15 U.S.C. § 78dd — Foreign securities exchanges

Page 454 TITLE 15—COMMERCE AND TRADE § 78dd thereunder, and every contract (including any contract for listing a security on an exchange) heretofore or hereafter made, the performance of which involves the violation of, or the con- tinuance of any relationship or practice in viola- tion of, any provision of this chapter or any rule or regulation thereunder, shall be void (1) as re- gards the rights of any person who, in violation of any such provision, rule, or regulation, shall have made or engaged in the performance of any such contract, and (2) as regards the rights of any person who, not being a party to such con- tract, shall have acquired any right thereunder with actual knowledge of the facts by reason of which the making or performance of such con- tract was in violation of any such provision, rule, or regulation: Provided, (A) That no con- tract shall be void by reason of this subsection because of any violation of any rule or regula- tion prescribed pursuant to paragraph (3) of sub- section (c) of section 78o of this title, and (B) that no contract shall be deemed to be void by reason of this subsection in any action main- tained in reliance upon this subsection, by any person to or for whom any broker or dealer sells, or from or for whom any broker or dealer pur- chases, a security in violation of any rule or reg- ulation prescribed pursuant to paragraph (1) or (2) of subsection (c) of section 78o of this title, unless such action is brought within one year after the discovery that such sale or purchase involves such violation and within three years after such violation. The Commission may, in a rule or regulation prescribed pursuant to such paragraph (2) of such section 78o(c) of this title, designate such rule or regulation, or portion thereof, as a rule or regulation, or portion there- of, a contract in violation of which shall not be void by reason of this subsection. (c) Validity of loans, extensions of credit, and creation of liens; actual knowledge of viola- tion Nothing in this chapter shall be construed (1) to affect the validity of any loan or extension of credit (or any extension or renewal thereof) made or of any lien created prior or subsequent to the enactment of this chapter, unless at the time of the making of such loan or extension of credit (or extension or renewal thereof) or the creating of such lien, the person making such loan or extension of credit (or extension or re- newal thereof) or acquiring such lien shall have actual knowledge of facts by reason of which the making of such loan or extension of credit (or extension or renewal thereof) or the acquisition of such lien is a violation of the provisions of this chapter or any rule or regulation there- under, or (2) to afford a defense to the collection of any debt or obligation or the enforcement of any lien by any person who shall have acquired such debt, obligation, or lien in good faith for value and without actual knowledge of the vio- lation of any provision of this chapter or any rule or regulation thereunder affecting the le- gality of such debt, obligation, or lien. (June 6, 1934, ch. 404, title I, § 29, 48 Stat. 903; June 25, 1938, ch. 677, § 3, 52 Stat. 1076; Pub. L. 101–429, title V, § 507, Oct. 15, 1990, 104 Stat. 956; Pub. L. 111–203, title IX, §§ 927, 929T, July 21, 2010, 124 Stat. 1852, 1867.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this title’’. See References in Text note set out under section 78a of this title. AMENDMENTS 2010—Subsec. (a). Pub. L. 111–203, §§ 927, 929T, amended subsec. (a) identically, substituting ‘‘a self-regulatory organization,’’ for ‘‘an exchange required thereby’’. 1990—Subsec. (b). Pub. L. 101–429 substituted in cl. (A) ‘‘paragraph (3)’’ for ‘‘paragraph (2) or (3)’’ and in cl. (B) ‘‘paragraph (1) or (2)’’ for ‘‘paragraph (1)’’, and inserted at end ‘‘The Commission may, in a rule or regulation prescribed pursuant to such paragraph (2) of such sec- tion 78o(c) of this title, designate such rule or regula- tion, or portion thereof, as a rule or regulation, or por- tion thereof, a contract in violation of which shall not be void by reason of this subsection.’’ 1938—Subsec. (b). Act June 25, 1938, inserted proviso. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as an Effective Date note under section 5301 of Title 12, Banks and Banking. EFFECTIVE DATE OF 1990 AMENDMENT Amendment by Pub. L. 101–429 effective Oct. 15, 1990, with provisions relating to civil penalties and account- ing and disgorgement, see section 1(c)(1), (2) of Pub. L. 101–429, set out in a note under section 77g of this title. § 78dd. Foreign securities exchanges (a) Unlawful transactions on foreign securities exchanges It shall be unlawful for any broker or dealer, directly or indirectly, to make use of the mails or of any means or instrumentality of interstate commerce for the purpose of effecting on an ex- change not within or subject to the jurisdiction of the United States, any transaction in any se- curity the issuer of which is a resident of, or is organized under the laws of, or has its principal place of business in, a place within or subject to the jurisdiction of the United States, in con- travention of such rules and regulations as the Commission may prescribe as necessary or ap- propriate in the public interest or for the pro- tection of investors or to prevent the evasion of this chapter. (b) Business without the jurisdiction of the United States The provisions of this chapter or of any rule or regulation thereunder shall not apply to any person insofar as he transacts a business in secu- rities without the jurisdiction of the United States, unless he transacts such business in con- travention of such rules and regulations as the Commission may prescribe as necessary or ap- propriate to prevent the evasion of this chapter. (c) Rule of construction No provision of this chapter that was added by the Wall Street Transparency and Account- ability Act of 2010, or any rule or regulation thereunder, shall apply to any person insofar as such person transacts a business in security- based swaps without the jurisdiction of the United States, unless such person transacts such Page 455 TITLE 15—COMMERCE AND TRADE § 78dd–1 business in contravention of such rules and reg- ulations as the Commission may prescribe as necessary or appropriate to prevent the evasion of any provision of this chapter that was added by the Wall Street Transparency and Account- ability Act of 2010. This subsection shall not be construed to limit the jurisdiction of the Com- mission under any provision of this chapter, as in effect prior to July 21, 2010. (June 6, 1934, ch. 404, title I, § 30, 48 Stat. 904; Pub. L. 111–203, title VII, § 772(b), July 21, 2010, 124 Stat. 1802.) Editorial Notes REFERENCES IN TEXT This chapter, referred to in text, was in the original ‘‘this title’’. See References in Text note set out under section 78a of this title. The Wall Street Transparency and Accountability Act of 2010, referred to in subsec. (c), is title VII of Pub. L. 111–203, July 21, 2010, 124 Stat. 1641, which enacted chapter 109 (§ 8301 et seq.) of this title and enacted and amended numerous other sections and notes in the Code. For complete classification of this Act to the Code, see Short Title note set out under section 8301 of this title and Tables. AMENDMENTS 2010—Subsec. (c). Pub. L. 111–203 added subsec. (c). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the later of 360 days after July 21, 2010, or, to the extent a provi- sion of subtitle B (§§ 761–774) of title VII of Pub. L. 111–203 requires a rulemaking, not less than 60 days after publication of the final rule or regulation imple- menting such provision of subtitle B, see section 774 of Pub. L. 111–203, set out as a note under section 77b of this title. Executive Documents TRANSFER OF FUNCTIONS For transfer of functions of Securities and Exchange Commission, with certain exceptions, to Chairman of such Commission, see Reorg. Plan No. 10 of 1950, §§ 1, 2, eff. May 24, 1950, 15 F.R. 3175, 64 Stat. 1265, set out under section 78d of this title. § 78dd–1. Prohibited foreign trade practices by issuers (a) Prohibition It shall be unlawful for any issuer which has a class of securities registered pursuant to section 78l of this title or which is required to file re- ports under section 78o(d) of this title, or for any officer, director, employee, or agent of such issuer or any stockholder thereof acting on be- half of such issuer, to make use of the mails or any means or instrumentality of interstate com- merce corruptly in furtherance of an offer, pay- ment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value to— (1) any foreign official for purposes of— (A)(i) influencing any act or decision of such foreign official in his official capacity, (ii) inducing such foreign official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper advantage; or (B) inducing such foreign official to use his influence with a foreign government or in- strumentality thereof to affect or influence any act or decision of such government or instrumentality, in order to assist such issuer in obtaining or retaining business for or with, or directing business to, any person; (2) any foreign political party or official thereof or any candidate for foreign political office for purposes of— (A)(i) influencing any act or decision of such party, official, or candidate in its or his official capacity, (ii) inducing such party, of- ficial, or candidate to do or omit to do an act in violation of the lawful duty of such party, official, or candidate, or (iii) securing any improper advantage; or (B) inducing such party, official, or can- didate to use its or his influence with a for- eign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality, in order to assist such issuer in obtaining or retaining business for or with, or directing business to, any person; or (3) any person, while knowing that all or a portion of such money or thing of value will be offered, given, or promised, directly or indi- rectly, to any foreign official, to any foreign political party or official thereof, or to any candidate for foreign political office, for pur- poses of— (A)(i) influencing any act or decision of such foreign official, political party, party official, or candidate in his or its official ca- pacity, (ii) inducing such foreign official, po- litical party, party official, or candidate to do or omit to do any act in violation of the lawful duty of such foreign official, political party, party official, or candidate, or (iii) se- curing any improper advantage; or (B) inducing such foreign official, political party, party official, or candidate to use his or its influence with a foreign government or instrumentality thereof to affect or influ- ence any act or decision of such government or instrumentality, in order to assist such issuer in obtaining or retaining business for or with, or directing business to, any person. (b) Exception for routine governmental action Subsections (a) and (g) shall not apply to any facilitating or expediting payment to a foreign official, political party, or party official the pur- pose of which is to expedite or to secure the per- formance of a routine governmental action by a foreign official, political party, or party official. (c) Affirmative defenses It shall be an affirmative defense to actions under subsection (a) or (g) that— (1) the payment, gift, offer, or promise of anything of value that was made, was lawful under the written laws and regulations of the foreign official’s, political party’s, party offi- cial’s, or candidate’s country; or