
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: 15USC78bb]

 
                      TITLE 15--COMMERCE AND TRADE
 
                    CHAPTER 2B--SECURITIES EXCHANGES
 
Sec. 78bb. Effect on existing law


(a) Addition of rights and remedies; recovery of actual damages; State 
        securities commissions

    Except as provided in subsection (f) of this section, the rights and 
remedies provided by this chapter shall be in addition to any and all 
other rights and remedies that may exist at law or in equity; but no 
person permitted to maintain a suit for damages under the provisions of 
this chapter shall recover, through satisfaction of judgment in one or 
more actions, a total amount in excess of his actual damages on account 
of the act complained of. Except as otherwise specifically provided in 
this chapter, nothing in this chapter shall affect the jurisdiction of 
the securities commission (or any agency or officer performing like 
functions) of any State over any security or any person insofar as it 
does not conflict with the provisions of this chapter or the rules and 
regulations thereunder. No State law which prohibits or regulates the 
making or promoting of wagering or gaming contracts, or the operation of 
``bucket shops'' or other similar or related activities, shall 
invalidate any put, call, straddle, option, privilege, or other security 
subject to this chapter, or apply to any activity which is incidental or 
related to the offer, purchase, sale, exercise, settlement, or closeout 
of any such security. No provision of State law regarding the offer, 
sale, or distribution of securities shall apply to any transaction in a 
security futures product, except that this sentence shall not be 
construed as limiting any State antifraud law of general applicability.

(b) Modification of disciplinary procedures

    Nothing in this chapter shall be construed to modify existing law 
with regard to the binding effect (1) on any member of or participant in 
any self-regulatory organization of any action taken by the authorities 
of such organization to settle disputes between its members or 
participants, (2) on any municipal securities dealer or municipal 
securities broker of any action taken pursuant to a procedure 
established by the Municipal Securities Rulemaking Board to settle 
disputes between municipal securities dealers and municipal securities 
brokers, or (3) of any action described in paragraph (1) or (2) on any 
person who has agreed to be bound thereby.

(c) Continuing validity of disciplinary sanctions

    The stay, setting aside, or modification pursuant to section 78s(e) 
of this title of any disciplinary sanction imposed by a self-regulatory 
organization on a member thereof, person associated with a member, or 
participant therein, shall not affect the validity or force of any 
action taken as a result of such sanction by the self-regulatory 
organization prior to such stay, setting aside, or modification: 
Provided, That such action is not inconsistent with the provisions of 
this chapter or the rules or regulations thereunder. The rights of any 
person acting in good faith which arise out of any such action shall not 
be affected in any way by such stay, setting aside, or modification.

(d) Physical location of facilities of registered clearing agencies or 
        registered transfer agents not to subject changes in beneficial 
        or record ownership of securities to State or local taxes

    No State or political subdivision thereof shall impose any tax on 
any change in beneficial or record ownership of securities effected 
through the facilities of a registered clearing agency or registered 
transfer agent or any nominee thereof or custodian therefor or upon the 
delivery or transfer of securities to or through or receipt from such 
agency or agent or any nominee thereof or custodian therefor, unless 
such change in beneficial or record ownership or such transfer or 
delivery or receipt would otherwise be taxable by such State or 
political subdivision if the facilities of such registered clearing 
agency, registered transfer agent, or any nominee thereof or custodian 
therefor were not physically located in the taxing State or political 
subdivision. No State or political subdivision thereof shall impose any 
tax on securities which are deposited in or retained by a registered 
clearing agency, registered transfer agent, or any nominee thereof or 
custodian therefor, unless such securities would otherwise be taxable by 
such State or political subdivision if the facilities of such registered 
clearing agency, registered transfer agent, or any nominee thereof or 
custodian therefor were not physically located in the taxing State or 
political subdivision.

(e) Exchange, broker, and dealer commissions; brokerage and research 
        services

    (1) No person using the mails, or any means or instrumentality of 
interstate commerce, in the exercise of investment discretion with 
respect to an account shall be deemed to have acted unlawfully or to 
have breached a fiduciary duty under State or Federal law unless 
expressly provided to the contrary by a law enacted by the Congress or 
any State subsequent to June 4, 1975, solely by reason of his having 
caused the account to pay a member of an exchange, broker, or dealer an 
amount of commission for effecting a securities transaction in excess of 
the amount of commission another member of an exchange, broker, or 
dealer would have charged for effecting that transaction, if such person 
determined in good faith that such amount of commission was reasonable 
in relation to the value of the brokerage and research services provided 
by such member, broker, or dealer, viewed in terms of either that 
particular transaction or his overall responsibilities with respect to 
the accounts as to which he exercises investment discretion. This 
subsection is exclusive and plenary insofar as conduct is covered by the 
foregoing, unless otherwise expressly provided by contract: Provided, 
however, That nothing in this subsection shall be construed to impair or 
limit the power of the Commission under any other provision of this 
chapter or otherwise.
    (2) A person exercising investment discretion with respect to an 
account shall make such disclosure of his policies and practices with 
respect to commissions that will be paid for effecting securities 
transactions, at such times and in such manner, as the appropriate 
regulatory agency, by rule, may prescribe as necessary or appropriate in 
the public interest or for the protection of investors.
    (3) For purposes of this subsection a person provides brokerage and 
research services insofar as he--
        (A) furnishes advice, either directly or through publications or 
    writings, as to the value of securities, the advisability of 
    investing in, purchasing, or selling securities, and the 
    availability of securities or purchasers or sellers of securities;
        (B) furnishes analyses and reports concerning issuers, 
    industries, securities, economic factors and trends, portfolio 
    strategy, and the performance of accounts; or
        (C) effects securities transactions and performs functions 
    incidental thereto (such as clearance, settlement, and custody) or 
    required in connection therewith by rules of the Commission or a 
    self-regulatory organization of which such person is a member or 
    person associated with a member or in which such person is a 
    participant.

    (4) The provisions of this subsection shall not apply with regard to 
securities that are security futures products.

(f) Limitations on remedies

                    (1) Class action limitations

        No covered class action based upon the statutory or common law 
    of any State or subdivision thereof may be maintained in any State 
    or Federal court by any private party alleging--
            (A) a misrepresentation or omission of a material fact in 
        connection with the purchase or sale of a covered security; or
            (B) that the defendant used or employed any manipulative or 
        deceptive device or contrivance in connection with the purchase 
        or sale of a covered security.

                (2) Removal of covered class actions

        Any covered class action brought in any State court involving a 
    covered security, as set forth in paragraph (1), shall be removable 
    to the Federal district court for the district in which the action 
    is pending, and shall be subject to paragraph (1).

                 (3) Preservation of certain actions

        (A) Actions under State law of State of incorporation

            (i) Actions preserved

                Notwithstanding paragraph (1) or (2), a covered class 
            action described in clause (ii) of this subparagraph that is 
            based upon the statutory or common law of the State in which 
            the issuer is incorporated (in the case of a corporation) or 
            organized (in the case of any other entity) may be 
            maintained in a State or Federal court by a private party.
            (ii) Permissible actions

                A covered class action is described in this clause if it 
            involves--
                    (I) the purchase or sale of securities by the issuer 
                or an affiliate of the issuer exclusively from or to 
                holders of equity securities of the issuer; or
                    (II) any recommendation, position, or other 
                communication with respect to the sale of securities of 
                an issuer that--
                        (aa) is made by or on behalf of the issuer or an 
                    affiliate of the issuer to holders of equity 
                    securities of the issuer; and
                        (bb) concerns decisions of such equity holders 
                    with respect to voting their securities, acting in 
                    response to a tender or exchange offer, or 
                    exercising dissenters' or appraisal rights.

        (B) State actions

            (i) In general

                Notwithstanding any other provision of this subsection, 
            nothing in this subsection may be construed to preclude a 
            State or political subdivision thereof or a State pension 
            plan from bringing an action involving a covered security on 
            its own behalf, or as a member of a class comprised solely 
            of other States, political subdivisions, or State pension 
            plans that are named plaintiffs, and that have authorized 
            participation, in such action.
            (ii) State pension plan defined

                For purposes of this subparagraph, the term ``State 
            pension plan'' means a pension plan established and 
            maintained for its employees by the government of a State or 
            political subdivision thereof, or by any agency or 
            instrumentality thereof.

        (C) Actions under contractual agreements between issuers and 
                indenture trustees

            Notwithstanding paragraph (1) or (2), a covered class action 
        that seeks to enforce a contractual agreement between an issuer 
        and an indenture trustee may be maintained in a State or Federal 
        court by a party to the agreement or a successor to such party.

        (D) Remand of removed actions

            In an action that has been removed from a State court 
        pursuant to paragraph (2), if the Federal court determines that 
        the action may be maintained in State court pursuant to this 
        subsection, the Federal court shall remand such action to such 
        State court.

               (4) Preservation of State jurisdiction

        The securities commission (or any agency or office performing 
    like functions) of any State shall retain jurisdiction under the 
    laws of such State to investigate and bring enforcement actions.

                           (5) Definitions

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

        (A) Affiliate of the issuer

            The term ``affiliate of the issuer'' means a person that 
        directly or indirectly, through one or more intermediaries, 
        controls or is controlled by or is under common control with, 
        the issuer.

        (B) Covered class action

            The term ``covered class action'' means--
                (i) any single lawsuit in which--
                    (I) damages are sought on behalf of more than 50 
                persons or prospective class members, and questions of 
                law or fact common to those persons or members of the 
                prospective class, without reference to issues of 
                individualized reliance on an alleged misstatement or 
                omission, predominate over any questions affecting only 
                individual persons or members; or
                    (II) one or more named parties seek to recover 
                damages on a representative basis on behalf of 
                themselves and other unnamed parties similarly situated, 
                and questions of law or fact common to those persons or 
                members of the prospective class predominate over any 
                questions affecting only individual persons or members; 
                or

                (ii) any group of lawsuits filed in or pending in the 
            same court and involving common questions of law or fact, in 
            which--
                    (I) damages are sought on behalf of more than 50 
                persons; and
                    (II) the lawsuits are joined, consolidated, or 
                otherwise proceed as a single action for any purpose.

        (C) Exception for derivative actions

            Notwithstanding subparagraph (B), the term ``covered class 
        action'' does not include an exclusively derivative action 
        brought by one or more shareholders on behalf of a corporation.

        (D) Counting of certain class members

            For purposes of this paragraph, a corporation, investment 
        company, pension plan, partnership, or other entity, shall be 
        treated as one person or prospective class member, but only if 
        the entity is not established for the purpose of participating 
        in the action.

        (E) Covered security

            The term ``covered security'' means a security that 
        satisfies the standards for a covered security specified in 
        paragraph (1) or (2) of section 18(b) of the Securities Act of 
        1933 [15 U.S.C. 77r(b)], at the time during which it is alleged 
        that the misrepresentation, omission, or manipulative or 
        deceptive conduct occurred, except that such term shall not 
        include any debt security that is exempt from registration under 
        the Securities Act of 1933 [15 U.S.C. 77a et seq.] pursuant to 
        rules issued by the Commission under section 4(2) of that Act 
        [15 U.S.C. 77d(2)].

        (F) Rule of construction

            Nothing in this paragraph shall be construed to affect the 
        discretion of a State court in determining whether actions filed 
        in such court should be joined, consolidated, or otherwise 
        allowed to proceed as a single action.

(June 6, 1934, ch. 404, title I, Sec. 28, 48 Stat. 903; Pub. L. 94-29, 
Sec. 21, June 4, 1975, 89 Stat. 160; Pub. L. 97-303, Sec. 4, Oct. 13, 
1982, 96 Stat. 1409; Pub. L. 100-181, title III, Secs. 327-329, Dec. 4, 
1987, 101 Stat. 1259; Pub. L. 104-290, title I, Sec. 103(b), Oct. 11, 
1996, 110 Stat. 3422; Pub. L. 105-353, title I, Sec. 101(b)(1), Nov. 3, 
1998, 112 Stat. 3230; Pub. L. 106-554, Sec. 1(a)(5) [title II, 
Secs. 203(a)(2), 210], Dec. 21, 2000, 114 Stat. 2763, 2763A-422,Nov. 3, 
