,,ii  #aae? ,,congress  #a/ ,session    
,s4 #agdd  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,augu/ #c1 #bjag,ms4   
,baldw9 7= h]self & ,mr4 ,p]due7        
introduc$ ! foll[+ bill2 :i* 0 read     
twice & ref]r$ to ! ,committee on       
,bank+1 ,h\s+1 & ,urban ,affairs  ,a    
,,bill  ,to require ! ,securities &     
,ex*ange ,commission to am5d c]ta9      
regulations1 & = o!r purposes4  #a4     
,%ort title ,?is ,act may be cit$ z !   
,brokaw ,act4  #b4 ,b5eficial own]%ip & 
%ort int]e/s  7a7 ,am5dm5ts to rule     
#ac;d-#a  7#a7 ,9 g5]al ,n lat] ?an #a  
ye> aft] ! date ( enactm5t ( ?is ,act1 !
 ,securities & ,ex*ange ,commission %all
 am5d section #bdj4ac;d-#a ( title #ag1 
,code ( ,f$]al ,regulations1 by /rik+   
subsection 7a7 & ins]t+ ! foll[+3  7a7  
,any p]son :o-- 7#a7 aft] directly or   
indirectly acquir+ ! b5eficial own]%ip (
 any equity security ( a class describ$ 
9 subsection 7i71 is directly or        
indirectly ! b5eficial own] ( m ?an #e  
p]c5t ( ! class %all1 n lat] ?an #d     

bus9ess days aft] ! acquisition1 file ) 
! ,commission a /atem5t conta9+ !       
in=mation requir$ by ,s*$ule #ac;,d1 z  
describ$ 9 section #bdj4ac;d-#aja2 &    
7#b7 aft] acquir+ a direct or indirect  
%ort int]e/ 9 an equity security ( a    
class describ$ 9 subsection 7i71 has a  
direct or indirect %ort int]e/ repres5t+
 m ?an #e p]c5t ( ! class %all1 n lat]  
?an #d bus9ess days aft] ! acquisition1 
file ) ! ,commission a /atem5t conta9+  
in=mation t is sub/antially simil> to ! 
in=mation requir$ by ,s*$ule #ac;,d1 z  
describ$ 9 section #bdj4ac;d-#aja4  4   
7#b7 ,promulgation ( regulation ,n lat] 
?an ! date on :i* ! ,securities &       
,ex*ange ,commission makes ! am5dm5ts   
requir$ by p>agraph 7#a71 ! ,commission 
%all promulgate a regulation detail+ !  
in=mation t %all be submitt$ to !       
,commission "u section                  
#bdj4ac;d-#a7;a77#b7 ( title #ag1 ,code 
( ,f$]al ,regulations1 z add$ by        
p>agraph 7#a74  7b7 ,am5dm5ts to rule   
#ac;d-#c ,n lat] ?an #a ye> aft] ! date 

( enactm5t ( ?is ,act1 ! ,securities &  
,ex*ange ,commission %all am5d section  
#bdj4ac;d-#c ( title #ag1 ,code ( ,f$]al
 ,regulations--  7#a7 9 subsection 7a7--
 7,a7 9 ! undesignat$ matt] prec$+      
p>agraph 7#a71 by /rik+ & #ac7;g7 &     
ins]t+ 1 #ac7;g71 & #ac7s72  7,b7 9     
p>agraph 7#a71 by /rik+ &_/or12  7,c7 9 
p>agraph 7#b71 by /rik+ ! p]iod at ! end
 & ins]t+ 2 or2 &  7,d7 by add+ at ! end
 ! foll[+3  7#c7 ,a pecuni>y or indirect
 pecuni>y int]e/ 9 su* security4  2 &   
7#b7 by add+ at ! end ! foll[+3  7e7 ,= 
! purposes ( calculat+1 ) respect to a  
d]ivative in/rum5t1 ! #e p] c5tum figure
 describ$ 9 sections #ac7;d77#a71       
#ac7;g77#a71 & #ac7s77#a7 ( ! ,act1 a   
p]son--  7#a7 may use-- 7,a7 ! numb] (  
%>es t may be deliv]$ to ! p]son or by !
 p]son on ! ex]cise ( ! rights "u !     
d]ivative in/rum5t2  7,b7 ! numb] ( %>es
 by ref]5ce to :i* ! am\nt payable "u ! 
d]ivative in/rum5t is d]iv$ or det]m9$2 
7,c7 9 ! case ( /ock futures contracts1 
! product obta9$ by multiply+ ! contract

 multipli] by ! numb] ( contracts held2 
7,d7 9 ! case ( a ca% settl$ d]ivative !
 numb] ( %>es 9 ! contract if ! contract
 all[s = a ca% equival5t ( ! clos+ price
 ( ! %>e2 or  7,e7 :5 det]m9+ ! numb] ( 
out/&+ %>es ( a class ( equity          
securities1 ! guidance provid$ "u       
section #ac;d-#a7;j72  7#b7 %all1 )     
respect to a d]ivative in/rum5t t does n
 h a delta t is equal to "o 7includ+    
ca%-settl$ options71 use ! numb] ( %>es 
t ! p]son c\ld pur*ase ) ! ca% t w\ld   
result f ! product t is obta9$ by       
multiply+ ! delta by ! numb] ( expos$   
%>es2  7#c7 7,a7 may n take ! diff]5ce  
betwe5 ! p]c5tage ( a class ( equity    
security 9 :i* ! p]son has a %ort int]e/
 7z describ$ 9 section #ac7s77#c7 ( !   
,act7 & ! p]c5tage ( t class ( equity   
security 9 :i* ! p]son has a long       
int]e/2 &  7,b7 %all use ! great]       
p]c5tage ( :i* ! p]son has-- 7i7 a %ort 
int]e/ 7z describ$ 9 section #ac7s77#c7 
( ! ,act7 9 a class ( equity security2  
or  7ii7 a long int]e/ 9 a class (      

equity security2 &  7#d7 %all calculate 
b5eficial own]%ip 9 accordance )        
subsection 7d77#a74  7f7 ,= ! purposes (
 ?is section-- 7#a7 ! t]m delta means1 )
 respect to a f9ancial in/rum5t1 !      
proportion t reflects ! *ange 9 ! value 
( ! in/rum5t to ! *ange 9 ! value ( !   
und]ly+ asset2  7#b7 ! t]m d]ivative    
in/rum5t-- 7,a7 means any--  7i7 option1
 w>rant1 conv]tible security1 /ock      
appreciation "r1 or simil> "r-- 7,i7    
:e!r or n ! "r or in/rum5t %all be      
subject$ to settlem5t 9 ! und]ly+ equity
 security2 &  7,,ii7 ) an ex]cise1      
ex*ange1 or conv]sion privilege1 or "r  
to a settlem5t paym5t at a price relat$ 
to an equity security2 or  7ii7 simil>  
in/rum5t ) a value d]iv$ 9 :ole or 9 "p 
f ! value ( an equity security2 &  7,b7 
does n include-- 7i7 rights ( a bona    
fide pl$gee ( securities to sell ! pl$g$
 securities2  7ii7 rights ( all hold]s (
 a class ( securities ( an issu] to     
receive securities pro rata1 or         
obligations to dispose ( securities1 z a

 result ( a m]g]1 ex*ange (f]1 or       
consolidation involv+ ! issu] ( !       
securities2  7iii7 rights or obligations
 to surr5d] a security1 or to h a       
security )held1 ^u ! receipt or ex]cise 
( a d]ivative security or ! receipt or  
ve/+ ( equity securities1 9 ord] to     
satisfy ! ex]cise price or ! tax )hold+ 
consequ5ces ( receipt1 ex]cise1 or ve/+2
  7iv7 int]e/s 9 broad-bas$ index       
options1 broad-bas$ index futures1 &    
broad-bas$ publicly trad$ m>ket baskets 
( /ocks approv$ = trad+ by ! appropriate
 au?ority ( ! ,f$]al ,gov]nm5t2  7v7    
int]e/s or rights to p>ticipate 9       
employee b5efit plans ( ! issu] held by 
employees or =m] employees ( ! issu]2 or
  7vi7 options grant$ to an und]writ] 9 
a regi/]$ public (f]+ = ! purpose (     
satisfy+ ov]-allotm5ts 9 ! (f]+2  7#c7 !
 t]m imm$iate family-- 7,a7 means a     
p]son's--  7i7 bro!r-9-law2  7ii7 *ild2 
7iii7 daught]-9-law2  7iv7 fa!r-9-law2  
7v7 gr&*ild2  7vi7 gr&p>5t2  7vii7      
"m-9-law2  7viii7 p>5t2  7ix7 sibl+2    

7x7 si/]-9-law2  7xi7 son-9-law2  7xii7 
sp\se2  7xiii7 /ep*ild2 or  7xiv7       
/epp>5t2 &  7,b7 includes adoptive      
relation%ips2  7#d7 ! t]m indirect      
pecuni>y int]e/--  7,a7 includes-- 7i7  
own]%ip ( any d]ivative in/rum5t t      
conta9s ! direct or indirect opportunity
 to pr(it f1 or %>e 9 any pr(it d]iv$ f1
 an increase 9 ! value ( ! subject      
security1 includ+ ! "r to acquire !     
subject security ?r\gh ! ex]cise or     
conv]sion ( a d]ivative in/rum5t1 :e!r  
or n ! "r is ex]cisable on ! date ! "r  
is obta9$2  7ii7 securities held by     
imm$iate family memb]s ( an individual  
:o %>e ! same h\sehold ( ! individual1  
except t ! presumption ( b5eficial      
own]%ip 9 ?is circum/ance %all be       
rebuttable2  7iii7 ! proportionate      
int]e/ ( a g5]al p>tn] 9 ! portfolio    
securities held by a g5]al or limit$    
p>tn]%ip1 :]e ! proportionate int]e/1 z 
evid5c$ by ! p>tn]%ip agreem5t 9 effect 
at ! "t ( ! transaction & ! mo/ rec5t   
f9ancial /atem5ts ( ! p>tn]%ip1 %all be 

! great] (--  7,i7 ! %>e ( ! pr(its ( ! 
g5]al p>tn]1 includ+-- 7aa7 7,,aa7      
pr(its attribut$ to any limit$ p>tn]%ip 
int]e/s held by ! g5]al p>tn]2 & 7,,bb7 
any o!r int]e/s 9 pr(its t arise f !    
pur*ase & sale ( ! sale ( ! portfolio   
securities ( ! p>tn]%ip2 or  7,,ii7 !   
%>e ( ! p>tn]%ip capital acc\nt belong+ 
to ! g5]al p>tn]1 includ+ ! %>e         
attributable to any limit$ p>tn]%ip held
 by ! g5]al p>tn]2  7iv7 subject to     
subp>agraph 7,b77ii71 a p]=mance-bas$   
fee receiv$ by any-- 7,i7 brok]2  7,,ii7
 deal]2  7,,iii7 bank2  7,,iv7 insurance
 company2  7,v7 inve/m5t company2       
7,,vi7 inve/m5t advis]2  7,,vii7        
inve/m5t manag]2 or  7,,viii7 tru/ee or 
p]son p]=m+ a simil> function2  7v7 a "r
 to divid5ds only if ! "r is sep>at$ or 
sep>able f ! und]ly+ security or        
securities2 &  7vi7 int]e/ 9 securities 
held by a tru/1 to ! ext5t t-- 7,i7 )   
respect to a tru/ee ( ! tru/--  7aa7 !  
tru/ee receives a p]=mance-bas$ fee t is
 n ( ! k9d describ$ 9 subp>agraph       

7,b77ii72 or  7bb7 an imm$iate family   
memb] ( ! tru/ee is a b5efici>y ( !     
tru/2  7,,ii7 ) respect to a b5efici>y (
 ! tru/1 ! b5efici>y--  7aa7 has        
inve/m5t control ov] tru/ assets2 or    
7bb7 %>es inve/m5t control ov] tru/     
assets ) ! tru/ee ( ! tru/2 &  7,,iii7 )
 respect to a settlor ( ! tru/1 !       
settlor-- 7aa7 res]ves ! "r to revoke ! 
tru/ )\t ! cons5t ( ano!r p]son2 &  7bb7
 ex]cises or %>es inve/m5t control ov]  
securities held by ! tru/2 &  7,b7 does 
n include--  7i7 an asset-bas$ fee2     
7ii7 a p]=mance-bas$ fee1 reg>dless ( :5
 payable1 t is calculat$ bas$ ^u net    
capital ga9s or net capital appreciation
 g5]at$ f--  7,i7 a portfolio2 or       
7,,ii7 f ! ov]all p]=mance ( a fiduci>y 
ov] a p]iod ( n less ?an #a ye>2 &      
7iii7 a situation 9 :i* equity          
securities ( an issu] d n acc\nt = m ?an
 #aj p]c5t ( ! m>ket value ( a          
portfolio2  7#e7 ! t]m pecuni>y int]e/  
means ! direct or indirect opportunity  
to pr(it f1 or %>e 9 any pr(it d]iv$ f1 

a transaction 9 ! subject security2 &   
7#f7 ! t]m p]son includes-- 7,a7 two or 
m p]sons act+ z a p>tn]%ip1 limit$      
p>tn]%ip1 syndicate1 or o!r gr\p1 or    
o!rwise coord9at+ ! actions ( ! p]sons1 
= ! purpose (--  7i7 acquir+1 hold+1 or 
dispos+ ( securities ( an issu]2  7ii7  
seek+ to control or influ5ce ! bo>d1    
managem5t1 or policies ( an issu]2 or   
7iii7 evad+1 or assi/+ o!rs 9 evad+1 !  
designation z a p]son "u ?is p>agraph2  
or  7,b7 a h$ge fund 7z t t]m is def9$ 9
 section #ac7;h7 ( ! ,bank ,hold+       
,company ,act ( #aief 7#ab ,u4,s4,c4    
#ahea7;h77 or a gr\p ( h$ge funds or    
p]sons t are1 z det]m9$ by !            
,commission1 work+ toge!r to evade !    
requirem5ts ( section #ac7;d71 #ac7;g71 
or #ac7s7 ( ! ,act4  4  7c7 ,%ort       
int]e/s ,section #ac ( ! ,securities    
,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4    
#ghm7 is am5d$ by add+ at ! end !       
foll[+3  7s7 ,disclosure ( %ort int]e/s 
7#a7 ,9 g5]al ,a p]son :o1 aft] acquir+ 
a direct or indirect %ort int]e/ 9 an   

equity security ( a class describ$ 9    
p>agraph 7#b71 has a direct or indirect 
%ort int]e/ repres5t+ m ?an #e p] c5tum 
( ! class1 %all1 n lat] ?an #d bus9ess  
days aft] ! acquisition1 file ) !       
,commission a /atem5t conta9+ in=mation 
t is sub/antially simil> to ! /atem5t   
requir$ "u subsection 7d77#a74  7#b7    
,cov]$ classes  7,a7 ,9 g5]al ,!        
requirem5ts ( p>agraph 7#a7 %all apply  
to ! foll[+ classes ( securities3 7i7   
,any equity security ( a class :i* is   
regi/]$ pursuant to section #ab4  7ii7  
,any equity security ( an insurance     
company :i* w\ld h be5 requir$ to be    
regi/]$ 9 accordance ) section #ab      
except = ! exemption conta9$ 9 section  
#ab7;g77#b77;,g74  7iii7 ,any equity    
security issu$ by a clos$-end inve/m5t  
company regi/]$ "u ! ,inve/m5t ,company 
,act ( #aidj 7#ae ,u4,s4,c4 #hj;a-#a et 
seq474  7,b7 ,exception ,! requirem5ts (
 p>agraph 7#a7 %all n apply to an equity
 security t belongs to a nonvot+ class4 
7#c7 ,%ort int]e/ ,= purposes ( ?is     

section1 a p]son %all be deem$ to h a   
%ort int]e/ 9 a security if ! p]son1    
directly or indirectly1 ?r\gh any       
contract1 arrangem5t1 und]/&+1          
relation%ip1 or o!rwise1 has !          
opportunity to pr(it f1 or %>e 9 any    
pr(it d]iv$ f1 any decrease 9 ! value ( 
! security1 includ+--  7,a7 an int]e/   
result+ f transactions 9 ! security1    
includ+ ! sale ( ! security by ! p]son  
:5 ! p]son does n own ! security2  7,b7 
a d]ivative in/rum5t 7z def9$ 9 section 
#bdj4ac;d-#c7;f77#b7 ( title #ag1 ,code 
( ,f$]al ,regulations72  7,c7 an int]e/ 
result+ f a securities transaction by   
memb]s ( ! imm$iate family 7z def9$ 9   
section #bdj4ac;d-#c7;f77#c7 ( title    
#ag1 ,code ( ,f$]al ,regulations7 %>+ ! 
same h\sehold z ! p]son1 except t !     
presumption ( ! %ort int]e/ 9 t         
circum/ance is rebuttable2  7,d7 !      
proportionate int]e/ ( a g5]al p>tn] 9 !
 securities transaction by a g5]al or   
limit$ p>tn]%ip1 :i*1 z evid5c$ by !    
p>tn]%ip agreem5t 9 effect at ! "t ( !  

transaction & ! mo/ rec5t f9ancial      
/atem5ts ( ! p>tn]%ip1 %all be ! great] 
(--  7i7 ! %>e ( ! pr(its ( ! p>tn]%ip (
 ! g5]al p>tn]1 includ+-- 7,i7 7aa7     
pr(its attribut$ to any limit$ p>tn]%ip 
int]e/s held by ! g5]al p>tn]2 &  7bb7  
any o!r int]e/s 9 pr(its t arise f !    
pur*ase & sale ( ! portfolio securities 
( ! p>tn]%ip2 or  7ii7 ! %>e ( !        
p>tn]%ip capital acc\nt ( ! g5]al p>tn]1
 includ+ ! %>e attributable to any      
limit$ p>tn]%ip int]e/ held by ! g5]al  
p>tn]2  7,e7 a p]=mance-relat$ fee1 o!r 
?an an asset-bas$ fee1 receiv$ by any-- 
7i7 brok]2  7ii7 deal]2  7iii7 bank2    
7iv7 insurance company2  7v7 inve/m5t   
company2  7vi7 inve/m5t advis]2  7vii7  
inve/m5t manag]2 or  7viii7 tru/ee or   
p]son p]=m+ a simil> function2 &  7,f7  
an int]e/ ( a p]son 9 securities        
transactions by a tru/4  7#d7 ,exception
 to p]=mance-relat$ fee ,a p]son %all n 
be deem$ to h a %ort int]e/ 9 a security
 because ( a p]=mance-relat$ fee        
describ$ 9 p>agraph 7#c77;,e7 if--  7,a7

 ! p]=mance-relat$ fee1 reg>dless ( :5  
payable1 is calculat$ bas$ ^u net       
capital ga9s or net capital appreciation
 g5]at$ f--  7i7 a portfolio2 or  7ii7 !
 ov]all p]=mance ( ! fiduci>y ov] a     
p]iod ( n less ?an #a ye>2  7,b7 int]e/s
 result+ f transactions 9 ! securities (
 ! issu] d n acc\nt = m ?an #aj p]c5t ( 
! m>ket value ( a portfolio2 &  7,c7 !  
fee is only a "r to a non               
p]=mance-relat$ fee4  7#e7 ,use (       
contract or o!r device to evade         
requirem5ts ,a p]son %all be deem$ to h 
a %ort int]e/ 9 ! security if ! p]son1  
directly or indirectly1 creates or uses 
a tru/1 proxy1 p[] ( attorney1 pool+    
arrangem5t1 or any o!r contract1        
arrangem5t1 or device to dive/ ! p]son (
 a %ort int]e/ 9 a security or to prev5t
 ! ve/+ ( ! %ort int]e/ 9 a security z  
"p ( a plan to evade ! report+          
requirem5ts ( ?is section4  7#f7        
,aggregation ,all securities ( ! same   
class 9 :i* a p]son has a %ort int]e/1  
reg>dless ( ! =m ( ! %ort int]e/1 %all  

be aggregat$ 9 calculat+ ! numb] ( %>es 
9 :i* ! p]son has a %ort int]e/4  7#g7  
,exceptions ,not)/&+ p>agraphs 7#c7 &   
7#f7-- 7,a7 a p]son %all be deem$ to h a
 %ort int]e/ 9 a security if ! p]son has
 ! "r to acquire1 n lat] ?an #fj days   
aft] ! date on :i* ! "r is obta9$1 a    
%ort int]e/ 9 ! security--  7i7 ?r\gh ! 
ex]cise ( any-- 7,i7 option2  7,,ii7    
w>rant2 or  7,,iii7 "r2  7ii7 9         
accordance ) ! p[] to revoke a-- 7,i7   
tru/2  7,,ii7 discretion>y acc\nt2 or   
7,,iii7 simil> arrangem5t2 or  7iii7 9  
accordance ) ! automatic t]m9ation ( a--
 7,i7 tru/2  7,,ii7 discretion>y acc\nt2
 or  7,,iii7 simil> arrangem5t2  7,b7 a 
p]son %all be deem$ to h a %ort int]e/ 9
 a security imm$iately ^u acquisition ( 
! security if ! p]son acquires !        
security--  7i7 by ! means describ$ 9   
subp>agraph 7,a72 &  7ii7 7,i7 ) !      
purpose ( *ang+ or influ5c+ ! control ( 
! issu]2 or  7,,ii7 9 connection )1 or z
 a p>ticipant 91 a transaction hav+ !   
purpose ( *ang+ or influ5c+ ! control ( 

! issu]2  7,c7 any securities n out/&+  
:i* are subject to a provision describ$ 
9 subp>agraph 7,a77i7-- 7i7 %all be     
deem$ to be out/&+ = ! purpose ( comput+
 ! p]c5tage ( out/&+ securities ( !     
class %ort$ by a p]son2 &  7ii7 %all n  
be deem$ to be out/&+ = ! purpose (     
comput+ ! p]c5tage ( out/&+ securities (
 ! class by any o!r p]son2 &  7,d7      
subp>agraphs 7,a7 ?r\gh 7,c7 %all rema9 
applicable = ! purpose ( det]m9+ !      
obligation to file ) respect to !       
und]ly+ security ev5 ?\gh ! option1     
w>rant1 or "r is--  7i7 ( a class (     
equity security1 z def9$ 9 section      
#bdj4ac;d-#a7;i7 ( title #ag1 ,code (   
,f$]al ,regulations1 or any successor   
!reto2 &  7ii7 may give rise to a       
sep>ate obligation to file4  4  7d7     
,effective date ,! am5dm5ts made by     
subsections 7b7 & 7c7 %all take effect  
on ! date on :i* ! ,securities &        
,ex*ange ,commission makes ! am5dm5ts   
requir$ "u subsection 7a74