
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 15USC687b]

 
                      TITLE 15--COMMERCE AND TRADE
 
             CHAPTER 14B--SMALL BUSINESS INVESTMENT PROGRAM
 
              SUBCHAPTER III--INVESTMENT DIVISION PROGRAMS
 
               Part A--Small Business Investment Companies
 
Sec. 687b. Investigations and examinations; power to subpena and 
        take oaths and affirmations; aid of courts; examiners; reports
        

(a) Investigation of violations

    The Administration may make such investigations as it deems 
necessary to determine whether a licensee or any other person has 
engaged or is about to engage in any acts or practices which constitute 
or will constitute a violation of any provision of this chapter, or of 
any rule or regulation under this chapter, or of any order issued under 
this chapter. The Administration shall permit any person to file with it 
a statement in writing, under oath or otherwise as the Administration 
shall determine, as to all the facts and circumstances concerning the 
matter to be investigated. For the purpose of any investigation, the 
Administration is empowered to administer oaths and affirmations, 
subpena witnesses, compel their attendance, take evidence, and require 
the production of any books, papers, and documents which are relevant to 
the inquiry. Such attendance of witnesses and the production of any such 
records may be required from any place in the United States. In case of 
contumacy by, or refusal to obey a subpena issued to, any person, 
including a licensee, the Administration may invoke the aid of any court 
of the United States within the jurisdiction of which such investigation 
or proceeding is carried on, or where such person resides or carries on 
business, in requiring the attendance and testimony of witnesses and the 
production of books, papers, and documents; and such court may issue an 
order requiring such person to appear before the Administration, there 
to produce records, if so ordered, or to give testimony touching the 
matter under investigation. Any failure to obey such order of the court 
may be punished by such court as a contempt thereof. All process in any 
such case may be served in the judicial district whereof such person is 
an inhabitant or wherever he may be found.

(b) Examinations and reports

    Each small business investment company shall be subject to 
examinations made by direction of the Investment Division of the 
Administration, which may be conducted with the assistance of a private 
sector entity that has both the qualifications to conduct and expertise 
in conducting such examinations, and the cost of such examinations, 
including the compensation of the examiners, may in the discretion of 
the Administration be assessed against the company examined and when so 
assessed shall be paid by such company. Fees collected under this 
subsection shall be deposited in the account for salaries and expenses 
of the Administration, and are authorized to be appropriated solely to 
cover the costs of examinations and other program oversight activities. 
Every such company shall make such reports to the Administration at such 
times and in such form as the Administration may require; except that 
the Administration is authorized to exempt from making such reports any 
such company which is registered under the Investment Company Act of 
1940 [15 U.S.C. 80a-1 et seq.] to the extent necessary to avoid 
duplication in reporting requirements.

(c) Examinations of small business investment companies

    Each small business investment company shall be examined at least 
every two years in such detail so as to determine whether or not--
        (1) it has engaged solely in lawful activities and those 
    contemplated by this subchapter;
        (2) it has engaged in prohibited conflicts of interest;
        (3) it has acquired or exercised illegal control of an assisted 
    small business;
        (4) it has made investments in small businesses for not less 
    than 1 year;
        (5) it has invested more than 20 per centum of its capital in 
    any individual small business, if such restriction is applicable;
        (6) it has engaged in relending, foreign investments, or passive 
    investments; or
        (7) it has charged an interest rate in excess of the maximum 
    permitted by law:

Provided, That the Administration may waive the examination (A) for up 
to one additional year if, in its discretion, it determines such a delay 
would be appropriate, based upon the amount of debentures being issued 
by the company and its repayment record, the prior operating experience 
of the company, the contents and results of the last examination and the 
management expertise of the company, or (B) if it is a company whose 
operations have been suspended while the company is involved in 
litigation or is in receivership.

(d) Valuations

                     (1) Frequency of valuations

        (A) In general

            Each licensee shall submit to the Administrator a written 
        valuation of the loans and investments of the licensee not less 
        often than semiannually or otherwise upon the request of the 
        Administrator, except that any licensee with no leverage 
        outstanding shall submit such valuations annually, unless the 
        Administrator determines otherwise.

        (B) Material adverse changes

            Not later than 30 days after the end of a fiscal quarter of 
        a licensee during which a material adverse change in the 
        aggregate valuation of the loans and investments or operations 
        of the licensee occurs, the licensee shall notify the 
        Administrator in writing of the nature and extent of that 
        change.

        (C) Independent certification

            (i) In general

                Not less than once during each fiscal year, each 
            licensee shall submit to the Administrator the financial 
            statements of the licensee, audited by an independent 
            certified public accountant approved by the Administrator.
            (ii) Audit requirements

                Each audit conducted under clause (i) shall include--
                    (I) a review of the procedures and documentation 
                used by the licensee in preparing the valuations 
                required by this section; and
                    (II) a statement by the independent certified public 
                accountant that such valuations were prepared in 
                conformity with the valuation criteria applicable to the 
                licensee established in accordance with paragraph (2).

                       (2) Valuation criteria

        Each valuation submitted under this subsection shall be prepared 
    by the licensee in accordance with valuation criteria, which shall--
            (A) be established or approved by the Administrator; and
            (B) include appropriate safeguards to ensure that the 
        noncash assets of a licensee are not overvalued.

(Pub. L. 85-699, title III, Sec. 310, as added Pub. L. 87-341, Sec. 9, 
Oct. 3, 1961, 75 Stat. 755; amended Pub. L. 89-779, Sec. 5, Nov. 6, 
1966, 80 Stat. 1360; Pub. L. 90-104, title II, Sec. 208, Oct. 11, 1967, 
81 Stat. 271; Pub. L. 100-590, title I, Sec. 104, Nov. 3, 1988, 102 
Stat. 2992; Pub. L. 102-366, title IV, Secs. 406(b), 407(a), 408(b), 
Sept. 4, 1992, 106 Stat. 1016; Pub. L. 104-208, div. D, title II, 
Sec. 208(f), (h)(1)(C), Sept. 30, 1996, 110 Stat. 3009-745, 3009-747; 
Pub. L. 105-135, title II, Sec. 216, Dec. 2, 1997, 111 Stat. 2603; Pub. 
L. 106-554, Sec. 1(a)(9) [title IV, Sec. 406], Dec. 21, 2000, 114 Stat. 
2763, 2763A-691.)

                       References in Text

    For definition of ``this chapter'', referred to in subsec. (a), see 
References in Text note set out under section 661 of this title.
    The Investment Company Act of 1940, referred to in subsec. (b), is 
title I of act Aug. 22, 1940, ch. 686, 54 Stat. 789, as amended, which 
is classified generally to subchapter I (Sec. 80a-1 et seq.) of chapter 
2D of this title. For complete classification of this Act to the Code, 
see section 80a-51 of this title and Tables.


                               Amendments

    2000--Subsec. (c)(4). Pub. L. 106-554 substituted ``1 year'' for 
``five years''.
    1997--Subsec. (b). Pub. L. 105-135 inserted after first sentence 
``Fees collected under this subsection shall be deposited in the account 
for salaries and expenses of the Administration, and are authorized to 
be appropriated solely to cover the costs of examinations and other 
program oversight activities.''
    1996--Subsec. (b). Pub. L. 104-208, Sec. 208(f)(1), inserted ``which 
may be conducted with the assistance of a private sector entity that has 
both the qualifications to conduct and expertise in conducting such 
examinations,'' after ``Investment Division of the Administration,'' in 
first sentence.
    Subsec. (c)(4). Pub. L. 104-208, Sec. 208(h)(1)(C), struck out ``not 
less than four years in the case of section 301(d) licensees and in all 
other cases,'' after ``small businesses for''.
    Subsec. (d). Pub. L. 104-208, Sec. 208(f)(2), inserted heading and 
amended text of subsec. (d) generally. Prior to amendment, text read as 
follows: ``Each small business investment company shall adopt written 
guidelines for determination of the value of investments made by such 
company. The board of directors of corporations and the general partners 
of partnerships shall have the sole responsibility for making a good 
faith determination of the fair market value of the investments made by 
such company. Determinations shall be made and reported to the 
Administration not less than semiannually or at more frequent intervals 
as the Administration determines appropriate: Provided, That any company 
which does not have outstanding financial assistance under the 
provisions of this subchapter shall be required to make such 
determinations and reports to the Administration annually, unless the 
Administration, in its discretion, determines otherwise.''
    1992--Subsec. (b). Pub. L. 102-366, Sec. 407(a), substituted 
``Investment Division of'' for ``Administration by examiners selected or 
approved by''.
    Subsec. (c)(5). Pub. L. 102-366, Sec. 408(b), inserted before 
semicolon at end ``, if such restriction is applicable''.
    Subsec. (d). Pub. L. 102-366, Sec. 406(b), added subsec. (d).
    1988--Subsec. (b). Pub. L. 100-590 struck out second sentence, which 
read as follows: ``Each such company shall be examined at least once 
each year, except that the Administrator may waive examination in the 
case of a company whose operations have been suspended by reason of the 
fact that the company is involved in litigation or is in receivership.''
    Subsec. (c). Pub. L. 100-590 added subsec. (c).
    1967--Subsec. (b). Pub. L. 90-104 required at least annual 
examination of small business investment companies but provided for 
waiver of examination of a company whose operations have been suspended 
because the company is involved in litigation or is in receivership.
    1966--Pub. L. 89-779 designated existing provisions as subsec. (a) 
and added subsec. (b).


                    Effective Date of 1997 Amendment

    Amendment by Pub. L. 105-135 effective Oct. 1, 1997, see section 3 
of Pub. L. 105-135, set out as a note under section 631 of this title.


                    Effective Date of 1967 Amendment

    Amendment by Pub. L. 90-104 effective 90 days after Oct. 11, 1967, 
see section 211 of Pub. L. 90-104, set out as a note under section 681 
of this title.


 Effect of Small Business Equity Enhancement Act of 1992 on Securities 
                                  Laws

    Nothing in amendment by Pub. L. 102-366 to be construed to affect 
applicability of securities laws or to otherwise supersede or limit 
jurisdiction of Securities and Exchange Commission, see section 418 of 
Pub. L. 102-366, set out as a note under section 661 of this title.


                          Transfer of Resources

    Section 407(b) of Pub. L. 102-366 provided that: ``Effective October 
1, 1992, the personnel, assets, liabilities, contracts, property, 
records, and unexpended balances of appropriations, authorizations, and 
other funds employed, held, used, arising from, available or to be made 
available, which are related to the examination function provided by 
section 310 of the Small Business Investment Act of 1958 [15 U.S.C. 
687b] shall be transferred by the Inspector General of the Small 
Business Administration to the Investment Division of the Small Business 
Administration.''

                  Section Referred to in Other Sections

    This section is referred to in section 687g of this title.
