S. 1645

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1645 Introduced in Senate (IS)]

<DOC>

119th CONGRESS
1st Session
S. 1645

To establish a domestic ownership investment facility, and for other 
purposes.

_______________________________________________________________________

IN THE SENATE OF THE UNITED STATES

May 7, 2025

Mr. Van Hollen (for himself, Mr. Moran, Ms. Baldwin, Mr. Young, Mrs. 
Shaheen, Mr. Schmitt, and Mr. Welch) introduced the following bill; 
which was read twice and referred to the Committee on Finance

_______________________________________________________________________

A BILL

To establish a domestic ownership investment facility, and for other 
purposes.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``American Ownership and Resilience 
Act''.

SEC. 2. DEFINITIONS.

In this Act:
(1) 1940 act company.--The term ``1940 Act Company'' means 
an investment company subject to registration under the 
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.).
(2) 1980 act company.--The term ``1980 Act Company'' means 
an investment company subject to registration under the Small 
Business Investment Incentive Act of 1980 (15 U.S.C. 80a-51 et 
seq.).
(3) Articles.--The term ``articles'' means--
(A) articles of incorporation for an incorporated 
body; or
(B) the functional equivalent or other similar 
documents specified by the Secretary for other business 
entities.
(4) Capital interest.--The term ``capital interest'' means 
an interest in a subsidiary LLC determined at the time of 
receipt that gives the holder of the interest a share of the 
proceeds in a complete liquidation of the subsidiary LLC if the 
assets of the subsidiary LLC are sold at fair market value.
(5) Covered business concern.--The term ``covered business 
concern'' means an enterprise, regardless of any size standard, 
that is independently owned and operated, except that an 
investment by a venture capital firm, investment company, 
employee welfare benefit plan or pension plan, or trust, 
foundation, or endowment that is exempt from Federal income 
taxation shall not cause a business concern to be deemed not 
independently owned and operated regardless of the allocation 
of control during the investment period under any investment 
agreement between the business concern and the entity making 
the investment.
(6) Covered investment.--The term ``covered investment'' 
means, with respect to an investment in a covered business 
concern--
(A) the provision of capital to finance the sale of 
an ownership interest of a covered business concern, 
including a covered business concern created as a 
result of a corporate divestiture, to an employee stock 
ownership plan or eligible worker-owned cooperative if 
such sale results in--
(i) the employee stock ownership plan or 
eligible worker-owned cooperative, 
respectively, holding a majority interest of 
the outstanding stock of the covered business 
concern; and
(ii) with respect to such a sale to an 
employee stock ownership plan, the appointment 
of an independent trustee for the transaction; 
or
(B) the provision of capital to finance a covered 
business concern if--
(i) an employee stock ownership plan or 
eligible worker-owned cooperative holds a 
majority interest of the outstanding stock of 
the covered business concern, prior to and 
immediately following the provision of capital; 
and
(ii) the provision of capital does not 
reduce the percentage of stock of the covered 
business concern held by the employee stock 
ownership plan or eligible worker-owned 
cooperative (as applicable), excluding any 
synthetic equity.
(7) Department.--The term ``Department'' means the 
Department of Commerce.
(8) Eligible worker-owned cooperative.--The term ``eligible 
worker-owned cooperative'' has the meaning given that term in 
section 1042(c) of the Internal Revenue Code of 1986.
(9) Employee stock ownership plan.--The term ``employee 
stock ownership plan'' has the meaning given that term in 
section 4975(e) of the Internal Revenue Code of 1986.
(10) Employee welfare benefit plan; pension plan.--The 
terms ``employee welfare benefit plan'' and ``pension plan''--
(A) have the meanings given those terms in section 
3 of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1002); and
(B) include--
(i) public and private pension or 
retirement plans subject to such Act; and
(ii) similar plans not covered by such Act 
that have been established and that are 
maintained by the Federal Government or any 
State or political subdivision, or any agency 
or instrumentality thereof, for the benefit of 
employees.
(11) Independent financial advisor.--The term ``independent 
financial advisor'' means a financial or valuation advisor 
that--
(A) is in the profession of serving as a financial 
or valuation advisor for transactions involving 
employee stock ownership plans;
(B) has never--
(i) performed services, including a 
preliminary valuation, for or on behalf of--
(I) any party selling an ownership 
interest in the covered business 
concern to the employee stock ownership 
plan involved in the transaction that 
the advisor is evaluating; or
(II) the covered business concern, 
unless the services were provided 
solely to an existing employee stock 
ownership plan sponsored by the covered 
business concern; or
(ii) been a director, officer, or employee 
of the covered business concern;
(C) has not performed services related to the 
transaction the advisor is evaluating, including a 
preliminary valuation, for or on behalf of--
(i) the ownership investment company that 
is preparing to or has already allocated 
capital to the covered business concern; or
(ii) any other entity that is structuring 
or financing the transaction for any party 
other than the employee stock ownership plan; 
and
(D) does not have a familial or corporate 
relationship (such as a parent-subsidiary relationship) 
to any of person or entity described in subparagraph 
(B) or (C).
(12) Independent trustee.--The term ``independent trustee'' 
means a trustee that--
(A) is in the profession of serving as a fiduciary 
for employee stock ownership plans;
(B) has never--
(i) performed services for or on behalf of 
any party selling an ownership interest in the 
covered business concern to the employee stock 
ownership plan involved in the transaction that 
the trustee is considering; or
(ii) been a director, officer, or employee 
of the covered business concern;
(C) has not performed services for or on behalf of 
the covered business concern at any time during the 5-
year period ending on the date of execution of the 
transaction the trustee is considering, unless such 
services solely consisted of acting as a fiduciary of 
an employee benefit plan (including an employee stock 
ownership plan) under the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1001 et seq.);
(D) has not performed services related to the 
transaction the trustee is considering, for or on 
behalf of--
(i) the ownership investment company that 
is preparing to or has already allocated 
capital to the covered business concern; or
(ii) any other entity that is structuring 
or financing the transaction for any party 
other than the employee stock ownership plan; 
and
(E) does not have a familial or corporate 
relationship (such as a parent-subsidiary relationship) 
to any person or entity described in subparagraph (B), 
(C), or (D).
(13) Leverage.--The term ``leverage'' means debentures 
guaranteed by the Department.
(14) License.--The term ``license'' means a license issued 
by the Department as provided in section 4(c).
(15) Licensee.--The term ``licensee'' means a company 
approved by the Secretary to operate under the provisions of 
this Act and issued a license provided in section 4(c).
(16) Limited liability company.--The term ``limited 
liability company'' means a business entity that is organized 
and operating in accordance with a State limited liability 
company statute approved by the Department.
(17) Member.--The term ``member'' means, with respect to a 
licensee that is a limited liability company, a holder of an 
ownership interest or a person otherwise admitted to membership 
in the limited liability company.
(18) Non-leveraged licensee.--The term ``non-leveraged 
licensee'' means a licensee that--
(A) has no outstanding leverage or leverage 
commitment; and
(B) certifies to the Department in writing that the 
licensee will not seek leverage in the future.
(19) Outstanding stock.--The term ``outstanding stock'' 
means shares of stock, including synthetic equity.
(20) Ownership investment company.--The term ``ownership 
investment company'' means--
(A) a company approved by the Secretary to operate 
under the provisions of this Act and issued a license 
as provided in section 4(c); and
(B) for which--
(i) 100 percent of the total capital 
managed by the investment firm shall be 
invested in covered investments;
(ii) not less than 50 percent of the total 
capital managed by the investment firm shall be 
invested in covered investments described in 
paragraph (6)(A); and
(iii) covered investment returns are 
obtained from debt, synthetic equity, preferred 
stock, equity, or a combination thereof, 
including returns obtained from cash interest, 
payment-in-kind interest, and stock warrants.
(21) Preferred stock.--The term ``preferred stock'' has the 
meaning given that term in section 351(g)(3) of the Internal 
Revenue Code of 1986.
(22) Private capital.--The term ``private capital''--
(A) means the sum of--
(i) the paid-in capital and paid-in surplus 
of a corporate licensee, the contributed 
capital of the partners of a partnership 
licensee, or the equity investment of the 
members of a limited liability company 
licensee; and
(ii) unfunded binding commitments, from 
investors that meet criteria established by the 
Secretary, to contribute capital to the 
licensee, provided that such unfunded 
commitments may be counted as private capital 
for purposes of approval by the Secretary of 
any request for leverage, but leverage shall 
not be funded based on such commitments; and
(B) does not include any--
(i) funds borrowed by a licensee from any 
source;
(ii) funds obtained through the issuance of 
leverage; or
(iii) funds obtained directly or indirectly 
from any Federal, State, or local government, 
or any government agency or instrumentality, 
except for--
(I) funds obtained from the 
business revenues (excluding any 
governmental appropriation) of any 
federally chartered or government-
sponsored corporation established 
before October 1, 1987;
(II) funds invested by an employee 
welfare benefit plan or pension plan; 
and
(III) any qualified nonprivate 
funds (if the investors of the 
qualified nonprivate funds do not 
control, directly or indirectly, the 
management, board of directors, general 
partners, or members of the licensee).
(23) Profits interest.--The term ``profits interests'' 
means an interest in a subsidiary LLC other than a capital 
interest.
(24) Protege oic.--The term ``Protege OIC'' means an entity 
licensed under section 4(c) as an ownership investment company 
and selected in accordance with section 6--
(A) for which the managers of the firm have a 
documented record of successful business experience; 
and
(B) that has an investment track record that does 
not meet the requirements under section 4(c)(3)(B)(i).
(25) Secretary.--The term ``Secretary'' means the Secretary 
of Commerce.
(26) State.--The term ``State'' includes the several 
States, the territories and possessions of the United States, 
the Commonwealth of Puerto Rico, and the District of Columbia.
(27) Subsidiary llc.--The term ``subsidiary LLC'' means a 
limited liability company owned by a corporation through equity 
ownership of the subsidiary with a common parent corporation, 
as described in section 1563 of the Internal Revenue Code of 
1986, in which--
(A) the equity of the subsidiary LLC owned by the 
corporation possesses not less than 80 percent of the 
total combined voting power of all classes of equity of 
the subsidiary LLC entitled to vote; and
(B) the equity value of the subsidiary LLC owned by 
the corporation that represents--
(i) not less than 51 percent of the total 
value of all classes of equity of the 
subsidiary LLC; and
(ii) not less than 51 percent equity 
ownership of the subsidiary LLC.
(28) Synthetic equity.--The term ``synthetic equity'' 
includes--
(A) synthetic equity, as defined in section 
409(p)(6) of the Internal Revenue Code of 1986;
(B) a profits interest of a subsidiary LLC granted 
to, purchased by, or otherwise obtained directly or 
indirectly by employees and directors of the subsidiary 
LLC; and
(C) nonqualified deferred compensation plans and 
arrangements subject to section 409A of the Internal 
Revenue Code of 1986.
(29) Third party debt.--The term ``third party debt'' means 
any indebtedness for borrowed money, other than indebtedness 
owed to the Department.

SEC. 3. OWNERSHIP INVESTMENT FACILITY.

(a) Definition of Facility.--In this section, the term ``facility'' 
means the facility established under subsection (b).
(b) Establishment.--The Secretary shall establish and carry out a 
facility to provide leverage to licensed ownership investment companies 
for the purpose of encouraging covered investments.
(c) Combined Leverage.--The Secretary may not provide leverage to 
ownership investment companies under the facility in a total amount 
that is greater than $5,000,000,000 for a fiscal year. Not more than 20 
percent of such total amount may be provided to Protege OIC companies 
for a fiscal year.
(d) Transaction Requirements.--
(1) In general.--With respect to a covered investment 
described in section 2(6)(A) involving a sale to an employee 
stock ownership plan, an independent trustee for the employee 
stock ownership plan shall be appointed by the covered business 
concern before the execution of the covered investment for a 
period of time that is sufficient for the independent trustee 
to fully evaluate the proposed transaction.
(2) Fairness opinion.--With respect to the scope of 
appointment under paragraph (1), an independent trustee 
appointed under paragraph (1) shall obtain a fairness opinion 
on the proposed covered investment from an independent 
financial advisor, which shall evaluate whether the price, 
terms, and cost of financing of the proposed covered investment 
are financially fair to the employee stock ownership plan.
(e) Prohibitions.--
(1) Financing.--
(A) In general.--An employee of a covered business 
concern may not provide personal financing of any kind 
for a covered investment, including through a wage 
concession or rollover of a retirement plan.
(B) Exceptions.--Subparagraph (A) shall not apply 
to--
(i) financing provided by an employee for 
the sale of an ownership interest held by the 
employee in a covered business concern; or
(ii) employee capital contributions or 
membership fees paid by members of an eligible 
worker-owned cooperative, if such amounts are 
reasonable and customary and not used for the 
purchase of the covered business concern.
(2) Control.--An ownership investment company shall not 
exercise control over a covered business concern in which the 
ownership investment company has made a covered investment.
(f) Employee Allocations.--With respect to a covered investment 
described in section 2(6)(A) made by an ownership investment company 
that involves an employee stock ownership plan, the employee stock 
ownership plan shall include a requirement that in the event of a sale 
to a third party of the covered business concern in which the covered 
investment is made, the proceeds that the employee stock ownership plan 
receives from the sale shall be distributed as though all shares of 
stock held by the employee stock ownership plan prior to the sale were 
fully allocated based on each participant's compensation, as defined 
under section 415(c)(3) of the Internal Revenue Code of 1986.
(g) Recirculation of Shares.--
(1) Share count.--With respect to a covered investment 
described in section 2(6)(A) made by an ownership investment 
company that involves an employee stock ownership plan, the 
number of shares held by the employee stock ownership plan on 
the final date of each plan year shall not be less than the 
number of shares held by the employee stock ownership plan on 
the execution date of the covered investment.
(2) Limitation.--The requirements under paragraph (1) shall 
apply only with respect to the period during which the 
ownership investment company has an interest in the covered 
business concern.
(3) Exception.--The requirement under paragraph (1) may be 
waived by the independent trustee for the applicable employee 
stock ownership plan.
(h) Independent Trustees.--With respect to a covered investment 
described in section 2(6)(A) made by an ownership investment company 
that involves an employee stock ownership plan, the employee stock 
ownership plan shall have an independent trustee during the period that 
the ownership investment company has an interest in the covered 
business concern.
(i) Subsidiary LLCs.--With respect to any covered investment made 
by an ownership investment company that involves an employee stock 
ownership plan, a subsidiary LLC may be permitted to be established, 
provided that the following requirements are met:
(1) ESOP majority interest.--The employee stock ownership 
plan exercises a majority interest in the subsidiary LLC as a 
result of the sale or provision of capital.
(2) S corporation board governance.--The board governance 
of the subsidiary LLC resides exclusively at the level of the S 
corporation by which the subsidiary LLC is owned.
(3) Profits interest.--The profits interest or any type of 
similar arrangements, including phantom stock and any deferred 
bonus plan related to equity in the subsidiary LLC, complies 
with section 409(p) of the Internal Revenue Code of 1986.
(4) Event protection.--The requirements of subsection (f) 
apply at the level of the subsidiary LLC.
(j) Procedures Related to a Sale of a Covered Business Concern.--
(1) In general.--Subject to paragraph (2), an ownership 
investment company shall require as a condition of making a 
covered investment described in section 2(6)(A) involving an 
employee stock ownership plan that--
(A) before any stock sale or the execution of any 
corporate matter listed in section 409(e)(3) of the 
Internal Revenue Code of 1986, the employee stock 
ownership plan shall--
(i) appoint an independent trustee for the 
transaction; and
(ii) require that the independent trustee 
obtain a fairness opinion from an independent 
financial advisor, which shall evaluate whether 
the price, terms, and cost of financing of the 
proposed covered investment are financially 
fair to the employee stock ownership plan; and
(B) the employee stock ownership plan requires 
that--
(i) in addition to the corporate matters 
listed in section 409(e)(3) of the Internal 
Revenue Code of 1986, each participant or 
beneficiary in the employee stock ownership 
plan is entitled to direct the employee stock 
ownership plan as to the manner in which voting 
rights under securities of the employer which 
are allocated to the account of such 
participant or beneficiary are to be exercised 
with respect to the approval or disapproval of 
any stock sale;
(ii) the requirements of section 409(e)(3) 
of the Internal Revenue Code of 1986 and clause 
(i) of this subparagraph shall be met using the 
procedures described in section 409(e)(5) of 
the Internal Revenue Code of 1986;
(iii) unless the parties agree otherwise, 
with respect to unallocated shares, the 
independent trustee shall be directed to vote 
or tender such unallocated shares in the same 
proportion as allocated shares for which the 
independent trustee has received voting or 
tender instructions from participants in the 
employee stock ownership plan; and
(iv) with respect to allocated shares that 
the independent trustee does not receive voting 
or tender instructions from participants in the 
employee stock ownership plan, the independent 
trustee shall have voting discretion over such 
shares.
(2) Voting discretion.--Nothing in paragraph (1)(B) shall 
limit the ability of an independent trustee to exercise voting 
discretion in accordance with the fiduciary obligations of the 
independent trustee under the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1001 et seq.).
(3) Limitation.--The requirements under paragraph (1) shall 
apply only with respect to the period during which the 
ownership investment company has an interest in the covered 
business concern.
(k) Reports.--Each ownership investment company (including Protege 
OICs) shall submit to the Secretary an annual report, which shall 
include, for the year covered by the report, the following information, 
disaggregated by type of covered investment as described in 
subparagraph (A) or (B) of section 2(6), as applicable:
(1) Whether the covered investment was made with respect to 
an employee stock ownership plan or eligible worker-owned 
cooperative.
(2) For an employee stock ownership plan--
(A) the effective date of the employee stock 
ownership plan;
(B) the number of active employee stock ownership 
plan participants;
(C) the number of employees of the covered business 
concern for which the employee stock ownership plan is 
established;
(D) the total value of employer securities, as 
determined by an independent appraiser hired by the 
independent trustee of the employee stock ownership 
plan;
(E) the total employee stock ownership plan assets;
(F) the total contributions during the employee 
stock ownership plan year;
(G) the total distributions during the employee 
stock ownership plan year;
(H) the median account asset balance; and
(I) demographic information of employee stock 
ownership plan participants, disaggregated by race, 
gender, and State, to the extent available.
(3) For an eligible worker-owned cooperative--
(A) the number of member-owners;
(B) the number of employees of the covered business 
concern for which the eligible worker-owned cooperative 
is established;
(C) the total value of employer securities;
(D) the aggregate assets of all membership accounts 
of the eligible worker-owned cooperative;
(E) the median membership account balance; and
(F) demographic information of membership base, 
disaggregated by race, gender, and State, to the extent 
available.
(l) Implementation Milestones.--
(1) In general.--Not later than 540 days after the date of 
enactment of this Act, the Secretary shall begin accepting 
applications to be licensed to participate in the facility as 
an ownership investment company.
(2) License timeline.--Not later than 2 years after the 
date of enactment of this Act, the Secretary shall approve the 
first tranche of licenses to participate in the facility as an 
ownership investment company with respect to applicants that 
satisfy the applicable eligibility criteria.
(m) Sunset.--
(1) Definition.--In this subsection, the term ``sunset 
date'' means the first day of the 20th calendar year that 
begins after the date on which the Secretary approves the first 
license to participate in the facility as an ownership 
investment company (including as a Protege OIC).
(2) Termination of authority.--On and after the sunset 
date, the Secretary may not license an entity to participate in 
the facility as an ownership investment company (including as a 
Protege OIC).
(3) Continued participation by existing entities.--Nothing 
in paragraph (2) shall be construed to prohibit an ownership 
investment company (including a Protege OIC) from continuing to 
draw leverage on and after the sunset date that was committed 
to the entity through the facility before the sunset date.
(4) Application.--The Secretary shall not consider 
paragraph (2) as a factor in the decision to license an entity 
to participate in the facility as an ownership investment 
company (including as a Protege OIC) before the sunset date.

SEC. 4. ORGANIZATION OF OWNERSHIP INVESTMENT COMPANIES.

(a) In General.--
(1) Requirement.--An ownership investment company shall be 
an incorporated body, a limited liability company, or a limited 
partnership organized and chartered or otherwise existing under 
State law solely for the purpose of performing the functions 
and conducting the activities contemplated under this Act, 
which--
(A) if incorporated, has succession for a period of 
not fewer than 30 years unless sooner dissolved by its 
shareholders; or
(B) if a limited partnership, has succession for a 
period of not fewer than 10 years, and possesses the 
powers reasonably necessary to perform such functions 
and conduct such activities.
(2) Area of operation.--The area in which an ownership 
investment company described in paragraph (1) is to conduct its 
operations, and the establishment of branch offices or agencies 
(if authorized by the articles), shall be subject to the 
approval of the Department.
(b) Articles.--
(1) Requirements.--The articles of any ownership investment 
company shall specify--
(A) the objects for which the company is formed in 
general terms;
(B) the name assumed by the ownership investment 
company;
(C) the area or areas in which the operations of 
the ownership investment company are to be carried on;
(D) the place where the principal office of the 
ownership investment company is to be located; and
(E) the amount and classes of the shares of capital 
stock of the ownership investment company.
(2) Inclusions.--Articles of an ownership investment 
company may contain any other provisions not inconsistent with 
this Act that the ownership investment company may see fit to 
adopt for the regulation of the business of the ownership 
investment company and the conduct of the affairs of the 
ownership investment company.
(3) Approval.--Articles of an ownership investment company 
and any amendments thereto adopted from time to time shall be 
subject to the approval of the Secretary.
(c) Issuance of License.--
(1) Submission of application.--
(A) In general.--Each applicant to operate as an 
ownership investment company (including a Protege OIC) 
under this Act shall submit to the Secretary an 
application, in a form and including such documentation 
as may be prescribed by the Secretary.
(B) Rolling basis.--The Secretary shall accept 
applications under subparagraph (A) on a rolling basis.
(C) Electronic submissions.--The Secretary shall 
allow an applicant under this subsection to 
electronically submit any document required by this 
subsection and to provide an electronic signature for 
any signature that is required on such a document.
(2) Procedures.--
(A) Status.--Not later than 90 days after the 
initial receipt by the Secretary of an application 
under this subsection, the Secretary shall provide the 
applicant with a written report detailing the status of 
the application and any requirements remaining for 
completion of the application.
(B) Approval or disapproval.--Within 90 days after 
receiving a completed application submitted in 
accordance with this subsection and in accordance with 
such requirements as the Secretary may prescribe by 
regulation, the Secretary shall--
(i) approve the application and issue a 
license for such operation to the applicant if 
the requirements of this section are satisfied; 
or
(ii) disapprove the application and notify 
the applicant in writing of the disapproval.
(3) Matters considered.--
(A) In general.--In reviewing and processing any 
application under this subsection, the Secretary--
(i) shall determine whether--
(I) the applicant meets the 
requirements of subsections (a) and (b) 
of section 6; and
(II) the management of the 
applicant is qualified and has the 
knowledge, experience, and capability 
necessary to comply with this Act;
(ii) shall take into consideration--
(I) the need for and availability 
of financing for a covered business 
concerns in the geographic area in 
which the applicant is to commence 
business;
(II) the general business 
reputation of the owners and management 
of the applicant; and
(III) the probability of successful 
operations of the applicant, including 
adequate profitability and financial 
soundness; and
(iii) shall not take into consideration any 
projected shortage or unavailability of 
leverage.
(B) Additional matters considered for ownership 
investment companies.--
(i) Investment track record.--Except as 
provided in clause (ii), an applicant for a 
license to operate as an ownership investment 
company shall submit to the Secretary proof 
that the managers of the applicant have a track 
record of managing investments, including 
structured investments, realized or unrealized, 
in an employee stock ownership plan or eligible 
worker-owned cooperative.
(ii) Advisory requirement.--An applicant 
that does not have an investment track record 
described in clause (i) or that is a Protege 
OIC shall submit to the Secretary evidence that 
the applicant has retained or will retain a 
legal, accounting, or financial advisory firm 
with not fewer than 5 years of experience in 
structuring employee stock ownership plans or 
eligible worker-owned cooperatives.
(iii) Limitation.--The Secretary may not 
reject an applicant for a license to operate as 
an ownership investment company solely because 
the applicant lacks a sufficient track record 
in realized investments if the applicant 
demonstrates an otherwise successful investment 
track record that includes unrealized covered 
investments.
(C) Provisional approval.--
(i) In general.--The Secretary may provide 
provisional approval for a license to 
participate in the facility as an ownership 
investment company (including a Protege OIC) 
for a period not to exceed 1 year to an 
investment firm submitting an application under 
this subsection or--
(I) that does not meet the minimum 
private capital requirements under 
section 6(a) necessary for licensing 
under this subsection at the time of 
application;
(II) that states an intent to more 
effectively raise capital commitments 
in private markets with a license; and
(III) that states an intent to more 
precisely request the desired amount of 
leverage contingent on securing capital 
from private market investors.
(ii) Capital requirements.--An applicant 
granted provisional approval under clause (i) 
shall not be eligible to receive leverage until 
the applicant satisfies the requirements of 
section 6(a).
(D) Fees.--
(i) In general.--The Secretary may 
prescribe fees to be paid by each applicant for 
a license to operate as an ownership investment 
company (including a Protege OIC) under this 
Act.
(ii) Use of amounts.--Fees collected under 
this subparagraph--
(I) shall be deposited in the 
account for salaries and expenses of 
the Department; and
(II) are authorized to be 
appropriated solely to cover the costs 
of licensing examinations.
(d) 1940 and 1980 Act Companies.--
(1) In general.--
(A) Application.--A 1940 Act Company or 1980 Act 
Company is eligible to apply for a license under this 
Act.
(B) Eligibility of licensees.--A licensee that is 
not registered as a 1940 Act Company or 1980 Act 
Company is eligible to apply for approval from the 
Secretary to convert to a 1940 Act Company or 1980 Act 
Company.
(2) Regulation.--A 1940 Act Company or 1980 Act Company 
that is a licensee may elect to be taxed as a regulated 
investment company for purposes of section 851 of the Internal 
Revenue Code of 1986 (26 U.S.C. 851), provided that the 
licensee making such election may make distributions only as 
permitted under the applicable guidance or regulations that the 
Secretary may prescribe.

SEC. 5. PROTEGE OIC PROGRAM.

(a) Establishment.--The Secretary shall establish a program to be 
known as the ``Protege OIC Program'' under which a manager of an 
ownership investment company that is not a Protege OIC may enter into a 
written agreement approved by the Secretary to provide guidance and 
assistance to a Protege OIC with respect to--
(1) applying for a license for the Protege OIC to operate 
as an ownership investment company; and
(2) management of the ownership investment company after 
licensure.
(b) Application.--After entering into a written agreement described 
in subsection (a), the Protege OIC shall apply for a license under 
section 4(c).
(c) Selection.--The Secretary may grant a license to a Protege OIC 
to operate as an ownership investment company under section 4(c) based 
on the investment track record of 1 or more of the managers that have 
entered into a written agreement described in subsection (a) of this 
section with the applicant Protege OIC.
(d) Requirements for Managers.--If a manager enters into a written 
agreement described in subsection (a)--
(1) the manager may hold a minority financial interest in 
the ownership investment company that is to be managed by the 
Protege OIC;
(2) the otherwise applicable maximum amount of outstanding 
leverage that may be made available to any 1 licensed company 
of the manager under section 7(b)(6)(B)(i)(I) shall be 
increased by $17,500,000; and
(3) the otherwise applicable maximum amount of outstanding 
leverage that may be made available to any 2 or more licensed 
companies that are commonly controlled by the manager under 
section 7(b)(6)(B)(i)(II) shall be increased by $35,000,000.

SEC. 6. CAPITAL REQUIREMENTS.

(a) Amount.--
(1) In general.--The private capital of each licensee shall 
be not less than $10,000,000.
(2) Adequacy.--In addition to the requirement under 
paragraph (1), the Secretary shall--
(A) determine whether the private capital of each 
licensee is adequate to assure a reasonable prospect 
that the licensee will be operated soundly and 
profitably, and managed actively and prudently in 
accordance with the articles of the licensee; and
(B) determine whether the licensee will be able, 
both prior to licensing and prior to approving any 
request for financing, to make periodic payments on any 
debt of the licensee that is interest bearing and shall 
take into consideration the income that the licensee 
anticipates on the contemplated investments of the 
licensee, the experience of the owners and managers of 
the licensee, the history of the licensee as an entity, 
if any, and the financial resources of the licensee.
(b) Diversification of Ownership.--The Secretary shall ensure that 
the management of each licensee (including Protege OICs) is 
sufficiently diversified from and unaffiliated with the ownership of 
the licensee in a manner that ensures independence and objectivity in 
the financial management and oversight of the investments and 
operations of the licensee.

SEC. 7. BORROWING POWER.

(a) In General.--Each ownership investment company shall have 
authority to borrow money and to issue its securities, promissory 
notes, or other obligations under such general conditions and subject 
to such limitations and regulations as the Secretary may prescribe.
(b) Authority To Guarantee.--
(1) Grant of authority.--To encourage the formation and 
growth of ownership investment companies the Secretary may, 
when authorized in appropriation Acts, guarantee the timely 
payment of all principal and interest as scheduled on 
debentures issued by ownership investment companies.
(2) Terms and conditions.--Guarantees made under paragraph 
(1) may be made by the Secretary on such terms and conditions 
as the Secretary deems appropriate, pursuant to regulations 
issued by the Secretary.
(3) Full faith and credit.--The full faith and credit of 
the United States is pledged to the payment of all amounts that 
may be required to be paid under any guarantee under this 
subsection.
(4) Status of debentures.--Debentures guaranteed by the 
Department under this subsection shall be subordinate to any 
other debenture bonds, promissory notes, or other debts and 
obligations of an ownership investment company, unless the 
Secretary, in the exercise of reasonable investment prudence 
and in considering the financial soundness of such ownership 
investment company, determines otherwise.
(5) Term and interest rate.--A debenture issued under this 
subsection may be issued for a term of not to exceed 15 years 
and shall bear interest at a rate not less than a rate 
determined by the Secretary of the Treasury, taking into 
consideration the current average market yield on outstanding 
marketable obligations of the United States with remaining 
periods to maturity comparable to the average maturities on 
such debentures, adjusted to the nearest \1/8\ of 1 per centum, 
plus an additional charge, in an amount established annually by 
the Secretary, as necessary to reduce to 0 the cost (as defined 
in section 502 of the Federal Credit Reform Act of 1990 (2 
U.S.C. 661a)) to the Department guaranteeing debentures under 
this Act, which amount may not exceed 1.38 percent per year, 
and which shall be paid to and retained by the Department.
(6) Additional restrictions and limitations.--A debenture 
issued under this subsection--
(A) shall include such other terms as the 
Department may fix; and
(B) shall be subject to the following restrictions 
and limitations:
(i)(I) The maximum amount of outstanding 
leverage made available to any 1 ownership 
investment company licensed under section 4(c) 
that is not a Protege OIC may not exceed the 
lesser of--
(aa) 100 percent of the private 
capital of such company; or
(bb) $500,000,000.
(II) The maximum amount of outstanding 
leverage made available to 2 or more ownership 
investment companies licensed under section 
4(c) that are commonly controlled (as 
determined by the Secretary) and not under 
capital impairment may not exceed 
$1,000,000,000.
(ii) A Protege OIC may not have multiple 
licenses under common control.
(iii) The maximum amount of outstanding 
leverage made available under the facility 
established under section 3 to any 1 Protege 
OIC may not to exceed the lesser of--
(I) 100 percent of the private 
capital of the Protege OIC; or
(II) $100,000,000.
(iv)(I) In calculating the outstanding 
leverage of a company for the purposes of 
subclauses (I) and (II) of clause (i), the 
Secretary shall not include the amount of the 
cost basis of any covered investment made by 
the ownership investment company in a covered 
business concern that--
(aa) conducts in the United States 
research and development, engineering, 
or production activities necessary or 
incidental to manufacturing;
(bb) operates in a critical 
industry or critical technology area 
identified by the Secretary to be vital 
to maintaining the national or economic 
security of the United States; and
(cc) is headquartered in the United 
States, or will be headquartered in the 
United States immediately following the 
transaction in the case of a covered 
investment described in section 
2(6)(A).
(II) The exclusion of amounts in subclause 
(I) shall not exceed a total of $75,000,000 or 
25 percent of private capital of such company, 
whichever is less.
(III) Subclause (I) shall not apply to any 
Protege OIC.
(v) Nothing in this paragraph shall prevent 
licensees with 1 or more small business 
investment companies licensed under section 
301(c) of the Small Business Investment Act of 
1958 (15 U.S.C. 681) under common control (as 
determined by the Secretary), including 
licensees whose small business investment 
companies have received the maximum amount of 
leverage in sections 303(b)(2)(A) or 
303(b)(2)(B) of that Act, from receiving the 
maximum amount of leverage in clause (i).
(c) Third Party Debt.--The Secretary--
(1) may not permit a licensee having outstanding leverage 
to incur third party debt that would create or contribute to an 
unreasonable risk of default or loss to the Federal Government; 
and
(2) shall permit any licensee to incur third party debt 
only on such terms and subject to such conditions as may be 
established by the Secretary, by regulation or otherwise.
(d) Capital Impairment.--Before approving any application for 
leverage submitted by a licensee under this Act, the Secretary--
(1) shall determine that the private capital of the 
licensee meets the requirements of section 6(a); and
(2) shall determine, taking into account the nature of the 
assets of the licensee, the amount and terms of any third party 
debt owed by such licensee, and any other factors determined to 
be relevant by the Secretary, that the private capital of the 
licensee has not been impaired to such an extent that the 
issuance of additional leverage would create or otherwise 
contribute to an unreasonable risk of default or loss to the 
Federal Government.
(e) Leverage Fee.--With respect to leverage granted by the 
Department to a licensee, the Department shall collect from the 
licensee a nonrefundable fee in an amount equal to 3 percent of the 
face amount of leverage granted to the licensee in the following 
manner:
(1) One percent upon the date on which the Department 
enters into any commitment for such leverage with the licensee.
(2) The balance of 2 percent (or 3 percent if no commitment 
has been entered into by the Department) on the date on which 
the leverage is drawn by the licensee.
(f) Calculation of Subsidy Rate.--All fees and interest received 
and retained by the Department under this section shall be included in 
the calculations made by the Director of the Office of Management and 
Budget to offset the cost (as that term is defined in section 502 of 
the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) to the 
Department of guaranteeing debentures under this Act.

SEC. 8. PROVISION OF INVESTMENT CAPITAL FOR COVERED BUSINESS CONCERNS.

(a) In General.--Each ownership investment company shall provide a 
source of debt, synthetic equity, preferred stock, or equity capital, 
or a combination thereof, for incorporated and unincorporated covered 
business concerns, in such manner and under such terms as the ownership 
investment company may fix in accordance with the regulations 
established by the Department.
(b) Requirement.--Before any capital described in subsection (a) is 
provided to a covered business concern under this section--
(1) the ownership investment company may require a covered 
business concern to refinance any or all of the outstanding 
indebtedness of the covered business concern so that the 
ownership investment company is the only holder of any evidence 
of indebtedness of the covered business concern; and
(2) except as provided in regulations issued by the 
Secretary, such the covered business concern shall agree that 
the covered business concern will not thereafter incur any 
indebtedness without first securing the approval of the 
ownership investment company and giving the ownership 
investment company the first opportunity to finance such 
indebtedness.
(c) Third Party Investors.--Investment capital provided to covered 
business concerns under this section may be provided directly or in 
cooperation with other investors, incorporated or unincorporated, 
through agreements to participate on an immediate or deferred basis.
(d) Interest.--The maximum rate of interest for the share of an 
ownership investment company of any loan made under this section shall 
be determined by the Secretary--
(1) provided that the Department also shall permit those 
ownership investment companies that have issued debentures 
pursuant to this Act to charge a maximum rate of interest based 
upon the coupon rate of interest on the outstanding debentures, 
determined on an annual basis, plus such other expenses of the 
ownership investment company as may be approved by the 
Department; and
(2) in making the initial determinations on the maximum 
rate of interest under this subsection following the enactment 
of this Act, the Secretary shall consult the regulations 
promulgated by the Administrator of the Small Business 
Administration on the maximum rate of interest for loans and 
debt securities in accordance with section 305 of the Small 
Business Investment Act of 1958 (15 U.S.C. 685).
(e) Maturity.--
(1) In general.--Any loan made under this section shall 
have a maturity not exceeding 20 years.
(2) Extension or renewal.--Any ownership investment company 
that makes a loan to a covered business concern under this 
section is authorized to extend the maturity of or renew such 
loan for additional periods, not exceeding 10 years, if the 
ownership investment company finds that such extension or 
renewal will aid in the orderly liquidation of such loan.
(f) Repayment.--Any loan made under this section shall be of such 
sound value, or so secured, as reasonably to assure repayment.

SEC. 9. PORTFOLIO DIVERSIFICATION.

If any ownership investment company obtains financing from the 
Secretary under this Act and such financing remains outstanding, the 
aggregate amount of securities acquired and for which commitments may 
be issued by the ownership investment company under this Act for any 
single covered business concern shall not, without the approval of the 
Secretary, exceed 10 percent of the sum of--
(1) the private capital of such company; and
(2) the total amount of leverage projected by the ownership 
investment company in the business plan of the ownership 
investment company that was approved by the Secretary at the 
time of the grant of the license of the ownership investment 
company.

SEC. 10. EXEMPTIONS.

(a) Securities Act of 1933.--Notwithstanding the provisions of 
title I of the Securities Act of 1933 (15 U.S.C. 77a et seq.), the 
Securities and Exchange Commission may from time to time by the rules 
and regulations of the Securities and Exchange Commission, and subject 
to such terms and conditions as may be prescribed under section 3 of 
the Securities Act of 1933 (15 U.S.C. 77c), add to the securities 
exempted as provided in section 3 of that Act any class of securities 
issued by an ownership investment company under this Act if the 
Securities and Exchange Commission finds, having regard to the purposes 
of the Securities Act of 1933 (15 U.S.C. 77a et seq.), that the 
enforcement of title I of the Securities Act of 1933 (15 U.S.C. 77a et 
seq.), with respect to such securities, is not necessary in the public 
interest and for the protection of investors.
(b) Trust Indenture Act of 1939.--Notwithstanding the provisions of 
title III of the Trust Indenture Act of 1939 (15 U.S.C. 77aaa et seq.), 
the Securities and Exchange Commission may from time to time by the 
rules and regulations of the Securities and Exchange Commission, and 
subject to such terms and conditions as may be prescribed under section 
304 of the Trust Indenture Act of 1939 (15 U.S.C. 77ddd), add to the 
securities exempted as provided in section 304 of that Act any class of 
securities issued by an ownership investment company under this Act if 
the Securities and Exchange Commission finds, having regard to the 
purposes of the Trust Indenture Act of 1939 (15 U.S.C. 77aaa et seq.), 
that the enforcement of title III of the Trust Indenture Act of 1939 
(15 U.S.C. 77aaa et seq.), with respect to such securities is not 
necessary in the public interest and for the protection of investors.
(c) Investment Company Act of 1940.--Notwithstanding the provisions 
of section 18 of the Investment Company Act of 1940 (15 U.S.C. 80a-18), 
the provisions of subparagraphs (A) and (B) of subsection (a)(1) of 
that section shall not apply to any ownership investment company 
operating under this Act, provided that such class of senior security 
shall be guaranteed by the Department.

SEC. 11. LEVERAGE REQUIREMENTS.

No leverage shall be committed by the Department under this Act to 
any licensee unless the managers of such licensee--
(1) certify to the Department the names of any attorneys, 
agents, or other persons engaged by or on behalf of such 
licensee for the purpose of expediting applications made to the 
Department for assistance of any sort, and the fees paid or to 
be paid to any such persons; and
(2) executes an agreement binding any such licensee for a 
period of 2 years after any assistance is rendered by the 
Department to such licensee, to refrain from employing, 
tendering any office or employment to, or retaining for 
professional services, any person who, on the date such 
assistance or any part thereof was rendered, or within the 1 
year period prior thereto, shall have served as an officer, 
attorney, agent, or employee of the Department occupying a 
position or engaging in activities which the department shall 
have determined involve discretion with respect to the granting 
of assistance under this Act.

SEC. 12. REPORTING.

(a) In General.--Not later than 1 year after the date of enactment 
of this Act, and each year thereafter, the Secretary shall submit to 
Congress a full and detailed account of the operations of the 
Department under this Act, including the amount of losses sustained by 
the Government as a result of such operations during the preceding 
fiscal year, together with an estimate of the total losses that the 
Government can reasonably expect to incur as a result of such 
operations during the current fiscal year.
(b) Contents.--In the annual report submitted pursuant to 
subsection (a), the Secretary shall include full and detailed accounts 
relative to the following matters:
(1) The plans of the Department to insure the provision of 
ownership investment company financing and licensing to all 
areas of the country and to all covered business concerns, 
including steps taken to accomplish the same.
(2) The plans of the Department to support States that seek 
to increase the number of licensees in the State.
(3) Steps taken by the Department to maximize recoupment of 
Government funds incident to the inauguration and 
administration of the ownership investment company program and 
to insure compliance with statutory and regulatory standards 
relating to the ownership investment company program.
(4) Recommendations to the Department of the Treasury with 
respect to additional tax incentives to improve and facilitate 
the operations of ownership investment companies and to 
encourage the use of the financing facilities of ownership 
investment companies by covered business concerns.
(5) A report from the Securities and Exchange Commission 
enumerating actions undertaken by the Securities and Exchange 
Commission to--
(A) simplify and minimize the regulatory 
requirements governing ownership investment companies 
under the Federal securities laws; and
(B) eliminate overlapping regulation and 
jurisdiction as between the Securities and Exchange 
Commission, the Department, and other agencies of the 
executive branch.
(6) Actions undertaken by the Securities and Exchange 
Commission to simplify compliance by ownership investment 
companies with the requirements of the Investment Company Act 
of 1940 and to facilitate the election to be taxed as regulated 
investment companies pursuant to section 851 of the Internal 
Revenue Code of 1954.
(7) The number of ownership investment companies the 
Department licensed (including Protege OICs), the number of 
licensees that have been placed in liquidation, and the number 
of licensees that have surrendered their licenses during the 
year ending on the date the report is submitted, identifying 
the amount of leverage each received during that period.
(8) The amount of leverage that ownership investment 
companies (including Protege OICs) received during the year 
ending on the date the report is submitted.
(9) The sizes, geographic locations, and other 
characteristics of licensed ownership investment companies 
(including Protege OICs), including the extent to which the 
ownership investment companies have used the leverage to make 
debt, synthetic equity, preferred equity, or equity 
investments, or a combination thereof, to covered business 
concerns.
(10) The geographic dispersion of licensees in each State 
compared to the population of the State.
(11) A summary of employee stock ownership plans created by 
an ownership investment company (including Protege OICs), 
including--
(A) the total number of active plan participants;
(B) the total number of employees of the covered 
business concerns with such employee stock ownership 
plans;
(C) the total value of employer securities, as 
determined by the independent appraisers hired by the 
independent trustee of each employee stock ownership 
plan;
(D) the total plan assets;
(E) the total contributions during the plan year;
(F) the total distributions during the plan year;
(G) the median account asset balance; and
(H) demographic information of plan participants, 
disaggregated by race, gender, and State, to the extent 
available.
(12) A summary of eligible worker-owned cooperatives 
created by ownership investment companies (including Protege 
OICs), including--
(A) the number of member-owners;
(B) the total number of employees of the covered 
business concern with such eligible worker-owned 
cooperatives;
(C) the total value of employer securities;
(D) the assets of all membership accounts;
(E) the median membership account balance; and
(F) demographic information of membership base, 
disaggregated by race, gender, and State, to the extent 
available.

SEC. 13. REVOCATION AND SUSPENSION OF LICENSES; CEASE AND DESIST 
ORDERS.

(a) In General.--A license may be revoked or suspended by the 
Secretary--
(1) for any false statement knowingly made in any written 
statement required under this Act, or under any regulation 
issued under this Act by the Secretary;
(2) if any written statement required under this Act, or 
under any regulation issued under this Act by the Secretary, 
fails to state a material fact necessary in order to make the 
statement not misleading in the light of the circumstances 
under which the statement was made;
(3) for willful or repeated violation, or willful or 
repeated failure to observe, any provision of this Act;
(4) for willful or repeated violation of, or willful or 
repeated failure to observe, any rule or regulation issued 
under this Act by the Secretary; or
(5) for violation of, or failure to observe, any cease and 
desist order issued by the Secretary under this section.
(b) Order To Cease and Desist.--
(1) Issuance.--Where a licensee or any other person has not 
complied with any provision of this Act, or of any regulation 
issued under this Act by the Secretary, or is engaging or is 
about to engage in any acts or practices that constitute or 
will constitute a violation of such Act or regulation, the 
Secretary may order such licensee or other person to cease and 
desist from such action or failure to act.
(2) Actions required.--The Secretary may order such 
licensee or other person to take such action or to refrain from 
such action as the Secretary deems necessary to insure 
compliance with the Act and the regulations implementing this 
Act.
(3) Suspension of licenses.--The Secretary may also suspend 
the license of a licensee against whom an order has been issued 
until such licensee complies with an order issued under this 
subsection.
(c) Orders To Show Cause.--
(1) Issuance.--Before revoking or suspending a license 
pursuant to subsection (a) or issuing a cease and desist order 
pursuant to subsection (b), the Secretary shall serve upon the 
licensee and any other person involved an order to show cause 
why an order revoking or suspending the license or a cease and 
desist order should not be issued.
(2) Contents.--Any order to show cause issued under 
paragraph (1) shall--
(A) contain a statement of the matters of fact and 
law asserted by the Department and the legal authority 
and jurisdiction under which a hearing is to be held; 
and
(B) set forth that a hearing will be held before 
the Department at a time and place stated in the order.
(3) Statement of findings.--If after hearing, or a waiver 
thereof, the Secretary determines on the record that an order 
revoking or suspending the license or a cease and desist order 
should issue, the Secretary shall--
(A) promptly issue such order, which shall include 
a statement of the findings of the Secretary and the 
grounds and reasons therefor and specify the effective 
date of the order; and
(B) cause the order to be served on the licensee 
and any other person involved.
(d) Witnesses.--
(1) Subpoena authority.--The Secretary may require by 
subpoena the attendance and testimony of witnesses and the 
production of all books, papers, and documents relating to the 
hearing from any place in the United States.
(2) Payment.--Any witness summoned before the Department 
shall be paid by the party at whose instance the witness was 
called the same fees and mileage that are paid witnesses in the 
courts of the United States.
(3) Aid of the court.--In case of disobedience to a 
subpoena, the Secretary, or any party to a proceeding before 
the Department, may invoke the aid of any court of the United 
States in requiring the attendance and testimony of witnesses 
and the production of books, papers, and documents.
(e) Appeals.--
(1) Filing.--
(A) In general.--An order issued by the Secretary 
under this section shall be final and conclusive unless 
within 30 days after the service thereof the licensee, 
or other person against whom an order is issued, 
appeals to the United States court of appeals for the 
circuit in which such licensee has its principal place 
of business by filing with the clerk of such court a 
petition praying that the Department's order be set 
aside or modified in the manner stated in the petition.
(B) Leave required.--After the expiration of the 
30-day period described in subparagraph (A), a petition 
may be filed only by leave of court on a showing of 
reasonable grounds for failure to file the petition 
theretofore.
(2) Delivery.--The clerk of the court shall immediately 
cause a copy of the petition described in paragraph (1) to be 
delivered to the Secretary, and, upon receipt, the Secretary 
shall certify and file in the court a transcript of the record 
upon which the order complained of was entered.
(3) Amending petition.--If, before the record is filed 
under paragraph (2), the Secretary amends or sets aside its 
order, in whole or in part, the petitioner may amend the 
petition within such time as the court may determine, on notice 
to the Secretary.
(4) Operation of order.--The filing of a petition for 
review under this subsection shall not of itself stay or 
suspend the operation of the order of the Department, but the 
court of appeals in its discretion may restrain or suspend, in 
whole or in part, the operation of the order pending the final 
hearing and determination of the petition.
(5) Disposition.--
(A) In general.--The court may affirm, modify, or 
set aside the order of the Secretary under this 
section.
(B) Evidence.--If the court determines that the 
just and proper disposition of the case requires the 
taking of additional evidence, the court shall order 
the Secretary to reopen the hearing for the taking of 
such evidence, in such manner and upon such terms and 
conditions as the court may deem proper.
(C) Findings of fact.--The Secretary--
(i) may modify the findings as to the facts 
of the Department, or make new findings, by 
reason of the additional evidence so taken; and
(ii) shall file modified or new findings 
and the amendments, if any, of the order, with 
the record of such additional evidence.
(D) Objections.--No objection to an order of the 
Secretary shall be considered by the court unless such 
objection was urged before the Department or, if it was 
not so urged, unless there were reasonable grounds for 
failure to do so.
(E) Review.--The judgment and decree of the court 
affirming, modifying, or setting aside any such order 
of the Secretary shall be subject only to review by the 
Supreme Court of the United States upon certification 
or certiorari as provided in section 1254 of title 28, 
United States Code.
(f) Enforcement.--
(1) Failure to obey.--If any licensee or other person 
against which or against whom an order is issued under this 
section fails to obey the order, the Secretary--
(A) may apply to the United States court of 
appeals, within the circuit where the licensee has its 
principal place of business, for the enforcement of the 
order; and
(B) shall file a transcript of the record upon 
which the order complained of was entered.
(2) Notice.--Upon the filing of the application under 
paragraph (1), the court shall cause notice thereof to be 
served on the licensee or other person.
(3) Evidence.--The evidence to be considered, the procedure 
to be followed, and the jurisdiction of the court shall be the 
same as is provided in subsection (e) for applications to set 
aside or modify orders.

SEC. 14. EXAMINATIONS AND INVESTIGATIONS.

(a) Investigations.--
(1) In general.--The Secretary may make such investigations 
as the Secretary deems necessary to determine whether a 
licensee or any other person has engaged or is about to engage 
in any acts or practices which constitute or will constitute a 
violation of any provision of this Act, or of any rule or 
regulation under this Act, or of any order issued under this 
Act.
(2) Statements.--The Secretary shall permit any person to 
file with it a statement in writing, under oath or otherwise as 
the Secretary shall determine, as to all the facts and 
circumstances concerning the matter to be investigated.
(3) Oaths and affirmations.--For the purpose of any 
investigation under this subsection, the Secretary is empowered 
to--
(A) administer oaths and affirmations;
(B) subpoena witnesses;
(C) compel the attendance of witnesses;
(D) take evidence; and
(E) require the production of any books, papers, 
and documents that are relevant to the inquiry.
(4) Attendance and production.--
(A) In general.--Attendance of witnesses and the 
production of any such records under this section may 
be required from any place in the United States.
(B) Failure to obey.--In case of contumacy by, or 
refusal to obey a subpoena issued to, any person, 
including a licensee, the Secretary may invoke the aid 
of any court of the United States within the 
jurisdiction of which such investigation or proceeding 
is carried on, or where such person resides or carries 
on business, in requiring the attendance and testimony 
of witnesses and the production of books, papers, and 
documents, and such court may issue an order requiring 
such person to appear before the Department, thereto 
produce records, if so ordered, or to give testimony 
touching the matter under investigation.
(C) Enforcement.--Any failure to obey such order of 
the court may be punished by such court as a contempt 
thereof.
(D) Service of process.--All process in any such 
case may be served in the judicial district whereof 
such person is an inhabitant or wherever he may be 
found.
(b) Examinations.--
(1) In general.--Each licensee shall be subject to 
examinations made by direction of the Department, which may be 
conducted with the assistance of a private sector entity that 
has both the qualifications to conduct and expertise in 
conducting such examinations, and the cost of such 
examinations, including the compensation of the examiners, may, 
in the discretion of the Department, be assessed against the 
licensee examined and when so assessed shall be paid by the 
licensee.
(2) Fees.--Fees collected under this subsection shall be 
deposited in the account for salaries and expenses of the 
Department, and are authorized to be appropriated solely to 
cover the costs of examinations and other oversight activities 
under this Act.
(3) Reports.--Every licensee shall make such reports to the 
Secretary at such times and in such form as the Secretary may 
require, except that the Secretary is authorized to exempt from 
making such reports any such licensee that is registered under 
the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) to 
the extent necessary to avoid duplication in reporting 
requirements.
(4) Required information.--
(A) In general.--Except as provided in subparagraph 
(B), each licensee shall be examined not less 
frequently than once every 2 years in such detail so as 
to determine whether or not--
(i) the licensee has engaged solely in 
lawful activities and those contemplated by 
this Act;
(ii) the licensee has engaged in prohibited 
conflicts of interest under section 16;
(iii) the licensee has acquired or 
exercised illegal control of a covered business 
concern;
(iv) the licensee has made investments in 
covered businesses for not less than 1 year;
(v) the licensee has adhered to portfolio 
diversification limits as stated under section 
9;
(vi) the licensee has engaged in relending, 
foreign investments, or passive investments;
(vii) the licensee has charged an interest 
rate in excess of the maximum permitted by law; 
or
(viii) the licensee has adhered to the 
requirements to make covered investments.
(B) Waiver.--The Secretary may waive any 
examination required under subparagraph (A)--
(i) for not more than 1 year if, in the 
discretion of the Secretary, the Secretary 
determines such a delay would be appropriate, 
based on the amount of debentures being issued 
by the licensee and the repayment record of the 
licensee, the prior operating experience of the 
licensee, the contents and results of the last 
examination and the management expertise of the 
licensee; or
(ii) if it is the examination of a licensee 
whose operations have been suspended while the 
licensee is involved in litigation or is in 
receivership.
(c) Valuations.--
(1) Frequency of valuations.--
(A) In general.--Each licensee shall submit to the 
Secretary a written valuation of the loans and 
investments of the licensee not less often than 
semiannually or otherwise upon the request of the 
Secretary, except that any licensee with no leverage 
outstanding shall submit such valuations annually, 
unless the Secretary determines otherwise.
(B) Material adverse changes.--Not later than 30 
days after the end of a fiscal quarter of a licensee 
during which a material adverse change in the aggregate 
valuation of the loans and investments or operations of 
the licensee occurs, the licensee shall notify the 
Secretary in writing of the nature and extent of that 
change.
(C) Independent certification.--
(i) In general.--Not less frequently than 
once during each fiscal year, each licensee 
shall submit to the Secretary the financial 
statements of the licensee, audited by an 
independent certified public accountant 
approved by the Secretary.
(ii) Audit requirements.--Each audit 
conducted under clause (i) shall include--
(I) a review of the procedures and 
documentation used by the licensee in 
preparing the valuations required by 
this section; and
(II) a statement by the independent 
certified public accountant that such 
valuations were prepared in conformity 
with the valuation criteria applicable 
to the licensee established in 
accordance with paragraph (2).
(2) Valuation criteria.--Each valuation submitted under 
this subsection shall be prepared by the licensee in accordance 
with valuation criteria, which shall--
(A) be established or approved by the Secretary; 
and
(B) include appropriate safeguards to ensure that 
the noncash assets of a licensee are not overvalued.

SEC. 15. INJUNCTIONS AND OTHER ORDERS.

(a) In General.--Whenever, in the judgment of the Secretary, a 
licensee or any other person has engaged or is about to engage in any 
acts or practices which constitute or will constitute a violation of 
any provision of this Act, or of any rule or regulation under this Act, 
or of any order issued under this Act, the Secretary may make 
application to the proper district court of the United States or a 
United States court of any place subject to the jurisdiction of the 
United States for an order enjoining such acts or practices, or for an 
order enforcing compliance with such provision, rule, regulation, or 
order, and such courts shall have jurisdiction of such actions and, 
upon a showing by the Secretary that such licensee or other person has 
engaged or is about to engage in any such acts or practices, a 
permanent or temporary injunction shall be granted without bond.
(b) Exclusive Jurisdiction.--In any proceeding under subsection 
(a), the court as a court of equity--
(1) may, to such extent as the court deems necessary, take 
exclusive jurisdiction of the licensee or licensees and the 
assets thereof, wherever located; and
(2) shall have jurisdiction in any such proceeding to 
appoint a trustee or receiver to hold or administer under the 
direction of the court the assets so possessed.
(c) Trustee and Receivership.--
(1) Authority.--The Secretary shall have authority to act 
as trustee or receiver of the licensee.
(2) Appointment.--Upon request by the Secretary, the court 
may appoint the Secretary to act in such capacity unless the 
court deems such appointment inequitable or otherwise 
inappropriate by reason of the special circumstances involved.

SEC. 16. CONFLICTS OF INTEREST.

(a) In General.--For the purpose of controlling conflicts of 
interest that may be detrimental to covered business concerns, to 
licensees, to the shareholders, partners, or members of either, or to 
the purposes of this Act, the Secretary shall adopt regulations to 
govern transactions with any officer, director, shareholder, partner, 
or member of any licensee, or with any person or concern, in which any 
interest, direct or indirect, financial or otherwise, is held by any 
officer, director, shareholder, partner, or member of any licensee, or 
any person or concern with an interest, direct or indirect, financial 
or otherwise, in any licensee.
(b) Public Disclosure.--Regulations adopted under subsection (a) 
shall include appropriate requirements for public disclosure necessary 
to the purposes of this section.
(c) Consultation With Existing Regulations.--In making any initial 
determination relating to a regulation adopted under subsection (a), 
the Secretary shall consult the regulations promulgated by the 
Administrator of the Small Business Administration on financing which 
constitute conflicts of interest in accordance with section 312 of the 
Small Business Investment Act of 1958 (15 U.S.C. 687d).
(d) Regulations.--The Secretary shall promulgate regulations under 
this section in accordance with the implementation milestones as set 
forth in section 3(l) of this Act.

SEC. 17. REMOVAL OR SUSPENSION OF MANAGEMENT OFFICIALS.

(a) Definition of Management Official.--In this section, the term 
``management official'' means an officer, director, general partner, 
manager, employee, agent, or other participant in the management or 
conduct of the affairs of a licensee.
(b) Removal of Management Officials.--
(1) Notice of removal.--The Secretary may serve upon any 
management official a written notice of its intention to remove 
that management official whenever, in the opinion of the 
Secretary--
(A) such management official--
(i) has willfully and knowingly committed 
any substantial violation of--
(I) this Act;
(II) any regulation issued under 
this Act; or
(III) a cease-and-desist order 
which has become final; or
(ii) has willfully and knowingly committed 
or engaged in any act, omission, or practice 
which constitutes a substantial breach of a 
fiduciary duty of that person as a management 
official; and
(B) the violation or breach of fiduciary duty is 
one involving personal dishonesty on the part of such 
management official.
(2) Contents of notice.--A notice of intention to remove a 
management official, as provided in paragraph (1), shall 
contain a statement of the facts constituting grounds therefor, 
and shall fix a time and place at which a hearing will be held 
thereon.
(3) Hearings.--
(A) Timing.--A hearing described in paragraph (2) 
shall be fixed for a date not earlier than 30 days nor 
later than 60 days after the date of service of notice 
of the hearing, unless an earlier or a later date is 
set by the Secretary at the request of--
(i) the management official, and for good 
cause shown; or
(ii) the Attorney General of the United 
States.
(B) Consent.--Unless the management official shall 
appear at a hearing described in this paragraph in 
person or by a duly authorized representative, that 
management official shall be deemed to have consented 
to the issuance of an order of removal under paragraph 
(4)(A).
(4) Issuance of order of removal.--
(A) In general.--In the event of consent under 
paragraph (3)(B), or if upon the record made at a 
hearing described in this subsection, the Secretary 
finds that any of the grounds specified in the notice 
of removal has been established, the Secretary may 
issue such orders of removal from office as the 
Secretary deems appropriate.
(B) Effectiveness.--An order under subparagraph (A) 
shall--
(i) become effective at the expiration of 
30 days after the date of service upon the 
subject licensee and the management official 
concerned (except in the case of an order 
issued upon consent as described in paragraph 
(3)(B), which shall become effective at the 
time specified in such order); and
(ii) remain effective and enforceable, 
except to such extent as it is stayed, 
modified, terminated, or set aside by action of 
the Secretary or a reviewing court in 
accordance with this section.
(c) Authority To Suspend or Prohibit Participation.--
(1) In general.--The Secretary may, if the Secretary deems 
it necessary for the protection of the licensee or the 
interests of the Department, suspend from office or prohibit 
from further participation in any manner in the management or 
conduct of the affairs of the licensee, or both, any management 
official referred to in subsection (b)(1), by written notice to 
such effect served upon the management official.
(2) Effectiveness.--A suspension or prohibition under 
paragraph (1)--
(A) shall become effective upon service of notice 
under paragraph (1); and
(B) unless stayed by a court in proceedings 
authorized by paragraph (3), shall remain in effect--
(i) pending the completion of the 
administrative proceedings pursuant to a notice 
of intention to remove served under subsection 
(b); and
(ii) until such time as the Secretary shall 
dismiss the charges specified in the notice, 
or, if an order of removal or prohibition is 
issued against the management official, until 
the effective date of any such order.
(3) Judicial review.--Not later than 10 days after any 
management official has been suspended from office or 
prohibited from participation in the management or conduct of 
the affairs of a licensee, or both, under paragraph (1), that 
management official may apply to the United States District 
Court for the judicial district in which the home office of the 
licensee is located, or the United States District Court for 
the District of Columbia, for a stay of the suspension or 
prohibition pending the completion of the administrative 
proceedings pursuant to a notice of intent to remove served 
upon the management official under subsection (b), and such 
court shall have jurisdiction to stay such action.
(d) Authority To Suspend on Criminal Charges.--
(1) In general.--Whenever a management official is charged 
in any information, indictment, or complaint authorized by a 
United States attorney, with the commission of or participation 
in a felony involving dishonesty or breach of trust, the 
Secretary may, by written notice served upon that management 
official, suspend that management official from office or 
prohibit that management official from further participation in 
any manner in the management or conduct of the affairs of the 
licensee, or both.
(2) Effectiveness.--A suspension or prohibition under 
paragraph (1) shall remain in effect until the subject 
information, indictment, or complaint is finally disposed of, 
or until terminated by the Secretary.
(3) Authority upon conviction.--If a judgment of conviction 
with respect to an offense described in paragraph (1) is 
entered against a management official, then at such time as the 
judgment is not subject to further appellate review, the 
Secretary may issue and serve upon the management official an 
order removing that management official, which removal shall 
become effective upon service of a copy of the order upon the 
licensee.
(4) Authority upon dismissal or other disposition.--A 
finding of not guilty or other disposition of charges described 
in paragraph (1) shall not preclude the Secretary from 
thereafter instituting proceedings to suspend or remove the 
management official from office, or to prohibit the management 
official from participation in the management or conduct of the 
affairs of the licensee, or both, pursuant to subsection (b) or 
(c).
(e) Notification to Licensees.--Copies of each notice required to 
be served on a management official under this section shall also be 
served upon the interested licensee.
(f) Procedural Provisions; Judicial Review.--
(1) Hearing venue.--Any hearing provided for in this 
section shall be--
(A) held in the Federal judicial district or in the 
territory in which the principal office of the licensee 
is located, unless the party afforded the hearing 
consents to another place; and
(B) conducted in accordance with the provisions of 
chapter 5 of title 5, United States Code.
(2) Issuance of orders.--After a hearing provided for in 
this section, and not later than 90 days after the Secretary 
has notified the parties that the case has been submitted for 
final decision, the Secretary shall render a decision in the 
matter (which shall include findings of fact upon which its 
decision is predicated), and shall issue and cause to be served 
upon each party to the proceeding an order or orders consistent 
with the provisions of this section.
(3) Authority to modify orders.--The Secretary may modify, 
terminate, or set aside any order issued under this section--
(A) at any time, upon such notice, and in such 
manner as the Secretary deems proper, unless a petition 
for review is timely filed in a court of appeals of the 
United States, as provided in paragraph (4)(B), and 
thereafter until the record in the proceeding has been 
filed in accordance with paragraph (4)(C); and
(B) upon such filing of the record, with permission 
of the court.
(4) Judicial review.--
(A) In general.--Judicial review of an order issued 
under this section shall be exclusively as provided in 
this paragraph.
(B) Petition for review.--Any party to a hearing 
provided for in this section may obtain a review of any 
order issued pursuant to paragraph (2) (other than an 
order issued with the consent of the management 
official concerned, or an order issued under subsection 
(d)), by filing in the court of appeals of the United 
States for the circuit in which the principal office of 
the licensee is located, or in the United States Court 
of Appeals for the District of Columbia Circuit, not 
later than 30 days after the date of service of such 
order, a written petition praying that the order of the 
Secretary be modified, terminated, or set aside.
(C) Notification to department.--A copy of a 
petition filed under subparagraph (B) shall be 
forthwith transmitted by the clerk of the court to the 
Secretary, and thereupon the Secretary shall file in 
the court the record in the proceeding, as provided in 
section 2112 of title 28, United States Code.
(D) Court jurisdiction.--Upon the filing of a 
petition under subparagraph (A)--
(i) the court shall have jurisdiction, 
which, upon the filing of the record under 
subparagraph (C), shall be exclusive, to 
affirm, modify, terminate, or set aside, in 
whole or in part, the order of the Secretary;
(ii) review of such proceedings shall be 
had as provided in chapter 7 of title 5, United 
States Code; and
(iii) the judgment and decree of the court 
shall be final, except that the judgment and 
decree shall be subject to review by the 
Supreme Court of the United States upon 
certiorari, as provided in section 1254 of 
title 28, United States Code.
(E) Judicial review not a stay.--The commencement 
of proceedings for judicial review under this paragraph 
shall not, unless specifically ordered by the court, 
operate as a stay of any order issued by the Secretary 
under this section.

SEC. 18. UNLAWFUL ACTS AND OMISSIONS BY OFFICERS, DIRECTORS, EMPLOYEES, 
OR AGENTS; BREACH OF FIDUCIARY DUTY.

(a) In General.--Wherever a licensee violates any provision of this 
Act or regulation issued thereunder by reason of the failure of the 
licensee to comply with the terms thereof or by reason of the licensee 
engaging in any act or practice which constitutes or will constitute a 
violation thereof, such violation shall be deemed to be also a 
violation and an unlawful act on the part of any person who, directly 
or indirectly, authorizes, orders, participates in, or causes, brings 
about, counsels, aids, or abets in the commission of any acts, 
practices, or transactions which constitute or will constitute, in 
whole or in part, such violation.
(b) Unlawful Acts.--
(1) Prohibition.--It shall be unlawful for any officer, 
director, employee, agent, or other participant in the 
management or conduct of the affairs of a licensee to engage in 
any act or practice, or to omit any act, in breach of his 
fiduciary duty as such officer, director, employee, agent, or 
participant, if, as a result thereof, the licensee has suffered 
or is in imminent danger of suffering financial loss or other 
damage.
(2) Specific acts and omissions.--Except with the written 
consent of the Secretary, it shall be unlawful--
(A) for any person hereafter to take office as an 
officer, director, or employee of a licensee, or to 
become an agent or participant in the conduct of the 
affairs or management of a licensee, if--
(i) the person has been convicted of a 
felony, or any other criminal offense involving 
dishonesty or breach of trust; or
(ii) the person has been found civilly 
liable in damages, or has been permanently or 
temporarily enjoined by an order, judgment, or 
decree of a court of competent jurisdiction, by 
reason of any act or practice involving fraud 
or breach of trust; or
(B) for any person to continue to serve in any of 
the above described capacities, if--
(i) the person is hereafter convicted of a 
felony, or any other criminal offense involving 
dishonesty or breach of trust; or
(ii) the person is hereafter found civilly 
liable in damages or is permanently or 
temporarily enjoined by an order, judgment, or 
decree of a court of competent jurisdiction, by 
reason of any act or practice involving fraud 
or breach of trust.

SEC. 19. PENALTIES AND FORFEITURES.

(a) Penalties.--
(1) In general.--Except as provided in subsection (b), a 
licensee that violates any regulation or written directive 
issued by the Secretary issued under this Act, requiring the 
filing of any regular or special report pursuant to section 12, 
shall forfeit and pay to the United States a civil penalty of 
not more than $100 for each day of the continuance of the 
failure by the licensee to file such report, unless it is shown 
that such failure is due to reasonable cause and not due to 
willful neglect.
(2) Accrual.--Any civil penalty under paragraph (1) shall 
accrue to the United States and may be recovered in a civil 
action brought by the Secretary.
(b) Enforcement.--The Secretary may--
(1) by rules and regulations, or upon application of an 
interested party, at any time previous to such failure, by 
order, after notice and opportunity for hearing, exempt in 
whole or in part, any licensee from the provisions of 
subsection (a) of this section, upon such terms and conditions 
and for such period of time as the Secretary deems necessary 
and appropriate, if the Secretary funds that such action is not 
inconsistent with the public interest or the protection of the 
Department; and
(2) for the purposes of this section make any alternative 
requirements appropriate to the situation.

SEC. 20. JURISDICTION AND SERVICE OF PROCESS.

Any suit or action brought under section 13, 15, 17, 19, or 23 by 
the Department at law or in equity to enforce any liability or duty 
created by, or to enjoin any violation of this Act, or any rule, 
regulation, or order promulgated thereunder, shall be brought in the 
district wherein the licensee maintains its principal office, and 
process in such cases may be served in any district in which the 
defendant maintains its principal office or transacts business, or 
wherever the defendant may be found.

SEC. 21. ISSUANCE AND GUARANTEE OF TRUST CERTIFICATES.

(a) Authority To Issue Trust Certificates.--The Secretary may issue 
trust certificates representing ownership of all or a fractional part 
of debentures issued by licensees and guaranteed by the Department 
under this Act, provided that the trust certificates shall be based on 
and backed by a trust or pool approved by the Secretary and composed 
solely of guaranteed debentures.
(b) Guarantee Authority.--
(1) In general.--The Secretary may, upon such terms and 
conditions as are deemed appropriate, to guarantee the timely 
payment of the principal of and interest on trust certificates 
issued by the Department or its agent for purposes of this 
section.
(2) Limitation.--Such guarantee shall be limited to the 
extent of principal and interest on the guaranteed debentures 
which compose the trust or pool.
(3) Reduction of guarantee.--In the event that a debenture 
in such trust or pool is prepaid, either voluntarily or 
involuntarily, or in the event of default of a debenture, the 
guarantee of timely payment of principal and interest on the 
trust certificates shall be reduced in proportion to the amount 
of principal and interest such prepaid debenture and priority 
payments represent in the trust or pool.
(4) Interest.--Interest on prepaid or defaulted debentures 
shall accrue and be guaranteed by the Department only through 
the date of payment on the guarantee.
(5) Redemption.--During the term of the trust certificate, 
it may be called for redemption due to prepayment or default of 
all debentures.
(c) Full Faith and Credit.--The full faith and credit of the United 
States is pledged to the payment of all amounts that may be required to 
be paid under any guarantee of such trust certificates issued by the 
Secretary pursuant to this section.
(d) Fees.--The Secretary may not collect a fee for any guarantee 
under this section, provided that nothing herein shall preclude any 
agent of the Department from collecting a fee approved by the 
Department for the functions described in subsection (f)(2).
(e) Rights of the Department.--
(1) Subrogation.--In the event the Secretary pays a claim 
under a guarantee issued under this section, it shall be 
subrogated fully to the rights satisfied by such payment.
(2) Ownership rights.--No State or local law, and no 
Federal law, shall preclude or limit the exercise by the 
Secretary of the ownership rights of the Secretary in the 
debentures residing in a trust or pool against which trust 
certificates are issued.
(f) Responsibilities.--
(1) Registration.--The Secretary shall provide for a 
central registration of all trust certificates sold pursuant to 
this section.
(2) Contracts.--The Secretary shall contract with an agent 
or agents to carry out, on behalf of the Department, the 
pooling and the central registration functions of this section 
including, notwithstanding any other provision of law, 
maintenance on behalf of and under the direction of the 
Department, such commercial bank accounts or investments in 
obligations of the United States as may be necessary to 
facilitate trusts or pools backed by guaranteed under this Act, 
and the issuance of trust certificates to facilitate such 
poolings. Such agent or agents shall provide a fidelity bond or 
insurance in such amounts as the Secretary determines to be 
necessary to fully protect the interests of the Government.
(3) Disclosures.--Before any sale of a trust certificate, 
the Secretary shall require the seller to disclose to a 
purchaser of a trust certificate issued pursuant to this 
section, information on the terms, conditions, and yield of 
such instrument.
(4) Regulation of brokers and dealers.--The Secretary is 
authorized to regulate brokers and dealers in trust 
certificates sold pursuant to this section.
(5) Rule of construction.--Nothing in this subsection shall 
prohibit the use of a bookentry or other electronic form of 
registration for trust certificates.

SEC. 22. PERIODIC ISSUANCE OF GUARANTEES AND TRUST CERTIFICATES.

The Secretary shall issue guarantees under section 7 and trust 
certificates under section 21 at periodic intervals of not less than 
every 12 months and shall do so at such shorter intervals as the 
Secretary deems appropriate, taking into consideration the amount and 
number of such guarantees or trust certificates.

SEC. 23. MISCELLANEOUS.

(a) Cooperation With Banks, Investors, and Lenders.--Whenever 
practicable, the operations of an ownership investment company, 
including the generation of business, may be undertaken in cooperation 
with banks or other investors or lenders, incorporated or 
unincorporated, and any servicing or initial investigation required for 
loans or acquisitions of securities by the company under the provisions 
of this Act may be handled through such banks or other investors or 
lenders on a fee basis. Any ownership investment company may receive 
fees for services rendered to such banks and other investors and 
lenders.
(b) Regulations.--The Secretary is authorized to prescribe 
regulations governing the operations of ownership investment companies, 
and to carry out the provisions of this Act, in accordance with the 
purposes of this Act.
(c) Dissolution or Forfeiture of Rights.--Should any ownership 
investment company violate or fail to comply with any of the provisions 
of this Act or of regulations prescribed hereunder, all of the rights, 
privileges, and franchises derived therefrom may thereby be forfeited. 
Before any such ownership investment company shall be declared 
dissolved, or its rights, privileges, and franchises forfeited, any 
noncompliance with or violation of this Act shall be determined and 
adjudged by a court of the United States of competent jurisdiction in a 
suit brought for that purpose in the district, territory, or other 
place subject to the jurisdiction of the United States, in which the 
principal office of the ownership investment company is located. Any 
such suit shall be brought by the United States at the instance of the 
Secretary or the Attorney General.
(d) Liability.--Except as expressly provided otherwise in this Act, 
nothing in this Act or in any other provision of law shall be deemed to 
impose any liability on the United States with respect to any 
obligations entered into, or stocks issued, or commitments made, by any 
company operating under the provisions of this Act.
<all>