Page:United States Statutes at Large Volume 116 Part 1.djvu/813

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PUBLIC LAW 107-204-^ULY 30, 2002 116 STAT. 787 (C) whether generally accepted accounting principles or the rules of the Commission result in financial statements of issuers reflecting the economics of such transactions to investors in a transparent fashion; (D) whether generally accepted accounting principles specifically result in the consolidation of special purpose entities sponsored by an issuer in cases in which the issuer has the majority of the risks and rewards of the special purpose entity; and (E) any recommendations of the Commission for improving the transparency and quality of reporting off- balance sheet transactions in the financial statements and disclosures required to be filed by an issuer with the Commission. SEC. 402. ENHANCED CONFLICT OF BMTEREST PROVISIONS. (a) PROHIBITION ON PERSONAL LOANS TO EXECUTIVES.— Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m), as amended by this Act, is amended by adding at the end the following: " (k) PROHIBITION ON PERSONAL LOANS TO EXECUTIVES. — "(1) IN GENERAL. —It shall be unlawful for any issuer (as defined in section 2 of the Sarbanes-Oxley Act of 2002), directly or indirectly, including through any subsidiary, to extend or maintain credit, to arrange for the extension of credit, or to renew an extension of credit, in the form of a personal loan to or for any director or executive officer (or equivalent thereof) of that issuer. An extension of credit maintained by the issuer on the date of enactment of this subsection shall not be subject to the provisions of this subsection, provided that there is no material modification to any term of any such extension of credit or any renewal of any such extension of credit on or after that date of enactment. "(2) LIMITATION.— Paragraph (1) does not preclude any home improvement and manufactured home loans (as that term is defined in section 5 of the Home Owners' Loan Act (12 U.S.C. 1464)), consumer credit (as defined in section 103 of the Truth in Lending Act (15 U.S.C. 1602)), or any extension of credit under an open end credit plan (as defined in section 103 of the Truth in Lending Act (15 U.S.C. 1602)), or a charge card (as defined in section 127(c)(4)(e) of the Truth in Lending Act (15 U.S.C. 1637(c)(4)(e)), or any extension of credit by a broker or dealer registered under section 15 of this title to an employee of that broker or dealer to buy, trade, or carry securities, that is permitted under rules or regulations of the Board of Governors of the Federal Reserve System pursuant to section 7 of this title (other than an extension of credit that would be used to purchase the stock of that issuer), that is— "(A) made or provided in the ordinary course of the consumer credit business of such issuer; "(B) of a type that is generally made available by such issuer to the public; and "(C) made by such issuer on market terms, or terms that are no more favorable than those offered by the issuer to the general public for such extensions of credit. " (3) RULE OF CONSTRUCTION FOR CERTAIN LOANS. —Paragraph (1) does not apply to any loan made or maintained