TITLE XI - CORPORATE FRAUD ACCOUNTABILITY
SEC. 1103. TEMPORARY FREEZE AUTHORITY FOR THE SECURITIES AND EXCHANGE COMMISSION.
(a) IN GENERAL. - Section 21C(c) of the Securities Exchange Act of 1934 (15
U.S.C. 78u–3(c)) is amended by adding at the end the following:
"(3) TEMPORARY FREEZE. -
"(A) IN GENERAL. -
"(i) ISSUANCE OF TEMPORARY ORDER. - Whenever, during
the course of a lawful investigation involving possible violations of the Federal
securities laws by an issuer of publicly traded securities or any of its directors,
officers, partners, controlling persons, agents, or employees, it shall appear
to the Commission that it is likely that the issuer will make extraordinary
payments (whether compensation or otherwise) to any of the foregoing persons,
the Commission may petition a Federal district court for a temporary order requiring
the issuer to escrow, subject to court supervision, those payments in an interest-bearing
account for 45 days.
"(ii) STANDARD. - A temporary order shall be entered
under clause (i), only after notice and opportunity for a hearing, unless the
court determines that notice and hearing prior to entry of the order would be
impracticable or contrary to the public interest.
"(iii) EFFECTIVE PERIOD. - A temporary order issued under
clause (i) shall -
"(I) become effective immediately;
"(II) be served upon the parties subject to it; and
"(III) unless set aside, limited or suspended by a court
of competent jurisdiction, shall remain effective and enforceable for 45 days.
"(iv) EXTENSIONS AUTHORIZED. - The effective period of
an order under this subparagraph may be extended by the court upon good cause
shown for not longer than 45 additional days, provided that the combined period
of the order shall not exceed 90 days.
"(B) PROCESS ON DETERMINATION OF VIOLATIONS. -
"(i) VIOLATIONS CHARGED. - If the issuer or other person
described in subparagraph (A) is charged with any violation of the Federal securities
laws before the expiration of the effective period of a temporary order under
subparagraph (A) (including any applicable extension period), the order shall
remain in effect, subject to court approval, until the conclusion of any legal
proceedings related thereto, and the affected issuer or other person, shall
have the right to petition the court for review of the order.
"(ii) VIOLATIONS NOT CHARGED. - If the issuer or other
person described in subparagraph (A) is not charged with any violation of the
Federal securities laws before the expiration of the effective period of a temporary
order under subparagraph (A) (including any applicable extension period), the
escrow shall terminate at the expiration of the 45-day effective period (or
the expiration of any extension period, as applicable), and the disputed payments
(with accrued interest) shall be returned to the issuer or other affected person.".
(b) TECHNICAL AMENDMENT. - Section 21C(c)(2) of the Securities Exchange Act
of 1934 (15 U.S.C. 78u–3(c)(2)) is amended by striking "This"
and inserting "paragraph (1)".
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