerings under section #bcj4bfb of title #ag1 ,code of ,federal ,regulations2 or 7,g7 is not eligible to make use of an exemption provided for certain ,regulation ,e offerings under section #bcj4fjb of title #ag1 ,code of ,federal ,regulations4 4 #d4 ,,gao study 7a7 ,study ,the ,comptroller ,general of the ,united ,states shall carry out a study of the ,securities and ,exchange ,commission's existing waiver process1 and the standard used by the ,commission in granting an application for an exemption1 under section #i7;c7 of the ,investment ,company ,act of #aidj4 7b7 ,report ,not later than the end of the #ahj-;day period beginning on the date of the enactment of this ,act1 the ,comptroller ,general shall issue a report to the ,congress containing-- 7#a7 all findings and determinations made in carrying out the study required under subsection 7a72 7#b7 a comparison of the ,commission's standard used in granting an application for an exemption under section #i7;c7 of the ,investment ,company ,act of #aidj with the standard used to grant a waiver under section #cf7;c7 of the ,securities ,exchange ,act of #aicd1 as added by this ,act2 and 7#c7 recommendations on how to increase transparency and opportunity for public participation in the waiver process under section #i7;c7 of the ,investment ,company ,act of #aidj and ensure that the disqualification and waiver process used by the ,commission under such section #i7;c7 is protective of investors1 the markets1 and the public and deters misconduct1 reduces recidivism1 promotes market integrity1 and removes bad actors from the market4