Sarbanes Oxley Act Section 1103

 

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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