Page:United States Statutes at Large Volume 102 Part 5.djvu/674

 102 STAT. 4680

PUBLIC LAW 100-704—NOV. 19, 1988 (2) iNVEsniENT ADVBEBS.—The Investment Advisers Act of 1940 (15 U.S.C. 80b-l et seq.) is amended by adding after section 204 the following new section: "PBEVENnON OF MISUSE OF NONPUBLIC INFORMATION

15 USC 80b-4a.

15 USC 78u-i "

"SBC. 204A. Eveiy investment adviser subject to section 204 of this title shall establish, maintain, and enforce written policies and procedures reasonably designed, taking into consideration the nature of such investment adviser's business, to prevent the misuse in violation of this Act or the Securities Exchange Act of 1934, or the rules or r^ulations thereunder, of material, nonpublic information by such investment adviser or any person associated with such investment adviser. The Commission, as it deems necessary or appropriate in the public interest or for the protection of investors, shall adopt rules or r^ulations to require specific policies or procedures reasonably designed to prevent misuse in violation of this Act or the Securities Exchange Act of 1934 (or the rules or regulations thereunder) of material, nonpublic information.". (c) COMMISSION RECX)MMBNDATIONS FOR ADDITIONAL CIVIL PENALTY AUTHORITY REQUIRED.—The Securities and Exchange Commission shall, within 60 days after the date of enactment of this Act, submit to each House of the 0)ngress any recommendations the Commission considers appropriate with respect to the extension of the Commission's authority to seek civil penalties or impose administrative fines for violations other than those described in section 21A of the Securities Exchange Act of 1934 (as added by this section). SEC. 4. INCREASES IN CRIMINAL PENALTIES.

Section 32(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78ff(a)) is amended— (1) by striking "$100,000" and inserting "$1,000,000"; (2) by striking "five years" and inserting "10 years"; (3) by striking "is an exchange" and inserting "is a person other than a natural person"; and (4) by striking out "$500,000" and inserting "$2,500,000". S E C 5. LIABILITY TO CONTEMPORANEOUS TRADERS FOR INSIDER TRADING.

The Securities Exchange Act of 1934 is amended by inserting after section 20 the following new section: "LIABILITY TO CONTEMPORANEOUS TRADERS FOR INSIDER TRADING

eiassified i'i^TTS?*^^^" 15 USC 78t-i.

"SEC. 20A. (a) PRIVATE RIGHTS OF ACTION BASED ON CONTEMPORANEOUS TRADING.—Any person who violates any provision of this title

Qj. ^jjg rules or regulations thereunder by purchasing or selling a security while in possession of material, nonpublic information shall be liable in an action in any court of competent jurisdiction to any person who, contemporaneously with the purchase or sale of securities that is the subject of such violation, has purchased (where such violation is based on a sale of securities) or sold (where such violation is based on a purchase of securities) securities of the same class. "(b) LIMITATIONS ON LIABILITY.— "(1) CONTEMPORANEOUS TRADING ACTIONS LIMITED TO PROFIT GAINED OR LOSS AVOIDED,—The total amount of damages im-

posed under subsection (a) shall not exceed the profit gained or

�