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Sarbanes Oxley
Act |
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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. 78u3(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. 78u3(c)(2)) is amended by
striking
This and
inserting paragraph (1).
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