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Sarbanes Oxley
Act Section 402
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SEC. 402.
ENHANCED CONFLICT OF INTEREST PROVISIONS.
(a) PROHIBITION ON
PERSONAL LOANS TO EXECUTIVES.—Section
13 of the
Securities Exchange Act of 1934 (15 U.S.C.
78m), as
amended by
this Act, is amended by adding at the end the
following:
‘‘(k) PROHIBITION ON PERSONAL LOANS TO
EXECUTIVES.—
‘‘(1) IN GENERAL.—It
shall be unlawful for any issuer (as
defined in
section 2 of the Sarbanes-Oxley Act of 2002),
directly
or
indirectly, including through any subsidiary,
to extend or
maintain
credit, to arrange for the extension of
credit, or to
renew an
extension of credit, in the form of a personal
loan
to or for any
director or executive officer (or equivalent
thereof)
of that
issuer. An extension of credit maintained by
the issuer
on the date
of enactment of this subsection shall not be
subject
to the
provisions of this subsection, provided that
there is
no material
modification to any term of any such extension
of credit or
any renewal of any such extension of credit on
or after that
date of enactment.
‘‘(2) LIMITATION.—Paragraph
(1) does not preclude any
home
improvement and manufactured home loans (as
that term
is defined in
section 5 of the Home Owners’ Loan Act (12
U.S.C.
1464)), consumer credit (as defined in section
103 of
the Truth in
Lending Act (15 U.S.C. 1602)), or any
extension
of credit
under an open end credit plan (as defined in
section
103 of the
Truth in Lending Act (15 U.S.C. 1602)), or a
charge
card (as
defined in section 127(c)(4)(e) of the Truth
in Lending
Act (15 U.S.C.
1637(c)(4)(e)), or any extension of credit by
a broker or
dealer registered under section 15 of this
title
to an
employee of that broker or dealer to buy,
trade, or
carry
securities, that is permitted under rules or
regulations
of the Board
of Governors of the Federal Reserve System
pursuant
to section 7
of this title (other than an extension of
credit
that would be
used to purchase the stock of that issuer),
that
is—
‘‘(A) made or
provided in the ordinary course of the
consumer
credit business of such issuer;
‘‘(B) of a
type that is generally made available by
such issuer
to the public; and
‘‘(C) made by
such issuer on market terms, or terms
that are no
more favorable than those offered by the
issuer
to the
general public for such extensions of credit.
‘‘(3) RULE OF
CONSTRUCTION FOR CERTAIN LOANS.—Paragraph
(1) does not
apply to any loan made or maintained
by an insured
depository institution (as defined in section
3
of the
Federal Deposit Insurance Act (12 U.S.C.
1813)), if
the loan is
subject to the insider lending restrictions of
section
22(h) of the
Federal Reserve Act (12 U.S.C. 375b).’’.
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