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1618 Ante, p. 198-1.

80 Stat. 416. Contract authorization.

Compensation; travel e x p e n s e s.

Appropriation. Termination.

[84 STAT.

pay rates, but at rates not in excess of the maximum rate for GS-18 of the General Schedule under section 5332 of such title, and (2) procure temporary and intermittent services to the same extent as is authorized by section 3109 of title 5, United States Code. (g) The Workmen's Compensation Commission is authorized to enter into contracts with Federal or State agencies, private firms, institutions, and individuals for the conduct of research or surveys, the preparation of reports, and other activities necessary to the discharge of its duties. (h) Members of the Workmen's Compensation Commission shall receive compensation for each day they are engaged in the performance of their duties as members of the Workmen's Compensation Commission at the daily rate prescribed for GS-18 under section 5332 of title 5, United States Code, and shall be entitled to reimbursement for travel, subsistence, and other necessary expenses incurred by them in the performance of their duties as members of the Workmen's Compensation Commission. (i) There are hereby authorized to be appropriated such sums as may be necessary to carry out the provisions of this section. (j) On the ninetieth day after the date of submission of its final report to the President, the Workmen's Compensation Commission shall cease to exist. E C O N O M I C ASSISTANCE TO S M A L L B U S I N E S S E S

Post,

p. 1633.

Post,

p. 1634.

79 Stat. 556. 42 USC 3142.

SEC. 28. (a) Section 7(b) of the Small Business Act, as amended, is amended— (1) by striking out the period at the end of "paragraph (5) " and inserting in lieu thereof "; and"; and (2) by adding after paragraph (5) a new paragraph as follows: "(6) to make such loans (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis) as the Administration may determine to be necessary or appropriate to assist any small business concern in effecting additions to or alterations in the equipment, facilities, or methods of operation of such business in order to comply with the applicable standards promulgated pursuant to section 6 of the Occupational Safety and Health Act of 1970 or standards adopted by a State pursuant to a plan approved under section 18 of the Occupational Safety and Health Act of 1970, if the Administration determines that such concern is likely to suffer substantial economic injury without assistance under this paragraph." (b) The third sentence of section 7(b) of he Small Business Act, as amended, is amended by striking out "or (5) " after "paragraph (3) " and inserting a comma followed by "(5) or (6)". (c) Section 4(c)(1) of the Small Business Act, as amended, is amended by inserting "7(b)(6)," after "7(b)(5),". (d) Loans may also be made or guaranteed for the purposes set forth in section 7(b)(6) of the Small Business Act, as amended, pursuant to the provisions of section 202 of the Public Works and Economic Development Act of 1965, as amended. ADDITIONAL ASSISTANT SECRETARY O F LABOR

75 Stat. 338.

SEC. 29. (a) Section 2 of the Act of April 17, 1946 (60 Stat. 91) as amended (29 U.S.C. 553) is amended by—

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(1) striking out "four" in the first sentence of such section and inserting in lieu thereof "five"; and (2) adding at the end thereof the following new sentence, "One of such Assistant Secretaries shall be an Assistant Secretary of Labor for Occupational Safety and Health.". (b) Paragraph (20) of section 5315 of title 5, United States Code, is amended by striking out " (4) " and inserting in lieu thereof " (5) ". ADDITIONAL

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POSITIONS

SEC. 30. Section 5108(c) of title 5, United States Code, is amended by(1) striking out the word "and" at the end of paragraph (8); (2) striking out the period at the end of paragraph (9) and inserting in lieu thereof a semicolon and the word "and"; and (3) by adding immediately after paragraph (9) the following new paragraph: "(10)(A) the Secretary of Labor, subject to the standards and procedures prescribed by this chapter, may place an additional twenty-five positions in the Department of Labor in GS-16,17, and 18 for the purposes of carrying out his responsibilities under the Occupational Safety and Health Act of 1970; " (B) the Occupational Safety and Health Review Commission, subject to the standards and procedures prescribed by this chapter, may place ten positions in GS-16,17, and 18 in carrying out its functions under the Occupational Safety and Health Act of 1970." E M E R G E N C Y LOCATOR BEACONS

SEC. 31. Section 601 of the Federal Aviation Act of 1958 is amended by inserting at the end thereof a new subsection as follows: u E M E R G E N C Y LOCATOR BEACONS

" (d)(1) Except with respect to aircraft described in paragraph (2) of this subsection, minimum standards pursuant to this section shall include a requirement that emergency locator beacons shall be installed— " (A) on any fixed-wing, powdered aircraft for use in air commerce the manufacture of which is completed, or which is imported into the United States, after one year following the date of enactment of this subsection; and " (B) on any fixed-wing, powered aircraft used in air commerce after three years following such date. "(2) The provisions of this subsection shall not apply to jetpowered aircraft; aircraft used in air transportation (other than air taxis and charter aircraft); military aircraft; aircraft used solely for training purposes not involving flights more than twenty miles from its base; and aircraft used for the aerial application of chemicals." SEPARABILITY

SEC. 32. If any provision of this Act, or the application of such provision to any person or circumstance, shall be held invalid, the remainder of this Act, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby. 47-348 O - 72 - 19 (Pt. 2)

J2 stau 7^5.

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[84 STAT.

APPROPRIATIONS

SEC. OO. There are authorized to be appropriated to carry out this Act for each fiscal year such sums as the Congress shall deem necessary. EFFECTIA^ DATE

SEC. 34. This Act shall take effect one hundred and twenty days after the date of its enactment. Approved December 29, 1970.

Public Law 91-597 December 29, 1970 ACl [H. R. 19888] To provide for the inspection of certain egg products by the United States Department of Agriculture; restriction on the disposition of certain qualities of eggs; uniformity of standard s for eggs in i n t e r s t a t e or foreign commerce; and cooperation with State agencies in administration of this Act, and for other purposes.

-fi55„.^'l.°'^"'";^

Inspection Act.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Egg Products Inspection Act". LEGISLATIVE FINDING

SEC. 2. Eggs and egg products are an important source of the Nation's total supply of food, and are used in food in various forms. They are consumed throughout the Nation and the major portion thereof moves in interstate or foreign commerce. I t is essential, in the public interest, that the health and welfare of consumers be protected by the adoption of measures prescribed herein for assuring that eggs and egg products distributed to them and used in products consumed by them are wholesome, otherwise not adulterated, and properly labeled and packaged. Lack of effective regulation for the handling or disposition of unwholesome, otherwise adulterated, or improperly labeled or packaged egg products and certain qualities of eggs is injurious to the public welfare and destroys markets for wholesome, not adulterated, and properly labeled and packaged eggs and egg products and results in sundry losses to producers and processors, as well as injury to consumers. Unwholesome, otherwise adulterated, or improperly labeled or packaged products can be sold at lower prices and compete unfairly with the wholesome, not adulterated, and properly labeled and packaged products, to the detriment of consumers and the public generally. I t is hereby found that all egg products and the qualities of eggs which are regulated under this Act are either in interstate or foreign commerce, or substantially affect such commerce, and that regulation by the Secretary of Agriculture and the Secretary of Health, Education, and Welfare, and cooperation by the States and other jurisdictions, as contemplated by this Act, are appropriate to prevent and eliminate burdens upon such commerce, to effectively regulate such commerce, and to protect the health and welfare of consumers.

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DECLARATION OF POLICY

SEC. 3. I t is hereby declared to be the policy of the Congress to provide for the inspection of certain egg products, restrictions upon the disposition of certain qualities of eggs, and uniformity of standards for eggs, and otherwise regulate the processing and distribution of eggs and egg products as hereinafter prescribed to prevent the movement or s a b for human food, of eggs and eg^ products which are adulterated or misbranded or otherwise in violation of this Act. DEFINITIONS

SEC. 4. For purposes of this Act— (a) The term "adulterated" applies to any egg or egg product under one or more of the following circumstances— (1) if it bears or contains any poisonous or deleterious substance which may render it injurious to health; but in case the substance is not an added substance, such article shall not be considered adulterated under this clause if the quantity of such substance in or on such article does not ordinarily render it injurious to health; (2)(A) if it bears or contains any added poisonous or added deleterious substance (other than one which is (i) a pesticide chemical in or on a raw agricultural commodity; (ii) a food additive; or (iii) a color additive) which may, in the judgment of the Secretary, make such article unfit for human food; (B) if it is, in whole or in part, a raw agricultural commodity and such commodity bears or contains a pesticide chemical which is unsafe within the meaning of section 408 of the Federal Food, Drug, and Cosmetic Act; (C) if it bears or contains any food additive which is unsafe within the meaning of section 409 of the Federal Food, Drug, and Cosmetic Act; (D) if it bears or contains any color additive which is unsafe within the meaning of section 706 of the Federal Food, Drug and Cosmetic Act: Provided, That an article which is not otherwise deemed adulterated under clause (B), (C), or (D) shall nevertheless be deemed adulterated if use of the pesticide chemical, food additive, or color additive, in or on such article, is prohibited by regulations of the Secretary in official plants; (3) if it consists in whole or in part of any filthy, putrid, or decomposed substance, or if it is otherwise unfit for human food; (4) if it has been prepared, packaged, or held under insanitary conditions whereby it may have become contaminated with filth, or whereby it may have been rendered injurious to health; (5) if it is an egg which has been subjected to incubation or the product of any egg which has been subjected to incubation; (6) if its container is composed, in whole or in part, of any poisonous or deleterious substance which may render the contents injurious to health;

^ ^'|^- |^y^ 72 Stat. irss. ^f f^^l- 3 9 9 ^^. 21 USC 376. " "" "

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[84 STAT.

(7) if it has been intentionally subjected to radiation, unless the use of the radiation was in conformity with a regulation or exemption in effect pursuant to section 409 of the Federal Food, Dru^5 ^nd Cosmetic Act; or (8) if any valuable constituent has been in whole or in part omitted or abstracted therefrom; or if any substance has been substituted, wholly or in part therefor; or if damage or inferiority has been concealed in any manner; or if any substance has been added thereto or mixed or packed therewith so as to increase its bulk or weight, or reduce its quality or strength, or make it appear better or of greater value than it is. (b) The term "capable of use as human food" shall apply to any egg or egg product, unless it is denatured, or otherwise identified, as required by regulations prescribed by the Secretary to deter its use as human food. (c) The term "commerce" means interstate, foreign, or intrastate commerce. (d) The term "container" or "package" includes any box, can, tin, plastic, or other receptacle, wrapper, or cover. (1) The term "immediate container" means any consumer package; or any other container in which egg products, not consumer packaged, are packed. (2) The term "shipping container" means any container used in packaging a product packed in an immediate container. (e) The term ^^egg handler" means any person who engages in any business in commerce which involves buying or selling any eggs (as a poultry producer or otherwise), or processing any egg products, or otherwise using any eggs in the preparation of human food. (f) The term ^^egg product" means any dried, frozen, or liquid eggs, with or without added ingredients, excepting products which contain eggs only in a relatively small proportion or historically have not been, in the judgment of the Secretary, considered by consumers as products of the egg food industry, and which may be exempted by the Secretary under such conditions as he may prescribe to assure that the egg ingredients are not adulterated and such products are not represented as egg products. (g) The term ^^egg'^ means the shell egg of the domesticated chicken, turkey, duck, goose, or guinea. (1) The term "check" means an egg that has a broken shell or crack in the shell but has its shell membranes intact and contents not leaking. (2) The term "clean and sound shell egg" means any egg whose shell is free of adhering dirt or foreign material and is not cracked or broken. (3) The term "dirty egg^^ means an egg that has a shell that is unbroken and has adhering dirt or foreign material. (4) The term "incubator reject" means an egg that has been subjected to incubation and has been removed from incubation during the hatching operations as infertile or otherwise unhatchable.

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(5) The term "inedible" means eggs of the following descriptions: black rots, yellow rots, white rots, mixed rots (addled eggs), sour eggs, eggs with green whites, eggs with stuck yolks, moldy eggs, musty eggs, eggs showing blood rings, and eggs containing embryo chicks (at or beyond the blood ring stage). (6) The term "leaker" means an egg that has a crack or break in the shell and shell membranes to the extent that the egg contents are exposed or are exuding or free to exude through the shell. (7) The term "loss" means an egg that is unfit for human food because it is smashed or broken so that its contents are leaking; or overheated, frozen, or contaminated; or an incubator reject; or because it contains a bloody white, large meat spots, a large quantity of blood, or other foreign material. (8) The term "restricted egg" means any check, dirty egg, incubator reject, inedible, leaker, or loss. (h) The term "Fair Packaging and Labeling Act" means the Act ^J^l "^^ ^''^i so entitled, approved November 3, 1966 (80 Stat, 1296), and Acts amendatory thereof or supplementary thereto. (i) The term "Federal Food, Drug, and Cosmetic Act" means the 21 USC 301. Act so entitled, approved June 25, 1938 (52 Stat. 1040), and Acts amendatory thereof or supplementary thereto. (j) The term "inspection" means the application of such inspection methods and techniques as are deemed necessary by the responsible Secretary to carry out the provisions of this Act. (k) The term "inspector" means: (1) any employee or official of the Ignited States Government authorized to inspect eggs or egg products under the authority of this Act; or (2) Any employee or official of the government of any State or local jurisdiction authorized by the Secretary to inspect eggs or egg products under the authority of this Act, under an agreement entered into between the Secretary and the appropriate State or other agency. (1) The term "misbranded" shall apply to egg products which are not labeled and packaged in accordance with the requirements prescribed by regulations of the Secretary under section 7 of this Act. (m) The term "official certificate" means any certificate prescribed by regulations of the Secretary for issuance by an inspector or other person performing official functions under this Act. (n) The term "official device" means any device prescribed or authorized by the Secretary for use in applying any official mark. (o) The term "official inspection legend" means any symbol prescribed by regulations of the Secretary showing that egg products were inspected in accordance with this Act. (p) The term "official mark" means the official inspection legend or any other symbol prescribed by regulations of the Secretary to identify the status of any article under this Act.

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[84 STAT.

(q) The term "official plant" means any plant, as determined by the Secretary, at which inspection of the processing of egg products is maintained by the Department of Agriculture under the authority of this Act. (r) The term "official standards" means the standards of quality, grades, and weight classes for eggs, in effect upon the effective date of this Act, or as thereafter amended, under the Agricultural Marketing Act of 1946 (60 Stat. 1087, as amended, 7 U.S.C. 1621 et seq.). (s) The term "pasteurize" means the subjecting of each particle of egg products to heat or other treatments to destroy harmful viable micro-organisms by such processes as may be prescribed by regulations of the Secretary. (t) The term "person" means any individual, partnership, corporation, association, or other business unit. (u) The terms "pesticide chemical," "food additive," "color additive," and "raw agricultural commodity" shall have the same meaning for purposes of this Act as under the Federal Food, Drug, and Cosmetic Act. (v) The term "plant" means any place of business where egg products are processed. (w) The term "processing" means manufacturing egg products, including breaking eggs or filtering, mixing, blending, pasteurizing, stabilizing, cooling, freezing, drying, or packaging egg products. (x) The term ''Secretary" means the Secretary of Agriculture or his delegate. (y) The term "State" means any State of the United States, the Commonwealth of Puerto Rico, the Virgin Islands of the United States, and the District of Columbia. (z) The term "United States" means the States. INSPECTION, REINSPECTION, CONDEMNATION

SEC. 5. (a) For the purpose of preventing the entry into or flow or movement in commerce of, or the burdening of commerce by, any egg product which is capable of use as human food and is misbranded or adulterated, the Secretary shall, whenever processing operations are being conducted, cause continuous inspection to be made, in accordance with the regulations promulgated under this Act, of the processing of egg products, in each plant processing egg products for commerce, unless exempted under section 15 of this Act. Without restricting the application of the preceding sentence to other kinds of establishments within its provisions, any food manufacturing establishment, institution, or restaurant which uses any eggs that do not meet the requirements of paragraph (a)(1) of section 15 of this Act in the preparation of any articles for human food shall be deemed to be a plant processing egg products, with respect to such operations. (b) The Secretary, at any time, shall cause such retention, segregation, and reinspection as he deems necessary of eggs and egg products capable of use as human food in each official plant.

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(c) Eggs and egg products found to be adulterated at official plants shall be condemned and, if no appeal be taken from such determination of condemnation, such articles shall be destroyed for human food purposes under the supervision of an inspector: Provided, That articles which may by reprocessing be made not adulterated need not be condemned and destroyed if so reprocessed under the supervision of an inspector and thereafter found to be not adulterated. If an appeal be taken from such determination, the eggs or egg products shall be appropriately marked and segregated pending completion of an appeal inspection, which appeal shall be at the cost of the appellant if the Secretary determines that the appeal is frivolous. If the determination of condemnation is sustained, the eggs or egg products shall be destroyed for human food purposes under the supervision of an inspector. (d) The Secretary shall cause such other inspections to be made of the business premises, facilities, inventory, operations, and records of ^gg handlers, and the records and inventory of other persons required to keep records under section 11 of this Act, as he deems appropriate (and in the case of shell egg packers, packing eggs for the ultimate consumer, at least once each calendar quarter) to assure that only eggs fit for human food are used for such purpose, and otherwise to assure compliance by egg handlers and other persons with the requirements of section 8 of this Act, except that the Secretary of Health, Education, and Welfare shall cause such inspections to be made as he deems appropriate to assure compliance with such requirements at food manufacturing establishments, institutions, and restaurants, other than plants processing ^gg products. Representatives of said Secretaries shall be afforded access to all such places of business for purposes of making the inspections provided for in this Act. S A N I T A T I O N, F A C I U T I E S, AND PRACTICES

SEC. 6. (a) Each official plant shall be operated in accordance with such sanitary practices and shall have such premises, facilities, and equipment as are required by regulations promulgated by the Secretary to effectuate the purposes of this Act, including requirements for segregation and disposition of restricted eggs. (b) The Secretary shall refuse to render inspection to any plant whose premises, facilities, or equipment, or the operation thereof, fail to meet the requirements of this section. P A S T E U R I Z A T I O N A N D LABELING OF EGG PRODUCTS A T OFFICIAL PLANTS

SEC. 7. (a) Egg products inspected at any official plant under the authority of this Act and found to be not adulterated shall be pasteurized before they leave the official plant, except as otherwise permitted by regulations of the Secretary, and shall at the time they leave the official plant, bear in distinctly legible form on their shipping containers or immediate containers, or both, when required by regulations of the Secretary, the official inspection legend and official plant number, of the plant where the products were processed, and such other information as the Secretary may require by regulations to describe the products adequately and to assure that they will not have false or misleading labeling. (b) No labeling or container shall be used for ^gg products at official plants if it is false or misleading or has not been approved as required by the regulations of the Secretary. If the Secretary has reason to believe that any labeling or the size or form of any container in use or proposed for use with respect to egg products at any official

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72 Stat. 944.

PUBLIC LAW 91-597-DEC. 29, 1970

[84 STAT.

plant is false or misleading in any particular, he may direct that such use be withheld unless the labeling or container is modified in such manner as he may prescribe so that it will not be false or misleading. If the person using or proposing to use the labeling or container does not accept the determination of the Secretary, such person may request a hearing, but the use of the labeling or container shall, if the Secretary so directs, be withheld pending hearing and final determination by the Secretary. Any such determination by the Secretary shall be conclusive unless, within thirty days after receipt of notice of such final determination, the person adversely affected thereby appeals to the United States court of appeals for the circuit in which such person has its principal place of business or to the United States Court of Appeals for the District of Columbia Circuit. The provisions of section 204 of the Packers and Stockyards Act, 1921 (42 Stat. 162, as amended; 7 U.S.C. 194), shall be applicable to appeals taken under this section. PROHIBITED ACTS

SEC. 8. (a)(1) No person shall buy, sell, or transport, or offer to buy or sell, or offer or receive for transportation, in any business in commerce any restricted eggs, capable of use as human food, except as authorized by regulations of the Secretary under such conditions as he may prescribe to assure that only eggs fit for human food are used for such purpose. (2] No egg handler shall possess with intent to use, or use, any restricted eggs in the preparation of human food for commerce except that such eggs may be so possessed and used when authorized by regulations of the Secretary under such conditions as he may prescribe to assure that only eggs fit for human food are used for such purpose. (b)(1) No person shall process any egg products for commerce at any plant except in compliance with the requirements of this Act. (2) No person shall buy, sell, or transport, or offer to buy or sell, or offer or receive for transportation, in commerce any egg products required to be inspected under this Act unless they have been so inspected and are labeled and packaged in accordance with the requirements of section 7 of this Act. (3) No operator of any official plant shall fail to comply with any requirements of paragraph (a) of section 6 of this Act or the regulations thereunder. (4) No operator of any official plant shall allow any egg products to be moved from such plant if they are adulterated or misbranded and capable of use as human food. (c) No person shall violate any provision of section 10, 11, or 17 of this Act. (d) No person shall— (1) manufacture, cast, print, lithograph, or otherwise make any device containing any official mark or simulation thereof, or any label bearing any such mark or simulation, or any form of official certificate or simulation thereof, except as authorized by the Secretary; (2) forge or alter any official device, mark, or certificate; (3) without authorization from the Secretary, use any official device, mark, or certificate, or simulation thereof, or detach, deface, or destroy any official device or mark; or use any labeling or container ordered to be withheld from use under section 7 of this Act after final judicial affirmance of such order or expiration of the time for appeal if no appeal is taken under said section;

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(4) contrary to the regulations prescribed by the Secretary, fail to use, or to detach, deface, or destroy any official device, mark, or certificate; (5) knowingly possess, without jDromptly notifying the Secretary or his representative, any official device or any counterfeit, simulated, forged, or improperly altered official certificate or any device or label, or any eggs or egg products bearing any counterfeit, simulated, forged, or improperly altered official mark; (6) knowingly make any false statement in any shipper's certificate or other nonofficial or official certificate provided foi in the regulations prescribed by the Secretary; (7) knowingly represent that any article has been inspected or exempted, under this Act, when, in fact, it has, respectively, not been so inspected or exempted; and (8) refuse access, at any reasonable time, to any representative of the Secretary of Agriculture or the Secretary of Health, Education, and Welfare, to any plant or other place of business subject to inspection under any provisions of this Act. (e) No person, while an official or employee of the United States Government or any State or local governmental agency, or thereafter, shall use to his own advantage, or reveal other than to the authorized representatives of the United States Government or any State or other government in their official capacity, or as ordered by a court in a judicial proceeding, any information accjuired under the authority of this Act concerning any matter which is entitled to protection as a trade secret. FEDERAL AND STATE COOPERATION

SEC. 9. The Secretary shall, whenever he determines that it would effectuate the purposes of this Act, cooperate with appropriate State and other governmental agencies, in carrying out any provisions of this Act. In carrying out the provisions of this Act, the Secretary may conduct such examinations, investigations, and inspections as he determines practicable through any officer or employee of any such agency commissioned by him for such purpose. The Secretary shall reimburse the States and other agencies for the costs incurred by them in such cooperative programs. EGGS AND EGG

PRODUCTS NOT INTENDED FOR HUMAN FOOD

SEC. 10. Inspection shall not be provided under this Act at any plant for the processing of any egg products which are not intended for use as human food, but such articles, prior to their offer for sale or transportation in commerce, shall be denatured or otherwise identified as prescribed by regulations of the Secretary to deter their use for human food. No person shall buy, sell, or transport or offer to buy or sell, or offer or receive for transportation, in commerce, any restricted eggs or egg products which are not intended for use as human food unless they are denatured or otherwise identified as required by the regulations of the Secretary. RECORD AND RELATED REQUIREMENTS FOR PROCESSORS OF EGGS AND EGG PRODUCTS AND RELATED INDUSTRIES

SEC 11. For the purpose of enforcing the provisions of this Act and the regulations promulgated thereunder, all persons engaged in the business of transporting, shipping, or receiving any eggs or egg products in commerce or holding such articles so received, and all egg handlers, shall maintain such records showing, for such time and in

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such form and manner, as the Secretary of Agriculture or the Secretary of Health, Education, and Welfare may prescribe, to the extent that they are concerned therewith, the receipt, delivery, sale, movement, and disposition of all eggs and egg products handled by them, and shall, upon the request of a duly authorized representative of either of said Secretaries, permit him at reasonable times to have access to and to copy all such records. PENALTIES

62 Stat. 756.

SEC. 12. (a) Any person who commits any offense prohibited by section 8 of this Act shall upon conviction be subject to imprisonment for not more than one year, or a fine of not more than $1,000, or both such imprisonment and fine, but if such violation involves intent to defraud, or any distribution or attempted distribution of any article that is known to be adulterated (except as defined in section 4(a)(8) of this Act), such person shall be subject to imprisonment for not more than three years or a fine of not more than $10,000, or both. When construing or enforcing the provisions of section 8, the act, omission, or failure of any person acting for or employed by any individual, partnership, corporation, or association within the scope of his employment or office shall in every case be deemed the act, omission, or failure of such individual, partnership, corporation, or association, as well as of such person. (b) No carrier or warehouseman shall be subject to the penalties of this Act, other than the penalties for violation of section 11 of this Act or paragraph (c) of this section 12, by reason of his receipt, carriage, holding, or delivery, in the usual course of business, as a carrier or warehouseman of eggs or egg products owned by another person unless the carrier or warehouseman has knowledge, or is in possession of facts which would cause a reasonable person to believe that such eggs or egg products were not eligible for transportation under, or were otherwise in violation of, this Act, or unless the carrier or warehouseman refuses to furnish on request of a representative of the Secretary the name and address of the person from whom he received such eg^s or egg products and copies of all documents, if there be any, pertaining to the delivery of the eggs or egg products to, or by, such carrier or warehouseman. (c) Any person who forcibly assaults, resists, opposes, impedes, intimidates, or interferes with any person while engaged in or on account of the performance of his official duties under this Act shall be fined not more than $5,000 or imprisoned not more than three years, or both. Whoever, in the commission of any such act, uses a deadly or dangerous weapon, shall be fined not more than $10,000 or imprisoned not more than ten years, or both. Whoever kills any^ person while engaged in or on account of the performance of his official duties under this Act shall be punished as provided under sections 1111 and 1112 ^f ^itie 18, United States Code. REPORTING OF VIOLATIONS

SEC. 13. Before any violation of this Act is reported by the Secretary of Agriculture or Secretary of Health, Education, and Welfare to any United States attorney for institution of a criminal proceeding, the person against whom such proceeding is contemplated shall be given reasonable notice of the alleged violation and opportunity to present his views orally or in writing with regard to such contemplated proceeding. Nothing in this Act shall be construed as requiring the Secretary of Agriculture or Secretary of Health, Education, and Welfare

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to report for criminal prosecution violations of this Act whenever he believes that the public interest will be adequately served and compliance with the Act obtained by a suitable written notice of warning. REGULATIONS AND ADMINISTRATION

SEC. 14. The Secretary shall promulgate such rules and regulations as he deems necessary to carry out the purj)0ses or provisions of this Act, and shall be responsible for the administration and enforcement of this Act except as otherwise provided in paragraph (d) of section 5 of this Act. EXEMPTIONS

SEC. 15. (a) The Secretary may, by regulation and under such conditions and procedures as he may prescribe, exempt from specific provisions of this Act— (1) the sale, transportation, possession, or use of eggs which contain no more restricted eggs than are allowed by the tolerance in the official standards of United States consumer grades for shell eggs; (2) the processing of egg products at any plant where the facilities and operating procedures meet such sanitary standards as may be prescribed by the Secretary, and where the eggs received or used in the manufacture of egg products contain no more restricted eggs than are allowed by the official standards of United States consumer grades for shell eggs, and the egg products processed at such plant; (3) the sale of eggs by any poultry producer from his own flocks directly to a household consumer exclusively for use by such consumer and members of his household and his nonpaying guests and employees, and the transportation, possession, and use of such eggs in accordance with this paragraph; (4) the processing of egg products by any poultry producer from eggs of his own flocks' production for sale of such products directly to a household consumer exclusively for use by such consumer and members of his household and his nonpaying guests and employees, and the egg products so processed when handled in accordance with this paragraph; (5) the sale of eggs by shell egg packers on his own premises directly to household consumers for use by such consumer and members of his household and his nonpaying guests and employees, and the transportation, possession, and use of such eggs in accordance with this paragraph; (6) for such period of time (not to exceed two years) during the initiation of operations under this Act as the Secretary determines that it is impracticable to provide inspection, the processing of egg products at any class of plants and the egg products processed at such plants; and (7) the sale of eggs by any egg producer with an annual egg production from aflockof three thousand or less hens. (b) The Secretary may immediately suspend or terminate any exemption under paragraph (a)(2) or (6) of this section at any time with respect to any person, if the conditions of exemption prescribed by this section or the regulations of the Secretary are not being met. The Secretary may modify or revoke any regulation granting exemption under this Act whenever he deems such action appropriate to effectuate the purposes of this Act.

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PUBLIC LAW 91-597-DEC. 29, 1970 ENTRY

OF MATERIALS I N TO OF F I C I A L

[84 STAT.

PLANTS

SEC. 16. The Secretary may limit the entry of eggs and e^g products and other materials into official plants under such conditions as he may prescribe to assure that allowing the entry of such articles mto such plants will be consistent with the purposes of this Act. IMPORTS

SEC. 17. (a) No restricted eggs capable of use as human food shall be imported into the United States except as authorized by regulations of the Secretary. No egg products capable of use as human food shall be imported into the United States unless they were processed under an approved continuous inspection system of the government of the foreign country of origin or subdivision thereof and are labeled and packaged in accordance with, and otherwise comply with the standards of this Act and regulations issued thereunder applicable to such articles within the United States. All such imported articles shall upon entry into the United States be deemed and treated as domestic articles subject to the other provisions of this Act: Provided, That they shall be labeled as required by such regulations for imported articles: Provided further, That nothing in this section shall apply to eggs or egg products purchased outside the United States by any individual for consumption by him and members of his household and his nonpaying guests and employees. (b) The Secretary may prescribe the terms and conditions for the destruction of all such articles which are imported contrary to this section, unless (1) they are exported by the consignee within the time fixed therefor by the Secretary or (2) in the case of articles which are not in compliance solely because of misbranding, such articles are brought into compliance with this Act under supervision of authorized representatives of the Secretary. (c) All charges for storage, cartage, and labor with respect to any article which is imported contrary to this section shall be paid by the owner or consignee, and in default of such payment shall constitute a lien against such article and any other article thereafter imported under this Act by or for such owner or consignee. (d) The importation of any article contrary to this section is prohibited. REFUSAL OF INSPECTION

\,

'

SEC. 18. The Secretary (for such period, or indefinitely, as he deems necessary to effectuate the purposes of this Act) may refuse to provide or may withdraw inspection service under this Act with respect to any plant if he determines, after opportunity for a hearing is accorded to the applicant for, or recipient of, such service, that such applicant or recipient is unfit to engage in any business requiring inspection under this Act, because the applicant or recipient or anyone responsibly connected with the applicant or recipient has been convicted in any Federal or State court, within the previous ten years, of (1) any felony or more than one misdemeanor under any law based upon the acquiring, handling, or distributing of adulterated, mislabeled, or deceptively packaged food or fraud in connection with transactions in food, or (2) any felony, involving fraud, bribery, extortion, or any other act or circumstances indicating a lack of the integrity needed for the conduct of operations affecting the public health.

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STAT.]

PUBLIC LAW 91-597-DEC. 29, 1970

For the purpose of this section, a person shall be deemed to be responsibly connected with the business if he is a partner, officer, director, holder, or owner of 10 per centum or more of its voting stock, or employee in a managerial or executive capacity. The determination and order of the Secretary with respect thereto under this section shall be final and conclusive unless the affected applicant for, or recipient of, inspection service files application for judicial review within thirty days after the effective date of such order in the United States court of appeals for the circuit in which such applicant or recipient has its principal place of business or in the United States Court of Appeals for the District of Columbia Circuit. Judicial review of any such order shall be upon the record upon which the determination and order are based. The provisions of section 201 of the Packers and Stockyards Act, 1921, as amended (7 U.S.C. 194) shall be applicable to appeals taken under this section. This section shall not affect in any way other provisions of this Act for refusal of inspection services.

1631

Judicial review.

^^^l^f.^'l^'

ADMINISTRATIVE DETENTION

SEC. 19. Whenever any eggs or egg products subject to the Act, are found by any authorized representative of the Secretary upon any premises and there is reason to believe that they are or have been processed, bought, sold, possessed, used, transported., or offered or received for sale or transportation in violation of this Act or that they are in any other way in violation of this Act, or whenever any restricted eggs capable of use as human food are found by such a representative in the possession of any person not authorized to acquire such eggs under the regulations of the Secretary, such articles may be detained by such representative for a reasonable period but not to exceed twenty days, pending action under section 20 of this Act or notification of any Federal, State, or other governmental authorities having jurisdiction over such articles and shall not be moved by any person from the place at which they are located when so detained until released by such representative. All official marks may be required by such representative to be removed from such articles before they are released unless it appears to the satisfaction of the Secretary that the articles are eligible to retain such marks. JUDICIAL S E I Z U R E P R O C E E D I N G S

SEC. 20. (a) Any eggs or egg products that are or have been processed, bought, sold, possessed, used, transported, or offered or received for sale or transportation, in violation of this Act, or in any other way are in violation of this Act; and any restricted eggs, capable of use as human food, in the possession of any person not authorized to acquire such eggs under the regulations of the Secretary shall be liable to be proceeded against and seized and condemned, at any time, on a complaint in any United States district court or other proper court as provided in section 21 of this Act within the jurisdiction of which the articles are found. If the articles are condemned they shall, after entry of the decree, be disposed of by destruction or sale as the court may direct and the proceeds, if sold, less the court costs and fees, and storage and other proper expenses, shall be paid into the Treasury of the United States, but the articles shall not be sold contrary to the provision of this Act, the Federal Food, Drug, and Cosmetic Act or the Fair Packaging and Labeling Act, or the laws of the jurisdiction in which they are sold: Provided, That upon the execution and delivery of a good and sufficient bond conditioned that the articles shall not be sold or otherwise disposed of contrary

21 USC 3 "'*'"'* so Stat. 129*6. ^^ ^^c 1451 note.

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note

PUBLIC LAW 91-597-DEC. 29, 1970

[84 STAT.

to the provisions of this Act, the Federal Food, Drug, and Cosmetic ^^^h ^^^ ^^^^ Packaging and Labeling Act, or the" laws of the jurisdiction in which disposal is made, the court may direct that they be delivered to the owner thereof subject to such supervision by autnorized representatives of the Secretary as is necessary to insure compliance with the applicable laws. When a decree of condemnation is entered against the articles and they are released under bond, or destroyed, court costs and fees, and storage and other proper expenses shall be awarded against the person, if any, intervening as claimant thereof. The proceedings in such cases shall conform, as nearly as may be, to the supplemental rules for certain admiralty and maritime claims, except that either party may demand trial by jury of any issue of fact joined in any case, and all such proceedings shall be at the suit of and in the name of the United States. (b) The provisions of this section shall in no way derogate from authority for condemnation or seizure conferred by other provisions of this Act, or other laws. JURISDICTION

SEC. 21. The United States district courts and the District Court of the Virgin Islands are vested with jurisdiction specifically to enforce, and to prevent and restrain violations of, this Act, and shall have jurisdiction in all other cases, arising under this Act, except as provided in section 18 of this Act. All proceedings for the enforcement or to restrain violations of this Act shall be by and in the name of the United States. Subpenas for witnesses who are required to attend a court of the United States, in any district, may run into any other district in any such proceeding. A P P L I C A B I L I T Y OP OTHER ACTS

66 Stat. 722.

SEC. 22. For the efficient administration and enforcement of this Act, the provisions (including penalties) of sections 6, 8, 9, and 10 of the Federal Trade Commission Act, as amended (38 Stat. 721-723, as amended; 15 U.S.C. 46, 48, 49, and 50) (except paragraphs (c) through (h) of section 6 and the last paragraph of section 9), and the provisions of subsection 409(1) of the Communications Act of 1934 (48 Stat. 1096, as amended; 47 U.S.C. 409(1)), are made applicable to the jurisdiction, powers, and duties of the Secretary in administering and enforcing the provisions of this Act and to any person with respect to whom such authority is exercised. The Secretary, in person or by such agents as he may designate, may prosecute any inquiry necessary to his duties under this Act in any part of the United States, and the powers conferred by said sections 9 and 10 of the Federal Trade Commission Act, as amended, on the district courts of the United States may be exercised for the purposes of this Act by any court designated in section 21 of this Act. RELATION

TO OTHER

AUTHORITIES

SEC. 23. (a) Requirements within the scope of this Act with respect to premises, facilities, and operations of any official plant which are in addition to or different than those made under this Act may not be imposed by any State or local jurisdiction except that any such jurisdiction may impose recordkeeping and other requirements within the scope of section 11 of this Act, if consistent therewith, with respect to any such plant. (b) For eggs which have moved or are moving in interstate or foreign commerce, (1) no State or local jurisdiction may require the use of standards of quality, condition, weight, quantity, or grade which

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PUBLIC LAW 91-597-DEC. 29, 1970

1633

are in addition to or different from the official Federal standards, and (2) no State or local jurisdiction other than those in noncontiguous areas of the United States may require labeling to show the State or other geographical area of production or origin: Provided, however, That this shall not preclude a State from requiring that the name, address, and license number of the person processing or packaging eggs, be shown on each container. Labeling, packaging, or ingredient requirements, in addition to or different than those made under this Act, the Federal Food, Drug, and Cosmetic Act and the Fair PackH use 3o°u°' aging and Labeling Act, may not be imposed by any State or local so Stat. 1296. jurisdiction, with respect to egg products processed at any official ^J^ "^^ ^"^^^ plant in accordance with the requirements under such Acts. However, any State or local jurisdiction may exercise jurisdiction with respect to eggs and egg products for the purpose of preventing the distribution for human food purposes of any such articles which are outside of such a plant and are in violation of any of said Federal Acts or any State or local law consistent therewith. Otherwise the provisions of this Act shall not invalidate any law or other provisions of any State or other jurisdiction in the absence of a conflict with this Act. (c) The provisions of this Act shall not affect the applicability of the Federal Food, Drug, and Cosmetic Act or the Fair Packaging and Labeling Act or other Federal laws to eggs, egg products, or other food products or diminish any authority conferred on the Secretary of Health, Education, and Welfare or other Federal officials by such other laws, except that the Secretary of Agriculture shall have exclusive jurisdiction to regulate official plants processing egg products and operations thereof as to all matters within the scope of this Act. (d) The detainer authority conferred on representatives of the Secretary of Agriculture by section 19 of this Act shall also apply to any authorized representative of the Secretary of Health, Education, and "Welfare for the purposes of paragraph (d) of section 5 of this Act, with respect to any eggs or egg products that are outside any plant processing egg products. COST OF INSPECTION

SEC. 24. (a) The cost of inspection rendered under the requirements of this Act, and other costs of administration of this Act, shall be borne by the United States, except that the cost of overtime and holiday work performed in official plants subject to the provisions of this Act at such rates as the Secretary may determine shall be borne by such official plants. Sums received by the Secretary from official plants under this section shall be available without fiscal year limitation to carry out the purposes of this Act. (b) The term "holiday" for the purposes of assessment or reim"Holiday." bursement of the cost of inspection performed under this Act, the Wholesome Poultry Products Act, and the Wholesome Meat Act shall H use Isi' mean the legal public holidays specified by the Congress in paragraph note. (a) of section 6103, title 5 of the United States Code. l\ 5|J,-g^o^JSMALL B U S I N E S S ASSISTANCE

note. 82 Stat. 250.

SEC. 25. (a) Section 7(b) of the Small Business Act is amended— 78^stat!*7;^^ (1) by striking out the period at the end of paragraph (4) 83 Stat. 802. and inserting in lieu thereof "; and"; and ^^ ^^^ ^^^' (2) by adding after paragraph (4) a new paragraph as follows:

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PUBLIC LAW 91-597-DEC. 29, 1970

[84 STAT.

"(5) to make such loans (either directly or in cooperation with banks or other lending institutions through agreements to participate on an immediate or deferred basis) as the Administrator may determine to be necessary or appropriate to assist any small business concern in effecting additions to or alterations in its plant, facilities, or methods of operation to meet requirements Ante. p. 16 20. imposed by the E g g Products Inspection Act, the Wholesome 82 Stat. 791. Poultry Products Act, and the Wholesome Meat Act of 1967 or notl.^^*^ ^^^ State laws enacted in conformity therewith, if the Administration 81 Stat, 584. determines that such concern is likely to suffer substantial econote."^*^ ^°^ nomic injury without assistance under this paragraph." 72'Stat. 387; (b) The third sentence of section 7(b) of such Act is amended by '^\f^^sc^ei6. inserting "or (5) " after "paragraph (3)". 80 Stat. 132; (c) Section 4(c)(1) of the Small Business Act is amended by ^'if use 633. inserting "7(b)(5)", after "7(b)(4),". ANNUAL

REPORT

SEC. 26. (a) Not later than March 1 of each year following the enactment of this Act the Secretary shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture and Forestry of the Senate a comprehensive and detailed written report with respect to— (1) the processing, storage, handling, and distribution of eggs and Qgg products subject to the provisions of this title; the inspection of establishments operated in connection therewith; the effectiveness of the operation of the inspection, including the effectiveness of the operations of State e^g inspection programs; and recommendations for legislation to improve such program; and (2) the administration of section 17 of this Act (relating to imports) during the immediately preceding calendar year, including but not limited to— (A) a certification by the Secretary that foreign plants exporting eggs or e^g products to the United States have complied with requirements of this Act and regulations issued thereunder; (B) the names and locations of plants authorized or permitted to export eggs or egg products to the United States; (C) the number of inspectors employed by the Department of Agriculture in the calendar year concerned who were assigned to inspect plants referred to in paragraph (B) hereof and the frequency with which each such plant was inspected by such inspectors; (D) the number of inspectors that were licensed by each country from which any imports were received and that were assigned, during the calendar year concerned, to inspect such imports and the facilities in which such imports were handled; and the frequency and effectiveness of such inspections; (E) the total volume of eggs and ^gg products which was imported into the United States during the calendar year concerned from each country, including a separate itemization of the volume of each major category of such imports from each country during such year, and a detailed report of rejections of plants and products because of failure to meet appropriate standards prescribed by this title; and (F) recommendations for legislation to improve such program.

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PUBLIC LAW 91-597-DEC. 29, 1970 APPROPRIATIONS

SEC. 27. Such sums as are necessary to carry out the provisions of this Act are hereby authorized to be appropriated. SEPARABILITY OF PROVISIONS

SEC. 28. If any provision of this Act or the application thereof to any person or circumstances is held invalid, the validity of the remainder of the Act and of the application of such provision to other persons and circumstances shall not be affected thereby. EFFECTIVE DAY

SEC. 29. The provisions of this Act with respect to egg products shall take effect six months after enactment. Otherwise, this Act shall take effect eighteen months after enactment. Approved December 29, 1970.

47-348 O - 72 - 20 (Pt. 2)

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PUBLIC LAW 91-598-DEC. 30, 1970

[84 STAT.

Public Law 91-598 December 30, 1970

[H. R. 19333]

Securities Inv e s to r Protection Act of 1970.

^N

ACT

To provide greater protection for cnstomers of registered brokers and dealers and members of national securities exchanges.

Be it enacted by the Senate and House of Representatives United States of America in Congress assembled,

of the

SECTION 1. SHORT TITLE, ETC.

(a) SHORT TITLE; TABLE OF CONTENT^.—This Act, with the following table of contents, may be cited as the "Securities Investor Protection Act of 1970". T A B L E OF CONTENTS Sec. 1. Short title, etc. (a) siiort title; table of contents. (b) Section headings. Sec*. 2. Application of Securities Exehangie Act of 1984, Sec. 3. Securities Investor Protection Corporation, (a) Creation. (b) Powers. (c) Board of Directors. (d) Meetings of Board. (e) Bylaws. (f) Other members. Sec, 4. SIPC Fund, (a) I n general, (b) Initial required balance for fund. (c) Assessments. (d) Requirements respecting assessments and lines of cretlit. (e) Prior t r u s t s; overpayments and underpayments. (f) Borrowing authority. (g) SEC loans to SIPC. (h) SEC notes issued to Treasury, (i) "Gross revenue" defined. Sec.."). Protection of customers. (a) Determination of need of protection. (b) Court action. (c) SEC participation in proceedings. Sec. 6. Liquidation proceedings. (a) General purposes of liquidation proceeding, (b) Powers and duties of trustee, (e) Application of Bankruptcy Act. (d) Completion of open contractual commitments. (e) Notice. (f) SIPC advances to trustee. (g) Payments to c u s to m e r s; no proof of claim required, (h) Proof of claim by associates and others. (i) Reports by trustee to court. (j) E}ffect of Act on claims. Sec. 7. SEC functions. (a) Administrative procedure. (b) Enforcement of actions. (c) Examinations and reports. (d) Financial responsibility. Sec. 8. Examining authority functions. Sec. 9. Functions of self-regulatory organizations. (a) Collecting agent. (b) Immunity. (c) Inspections. (d) Reports. (e) Consultation. (f) Financial condition of members. Sec. 10. Prohibited acts. (a) F a i l u r e to pay assessment, etc. (b) Engaging in business after appointment of trustee. (c) Embezzlement, etc., of assets of SIPC.

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PUBLIC LAW 9 1 ^ 9 8 - D E C. 30, 1970

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T A B L E OF CONTENT hi—Continued Set-. 11. Miscellaneous provisions. (a) Public inspection of reix)rts. (b) Application of Act to foreign members. (c) Liability of members of SIl'C. ( d) Liability of SIPC and Directors. (e) Advertising. (f) SIPC exempt from taxation. (g) Section 20 {a) of 1934 Act not to apply, (h) SEC study of unsafe or unsound practices. Sec. 12. Definitions. (b) SECTIOX HEADINGS.—Headings for sections and

subsections, and the table of contents, are included only for convenience, and shall be given no legal effect. SEC. 2. APPLICATION OF SECURITIES EXCHANGE ACT OF 1934. Except as otherwise provided in this Act, the provisions of the Securities Exchange Act of 1934 (15 U.S.C., sec. 78a and fol,; hereinafter referred to as the "1934 Act") apply as if this Act constituted 48 Stat. ssi. an amendment to, and was included as a section of, such Act. SEC. 3. SECURITIES INVESTOR PROTECTION CORPORATION. (a) CREATION.—There is hereby established a body corporate to be known as "Securities Investor Protection Corporation"' (hereafter in this Act referred to as " S I P C "). S I P C shall be a nonprofit corporation and shall have succession until dissolved by act of the Congress. S I P C shall— (1) not be an agency or establishment of the United States Government; (2) be a membership corporation the members of which shall be— (A) all persons registered as brokers or dealers under section 15(b) of the 1934 Act, and ^ ulc 7J0.' (B) all persons who are members of a national securities exchange, other than persons whose business as a broker or dealer consists exclusively of (i) the distribution of shares of registered open end investment companies or unit investment trusts, (ii) the sale of variable annuities, (iii) the business of insurance, or (iv) the business of rendering investment advisory services to one or more registered investment companies or insurance company separate accounts; and (3) except as otherwise provided in this Act, be subject to, and have all the powers conferred upon a nonprofit corporation by, the District of Columbia Nonprofit Corporation Act (D.C. Code, sec. 29-1001 and fol.). ^e Stat. 265. (b) POWERS.—In addition to the powers granted to S I P C elsewhere in this Act, S I P C shall have the power— (1) to sue and be sued, complain and defend, in its corporate name and through its own counsel, in any court. State, or Federal; (2) to adopt, alter, and use a corporate seal, which shall be judicially noticed; (3) subject to the provisions of this Act, to adopt, amend, and repeal, by its Board of Directors, bylaws and rules relating to the conduct of its business and the exercise of all other rights and powers granted to it by this Act; (4) to conduct its business (including the carrying on of operations and the maintenance of offices) and to exercise all other rights and powers granted to it by this Act in any State or other jurisdiction without regard to any qualification, licensing, or other statute in such State or other jurisdiction;

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[84 STAT.

(5) to lease, purchase, accept gifts or donations of or otherwise acquire, to own, hold, improve, use, or otherwise deal in or with, and to sell, convey, mortgage, pledge, lease, exchange or otherwise dispose of, any property, real, personal or mixed, or any interest therein, wherever situated; (6) subject to the provisions of subsection (c), to elect or appoint such officers, attorneys, employees, and agents as may be required, to determine their qualifications, to define their duties, to fix their salaries, require bonds for them and fix the penalty thereof; (7) to enter into contracts, to execute instruments, to incur liabilities, and to do any and all other acts and things as may be necessary or incidental to the conduct of its business and the exercise of all other rights and powers granted to h>IPC by this Act; and (8) by bylaw, to establish its fiscal year. (c) BOARD or DIRECTORS.—

78 Stat. 56S. 15 USC 78c.

(1) FUNCTIONS.—SIPC shall have a Board of Directors which, subject to the provisions of this Act, shall determine the policies which shall govern the operations of S I P C. (2) NUMBER AND APPOINTMENT.—The Board of Directors shall consist of seven persons as follows: (A) One director shall be appointed by the Secretary of the Treasury from among the officers and employees of the Department of the Treasury. (B) One director shall be appointed by the Federal Reserve Board from among the officers and employees of the Federal Reserve Board. (C) Five directors shall be appointed by the President, by and with the advice and consent of the Senate,, as follows— (i) three such directors shall be selected from among persons who are associated with, and representative of different aspects of, the securities industry, not all of whom shall be from the same geographical area of the United States, and (ii) two such directors shall be selected from the general public from among persons who are not associated with any broker or dealer, within the meaning of paragraph (18) of section 3(a) of the 1934 Act, or similarly associated with a national securities exchange or other securities industry group and who have not had any such association during the two years preceding appointment. (3) CHAIRMAN AND VICE CHAIRMAN.—The President shall designate a Chairman and Vice Chairman from among those directors appointed under paragraph (2)(C) ( i i) of this subsection. (4)

TERMS.—

(A) Except as provided in subparagraphs (B) and (C), each director shall be appointed for a term of three years. (B) Of the directors first appointed under paragraph (2) — (i) two shall hold office for a term expiring on December 31, 1971, (ii) two shall hold office for a term expiring on December 31, 1972, and (iii) three shall hold office for a term expiring on December 31, 1973, as designated by the President at the time they take office. Such designation shall be made in a manner which will assure

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PUBLIC LAW 91-598-DEC. 30, 1970

that no two persons appointed under the authority of the same clause of paragraph (2)(C) shall have terms which expire simultaneously. (C) A vacancy in the Board shall be filled in the same manner as the original appointment was made. Any director appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed only for the remainder of such term. A director may serve after the expiration of his term until his successor has taken office. (5) COMPENSATION, ETC.—All matters relating to compensation of directors and the determination of dollar volume of trading on exchanges shall be as provided in the bylaws of S I P C. (d) MEETINGS OF BOARD.—The Board of Directors shall meet at the call of its Chairman, or as otherwise provided by the bylaws of S I P C. (e) BYLAWS.—

(1) As soon as practicable but not later than forty-five days after the date of enactment of this Act, the Board of Directors shall adopt initial bylaws and rules relating to the conduct of the business of S I P C and the exercise of the rights and powers granted to it by this Act, and shall file a copy thereof with the Commission. Thereafter, the Board of Directors may alter, supplement, or repeal any existing bylaw or rule and may ardopt additional bylaws and rules, and in each such case shall file a copy thereof with the Commission. (2) Each such initial bylaw or rule, alteration, supplement, or repeal, and additional bylaw or rule shall take effect upon the thirtieth day (or such later date as S I P C may designate) after the filing of the copy thereof with the Commission or upon such earlier date as the Commission may determine, unless the Commission shall, by notice to S I P C setting forth the reasons therefor, disapprove the same, in whole or in part, as being contrary' to the public interest or contrary to the purposes of this Act. (3) The Commission may, by such rules or regulations as it determines to be necessary or appropriate in the public interest
 * .» or to effectuate the purposes of this Act, require the adoption,
 * ^j'; amendment,- alteration of, supplement to or rescission of any

• bylaw or rule by S I P C, whenever adopted. (f)

OTHER MEMBERS.—

(1) Any person who is a broker, dealer, or member of a national securities exchange and who is excluded from membership in S I P C under subsection (a) may become a member of S I P C under such conditions and upon such terms as S I P C shall require. (2) Notwithstanding anything contained in subsections (c) and (d) of section 4, any person who becomes a member of the corporation under this subsection shall be subject to such assessments as S I P C determines to be equitable. SEC. 4. SIPC FUND. (a)

IN GENERAL.— (1) ESTABLISHMENT OF FUND.—SIPC

shall establish a " S I P C F u n d " (hereinafter in this Act referred to as the "fund"). All amounts received by S I P C (other than amounts paid directly to any lender pursuant to any pledge securing a borrowing by S I P C) shall be deposited in the fund, and all expenditures made by S I P C shall be made out of the fund. (2) BALANCE OF THE FUND.—The balance of the fund at any time shall consist of the aggregate at such time of the followingitems:

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PUBLIC LAW 91-598-DEC. 30, 1970

[84 STAT.

(A) Cash on hand or on deposit. (B) Amounts invested in United States Government or agency securities. (C) Confirmed lines of credit. (8) CONFIRMED LINES OF CREDIT.—For purposes of this section, the amount of confirmed lines of credit as of any time is the aggregate amount which S I P C at such time has the right to borrow from banks and other financial institutions under confirmed lines of credit or other written agreements which provide that moneys so borrowed are to be repayable by S I P C not less than one year from the time of such borrowings (including, for purposes of determining when such moneys are repayable, all rights of extension, refunding, or renewal at the election of S I P C). (b) INITIAL REQUIRED BALANCE FOR FUND.—Within one hundred and twenty days from the date of enactment of this Act, the balance of the fund shall aggregate not less than $75,000,000, less any amounts expended from the fund within that period. (c) ASSESSMENTS.— (1) INITIAL ASSESSMENTS.—Each member of S I P C shall pay to

S I P C, or the collection agent for S I P C specified in section 9(a), on or before the one hundred and twentieth day following the date of enactment of this Act, an assessment equal to one-eighth of 1 per centum of the gross revenues from the securities business of such member during the calendar year 1969, or if the Commission shall determine that, for purposes of assessment pursuant to this paragraph, a lesser percentage of gross revenues from the securities business is appropriate for any class or classes of members (taking into account relevant factors, including but not limited to types of business done and nature of securities sold), such lesser percentages as the Commission, by rule or regulation, shall establish for such class or classes, but in no event less than onesixteenth of 1 per centum for any such class. I n no event shall any assessment upon a member pursuant to this paragraph be less than $150. (2) GENERAL ASSESSMENT AUTHORITY.—SIPC shall, by bylaw or rule, impose upon its members such assessments as, after consultation with self-regulatory organizations, S I P C may deem necessary and appropriate to establish and maintain the fund and to repay any borrowings by S I P C. Any assessments so made shall be in conformity with contractual obligations made by S I P C in connection with any borrowing incurred by S I P C. Subject to paragraph (3) and subsection (d)(1)(A), any such assessment upon.the members, or any one or more classes thereof, may, in whole or in part, be based upon or measured by (A) the amount of their gross revenues from the securities business, or (B) all or any of the following factors: the amount or composition of their gross revenues from the securities business, the number or dollar volume of transactions effected by them, the number of customer accounts maintained by them or the amounts of cash and securi^ * ties in such accounts, their net capital, the nature of their activi/ ties (whether in the securities business or otherwise) and the ,: consequent risks, or other relevant factors. (3) LIMITATIONS.—Notwithstanding any other provision of this . Act (other than section 3(f)) — (A) no assessment shall be made upon a member otherwise than pursuant to paragraph (1) or (*2) of this subsection, ., (B) an assessment may be made under paragraph (2) of this subsection at a rate in excess of one-half of one per centum

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during any twelve-month period if S I P C determines, in accordance with a bylaw or rule, that such rate of assessment during such period will not have a material adverse effect on the financial condition of its members or their customers, except that no assessments shall be made pursuant to such paragraph upon a member which require payments during any such period which exceed in the aggregate one per centum of such member's gross revenues from the securities business for such period, and (C) no assessment shall include any charge based upon the member's activities (i) in the distribution of shares of registered open end investment companies or unit investment trusts, (ii) in the sale of variable annuities, (iii) in the business of insurance, or (iv) in the business of rendering investment advisory services to one or more registered investment companies or insurance company separate accounts. (d) REQUIREMENTS RESPECTING CREDIT.— (1) ASSESSMENTS.—

ASSESSMENTS

AND L I N E S

or

(A) 3^ OF 1 PERCENT ASSESSMENT.—Subject to subsection (c)(3), S I P C shall impose upon each of its members an assessment at a rate of not less than one-half of 1 per centum per annum of the gross revenues from the securities business of such member— (i) until the balance of the fund aggregates not less than $150,000,000 (or such other amount as the Commission may determine in the public interest), (ii) during any period when there is outstanding borrowing by S I P C pursuant to subsection (f) or subsection (g) of this section, and (iii) whenever the balance of the fund (exclusive of confirmed lines of credit) is below $100,000,000 (or such other amount as the Commission may determine in the public interest). (B) 1^ OF 1 PERCENT ASSESSMENT.—During any period during which— (i) the balance of the fund (exclusive of confirmed lines of credit) aggregates less than $150,000,000 (or such other amount as the Commission has determined under paragraph (2)(B)), o r (ii) S I P C is required under paragraph (2)(B) to phase out of the fund all confirmed lines of credit, S I P C shall endeavor to make assessments in such a manner that the aggregate assessments payable by its members during such period shall not be less than one-fourth of 1 per centum per annum of the aggregate gross revenues from the securities business for such members during such period. (2) L I N E S or CREDIT.— (A) $50,000,000 LIMIT AFTER 1973.—After December 31,

1973, confirmed lines of credit shall not constitute more than $50,000,000 of the balance of the fund. (B) PHASEOUT REQUIREMENT.—When the balance of the fund aggregates $150,000,000 (or such other amount as the Commission may determine in the public interest) S I P C shall phase out of the fund all confirmed lines of credit. (e) PRIOR TRUSTS; OVERPAYMENTS AND UNDERPAYMENTS.— (1) PRIOR TRUSTS.—There may be contributed and transferred

at any time to S I P C any funds held by any trust established by a

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self-regulatory organization prior to January 1, 1970, and the amounts so contributed and transferred shall be applied, as may be determined by S I P C with approval of the Commission, as a reduction in the amounts payable pursuant to assessments made or to be made by S I P C upon members of such self-regulatory organization pursuant to subsection (c)(2). No such reduction shall be made at any time when there is outstanding any borrowing by S I P C pursuant to subsection (g) of this section or any borrowings under confirmed lines of credit. (2) OVERPAYMENTS.—To the extent that any payment by a member exceeds the maximum rate permitted by subsection (c) of this section, the excess shall not be recoverable except against future payments by such member in accordance with a bylaw or rule of S I P C. (3) UNDERPAYMENTS.—If a member fails to pay when due all or any part of an assessment made upon such member, the unpaid portion thereof shall bear interest at such rate as may be determined by S I P C by bylaw or rule. (f) BORROWING AUTHORITY.—SIPC shall have the power to borrow moneys and to evidence such borrowed moneys by the issuance of bonds, notes, or other evidences of indebtedness, all upon such terms and conditions as the Board of Directors may determine in the case of a borrowing other than pursuant to subsection (g) of this section, or as may be prescribed by the Commission in the case of a borrowing pursuant to subsection (g). The interest payable on a borrowing pursuant to subsection (g) shall be equal to the interest payable on the related notes or other obligations issued by the Commission to the Secretary of the Treasury. To secure the payment of the principal of, and interest and premium, if any, on, all bonds, notes, or other evidences of indebtedness so issued, S I P C may make agreements with respect to the amount of future assessments to be made upon members and may pledge all or any part of the assets of S I P C and of the assessments made or to be made upon members. Any such pledge of future assessments shall (subject to any prior pledge) be valid and binding from the time that it is made, and the assessments so pledged and thereafter received by S I P C, or any examining authority as collection agent for S I P C, shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of such pledge shall be valid and binding against all parties having claims of any kind against S I P C or such collection agent whether pursuant to this Act, in tort, contract or otherwise, irrespective of whether such parties have notice thereof. During any period when a borrowing by S I P C pursuant to subsection (g) of this section is outstanding, no pledge of any assessment upon a member to secure any bonds, notes, or other evidences of indebtedness issued other than pursuant to subsection (g) of this section shall be effective as to the excess of the payments under the assessment on such member during any twelve-month period over one-fourth of 1 per centum of such member's gross revenues from the securities business for such period. Neither the instrument by which a pledge is authorized or created, nor any statement or other document relative thereto, need be filed or recorded in any State or other jurisdiction. The Commission may by rule or regulation provide for the filing of any instrument by which a pledge or borrowing is authorized or created, but the failure to make or any defect in any such filing shall not affect the validity of such pledge or borrowing. (g) S E C LOANS TO SIPC.—In the event that the fund is or may reasonably appear to be insufficient for the purposes of this Act, the Commission is authorized to make loans to S I P C. At the time of appli-

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cation for, and as a condition to, any such loan, SI P C shall file with the Commission a statement with respect to the anticipated use of the proceeds of the loan. If the Commission determines that such loan is necessary for the protection of customers of brokers or dealers and the maintenance of confidence in the United States securities markets and that S I P C has submitted a plan which provides as reasonable an assurance of prompt repayment as may be feasible under the circumstances, then the Commission shall so certify to the Secretary of the Treasury, and issue notes or other obligations to the Secretary of the Treasury pursuant to subsection (h). If the Commission determines that the amount or time for payment of the assessments pursuant to such plan would not satisfactorily provide for the repayment of such loan, it may, by rules and regulations, impose upon the purchasers of equity securities in transactions on national securities exchanges and in the over-the-counter markets a transaction fee in such amount as at any time or from time to time it may determine to be appropriate, but not exceeding one-fiftieth of 1 per centum of the purchase price of the securities. No such fee shall be imposed on a transaction (as defined by rules or regulations of the Commission) of less than $'5,000. For the purposes of the next preceding sentence, (A) the fee shall be based upon the total dollar amount of each purchase; (B) the fee shall not apply to any purchase on a national securities exchange or in an overthe-counter market by or for the account of a broker or dealer registered under section 15(b) of the 1934 Act or a member of a national securities exchange unless such purchase is for an investment account of such broker, dealer, or member (and for this purpose any transfer from a trading account to an investment account shall be deemed a purchase at fair market value); and (C) the Commission by rules and regulations may exempt any transaction in the over-the-counter markets in order to provide for the assessment of fees on purchasers in transactions in those markets on a basis comparable to the assessment of fees on purchasers in transactions on national securities exchanges. Such fee shall be collected by the broker or dealer effecting the transaction for or with the purchaser and shall be paid to S I P C in the same manner as assessments imposed pursuant to subsection (c). (h) SEC NOTES ISSUED TO TREASURY.—To enable the Commission to make loans under subsection (g), the Commission is authorized to issue to the Secretary of the Treasury notes or other obligations in an aggregate amount of not to exceed $1,000,000,000, in such forms and denominations, bearing such maturities, and subject to such terms and conditions, as may be prescribed by the Secretary of the Treasury. Such notes or other obligations shall bear interest at a rat« determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of the notes or other obligations. The Secretary of the Treasury may reduce the interest rate if he determines such reduction to be in the national interest. The Secretary of the Treasury is authorized and directed to purchase any notes and other obligations issued hereunder and for that purpose he is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act, as amended, and the purposes for which securities may be issued under that Act, as amended, are extended to include any purchase of such notes and obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this subsection. All redemptions, purdhases, and sales by the Secretary of the Treasury of such

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notes or other obligations shall be treated as pnblic debt transactions ol' the United States. (i) ''GROSS REVENUES" DEFINED.—

(1) IN GENERAL,—For purposes of this Act, the tenn "gross revenues from the securities business" means the sum of (but without duplication): (A) commissions earned in connection with transactions in securities effected for customers as agent (net of commissions paid to other brokers and dealers in connection with such transactions) and markups in respect of purchases or sales of securities as principal, (B) charges for executing or clearing transactions in securities for other brokers and dealers, (C) the net realized gain, if any, from principal transactions in securities in trading accounts, (D) the net profit, if any, from the management of or participation in the underwriting or distribution of securities, (E) interest earned on customers' securities accounts, (F) fees for investment advisory services (except when rendered to one or more registered investment companies or insurance company separate accounts) or account supervision in respect of securities, (G) fees for the solicitation of proxies with respect to, or tenders or exchanges of, securities, (H) income from service charges or other surcharges in respect of securities, (I) except as otherwise provided by rule or regulation of the Commission, dividends and interest received on securities in investment accounts of the broker or dealer, (J) fees in connection with put, call, and other option transactions in securities, and (K) fees and other income for all other investment banking services. Such term does not include revenues received by a broker or dealer in connection with the distribution of shares of a registered open end investment company or unit investment trust or revenues derived by a broker or dealer from the sale of variable annuities or from the conduct of the business of insurance. (2) CONSOLIDATED GROUP.—Except as otherwise provided by

S I P C by bylaw or rule, gross revenues from the securities business of a broker or dealer shall be computed on a consolidated basis for such broker or dealer and all its subsidiaries, and the operations of a broker or dealer shall include those of any business to which such broker or dealer has succeeded. (3) MEANING or TERMS NOT DEFINED.—SIPC may by bylaw or rule define all terms used in this subsection insofar as such definitions are not inconsistent wath the provisions of this subsection. SEC. 5. PROTECTION OF CUSTOMERS. (a) DETERMINATION OF N E E D OF PROTECTION. — (1) NOTICE TO SIPC.—If the Commission or

any self-regulatory organization is aware of facts which lead it to believe that any broker or dealer subject to its regulation is in Or is approaching financial difficulty, it shall immediately notify S I P C, and, if such notification is by a self-regulatory organization, the Commission. (2) ACTION BY SIPC.—If S I P C determines that any member has failed or is in danger of failing to meet its obligations to

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customers and that there exists one or more of the conditions specified in subsection (b)(1)(A), S I P C, upon notice to such member, may apply to any court of competent jurisdiction specified in section 27 or 21 (e) of the 1934 Act for a decree adjudicating ^^^^^ ^tat. 902. that customers of such member are in need of the protection pro- 15 USC 78aa, vided by this Act, '^^"• (3) EFFECT OF OTHER PENDING ACTIONS.—An application under paragraph (2) — (A) with the consent of the Commission, may be combined with any action brought by the Commission including an action by it for a temporary receiver pending an appointment of a trustee under subsection (b)(3), and (B) may be filed notwithstanding the pendency in the same or any other court of any bankruptcy, mortgage foreclosure, or equity receivership proceeding or any proceeding to reorganize, conserve, or liquidate such member or its property, or any proceeding to enforce a lien against property of such member. (b)

COURT ACTION.— (1) ISSUANCE OF DECREE.— (A) FINDINGS BY COURT.—A

court to which application is jnade pursuant to subsection (a)(2) shall grant the application and issue a decree adjudicating that customers of the member named in the application are in need of protection under this Act if it finds that such member— (i) is insolvent within the meaning of section 1(19) of the Bankruptcy Act, or is unable to meet its obliga- ^^ Stat. 84i. tions as they mature, or (ii) has committed an act of bankruptcy within the meaning of section 3 of the Bankruptcy Act, or ^stat^*' ^'^'^' (iii) is the subject of a proceeding pending in any court 11 USC 21*. or before any agency of the United States or any State in which a receiver, trustee, or liquidator for such member has been appointed, or (iv) is not in compliance with applicable requirements under the 1934 Act or rules or regulations of the Com- ^^ use y^si" mission or any self-regulatory organization with respect to financial responsibility or hypothecation of customers' securities, or (v) is unable to make such computations as may be necessary to establish compliance with such financial responsibility or hypothecation rules or regulations. (B) UNCONTESTED, ETC., APPLICATIONS.—If within three business days after the filing of an application pursuant to subsection (a)(2), or such other period as the court may order, the debtor shall consent to or fail to contest such application or shall fail to show facts sufficient to contorvert any material allegation of such application, the court shall forthwith grant the application and issue a decree adjudicating that customers of the member named in the application are in need of protection under this Act. (2) EXCLUSIVE JURISDICTION OVER DEBTOR,—Upon the filing of an application pursuant to subsection (a)(2), the court to which application is made shall have exclusive jurisdiction of the debtor involved and its property wherever located with the powers, to the extent consistent with the purposes of this Act, of a court of bankruptcy and of a court in a proceeding under chapter X of the Bankruptcy Act. Pending an adjudication under para- 8o^stat^*i'1278. 80 Stat. 2*7s^' 11 USC 501.

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graph (1) such court shall stay, and upon appointment by it of a trustee as provided in paragraph (3) such court shall continue the stay of, any pending bankruptcy, mortgage foreclosure, equity receivership, or other proceeding to reorganize, conserve, or liquidate the debtor or its property and any other suit against any receiver, conservator, or trustee of the debtor or its property. Pending such adjudication and upon the appointment by it of such trustee, the court may stay any proceeding to enforce a lien against property of the debtor or any other suit against the debtor. Pending such adjudication, such court may appoint a temporary receiver. (3) APPOINTMENT OF TRUSTEE.—If the court grants an applica' tion and makes an adjudication under paragraph (1), the court shall forthwith appoint as trustee for the liquidation of the business of the debtor in accordance with section 6, and as attorney for such trustee, such persons as S I P C shall specify. No person shall be appointed as such trustee or attorney if such person is not "disinterested" within the meaning of section 158 of the 52 Stat. 888 Bankruptcy Act. 11 USC 558, (4) DEBTOR AND FILING DATE DEFINED.—For purposes of this Act— (A) DEBTOR.—The term "debtor" means a member of S I P C in respect of whom an application has been filed pursuant to subsection (a)(2).. (B) F I L I N G DATE.—The term "filing date" means the date on which an application with respect to any debtor is filed under subsection (a)(2); except that if— (i) a petition was filed before such date by or against 30 Stat. 544. the debtor under the Bankruptcy Act, or 11 USC 1 et seq. (ii) the debtor is the subject oi a proceeding pending in any court or before any agency of the United States or any State in which a receiver, trustee, or liquidator for '' such debtor was appointed which proceeding was commenced before the date on which such application was filed, then the term "filing date" means the date on which such petition was filed or such proceeding commenced, (c) S E C PARTICIPATION I N PROCEEDINGS.—The Commission may, on its own motion, file notice of its appearance in any proceeding under this Act and may thereafter participate as a party. SEC. 6. LIQUIDATION PROCEEDINGS. (a) GENERAL PURPOSES OF LIQUIDATION PROCEEDING.—The purposes

of any proceeding in which a trustee has been appointed under section 5(b)(3) (hereafter in this section referred to as a "liquidation proceeding") shall be: (1) as promptly as possible after such appointment and in accordance with the provisions of this section— (A) to return specifically identifiable property to the customers of the debtor entitled thereto; (B) to distribute the single and separate fund, and (in advance thereof or concurrently therewith) pay to customers moneys advanced by S I P C, as provided in subsection (f); (2) to operate the business of the debtor in order to complete open contractual commitments of the debtor pursuant to subsection (d); (3) to enforce rights of subrogation as provided in this Act; and

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(4) to liquidate the business of the debtor. (b) POWERS AND DUTIES OF TRUSTEE,— (1) TRUSI^EE POWERS.—A trustee appointed

under section 5(b) (3) (hereinafter referred to as "trustee") shall be vested with the same powers and title with respect to the debtor and the property of the debtor, and the same rights to avoid preferences, as a trustee in bankruptcy and a trustee under chapter X of the Bankruptcy Act have with respect to a bankrupt and a chapter X ^2 Stat. 883; debtor. I n addition, a trustee shall have the right— iTu^sc soV. (A) with the approval of S I P C, to hire and fix the compensation of all personnel (including officers and employees of the debtor and of its examining authority) and other persons (including but not limited to accountants) that are deemed by such trustee necessary for all or any purposes of the liquidation proceeding, and (B) to operate the business of the debtor in order to complete open contractual commitments pursuant to subsection (d), and no approval of the court shall be required therefor. (2) TRUSTEE DUTIES.—Except as inconsistent with the provisions of this Act or otherwise ordered by the court, a trustee shall be subject to the same duties as a trustee appointed under section 44 of the Bankruptcy Act, except that a trustee may, but shall c/Ll*'^%^^°'' have no duty to, reduce to money any securities in the single and u use 72'. separate fund (provided under subsection (c)(2)(B)) or in the general estate of the debtor.

(c) APPLICATION or BANKRUPTCY ACT. — (1) GENERAL PROVISIONS APPLK^ABLE.—Except

as inconsistent with the provisions of this Act and except that in no event shall a plan of reorganization be formulated, a liquidation proceeding shall be conducted in accordance with, and as though it were being conducted under, the provisions of chapter X and such of the proA^sions (other than section 60e) of chapters I to VII, inclusive, of the Bankruptcy Act as section 102 of chapter X would make applicable if an order of the court had been entered directing that bankruptcy be proceeded with pursuant to the provisions of such chapters I to VII, inclusive; except that the court may, for such period as may be appropriate, stay enforcement of, but shall not abrogate, the rights provided in section 68 of the Bankruptcy Act and the right to enforce a valid, non-preferential lien or pledge against the property of the debtor. For purposes of applying the Bankruptcy Act in carrying out this section, any reference in the Bankruptcy Act to the date of commencement of proceedings under the Bankruptcy Act shall be deemed to be a reference to the filing date (as defined in section 5(b)(4)(B)). (2) SPECIAL PROVISIONS.—The following subparagraphs of this paragraph shall apply to a liquidation proceeding in lieu of section 60e of the Bankruptcy Act: (A) DEFINITIONS.—Except as otherwise expressly provided in this section, for purposes of this section and the application of the Bankruptcy Act to a liquidation proceeding— (i) "property" includes cash and securities, whether or not negotiable and all property of a similar character; (ii) "customers" of a debtor means persons (including persons with whom the debtor deals as principal or agent) who have claims on account of securities received, acquired, or held by the debtor from or for the account of such persons (I) for safekeeping, or ( II) with a

^^ ^^^ ^^* 52 Stat. 84o11 USC 1-101.

11 USC 108.

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