(a) Short title.—This Act may be cited as the “Stop Wall Street Looting Act”.

(b) Table of contents.—The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Definitions.

Congress finds the following:

(1) During the 20-year period preceding the date of enactment of this Act, activity by private equity funds has exploded.

(2) Millions of people in communities across the United States rely on companies that are owned by private equity funds, including almost 5,800,000 individuals who work for companies owned by those funds. For millions of additional individuals, a private investment fund acts as a landlord, a lender, or an owner of a local grocery store, newspaper, or hospital. Many pension funds are also investors in private investment funds.

(3) Private investment funds have taken controlling stakes in companies in a wide variety of industries, including the financial services, real estate, media, and healthcare industries, but some of the largest impacts from private investment funds have been in the retail sector. In the 2 years preceding the date of enactment of this Act, cases have been commenced under title 11, United States Code, with respect to dozens of retailers in the United States, including Sears, Toys “R” Us, Shopko, Payless ShoeSource, Charlotte Russe, Bon-Ton, Nine West, David’s Bridal, Claire’s, and Southeastern Grocers, which was the parent company for BI–LO and Winn-Dixie.

(4) Private investment funds have also targeted entities that serve low-income or vulnerable populations, including affordable housing developments, for-profit colleges, payday lenders, medical providers, and nursing homes.

(5) While private investment funds often purport to take over struggling companies and make those companies viable, the opposite is often true. Leveraged buyouts impose enormous debt loads on otherwise viable companies and then strip those companies of assets, hobbling the operations of those companies and preventing them from making necessary investments for future growth. If an investment goes well, the fund reaps most of the rewards, but if the investment does not go well, workers and customers of the company, and the community relying on the company, suffer.

(6) Regardless of the performance of a private investment fund, the managers of the fund often make profits through fees, dividends, and other financial engineering. Private funds should have a stake in the outcome of their investments, enjoying returns if those investments are successful but absorbing losses if those investments fail.

(7) When a case is commenced under title 11, United States Code, with respect to a portfolio company, workers not only lose jobs, but also lose wages and benefits that are owed, severance pay that has been promised, and pensions that have been earned. Workers should not be sent to the back of the line behind other creditors if, through no fault of those workers, an investment fails.

(8) The performance of private investment funds is cloaked in secrecy. Those funds have full control over the information that the funds disclose to investors, which allows the funds to manufacture their own performance metrics and makes it difficult for an investor to compare the returns to other investment options. Funds also increasingly require investors to waive the fiduciary obligations applicable to the funds. Investors should have the information and bargaining power to take control over their own investments.

(9) An increasing amount of risky debt is being introduced into the market and the quality of that debt is deteriorating, raising concerns with regulators and lawmakers about systemic risk. The institutions that make and securitize risky loans collect large fees and then pass on risk to unwitting investors. The financial system should not bear all of the risk while lenders and securitizers reap the rewards.

(10) The Federal Government should—

(A) protect workers, companies, consumers, and investors in the United States; and

(B) put an end to the practice of looting of economically viable companies for the enrichment of private investment fund managers.

In this Act:

(1) AFFILIATE.—The term “affiliate” means—

(A) a person that directly or indirectly owns, controls, or holds with power to vote, 20 percent or more of the outstanding voting securities of another entity, other than a person that holds such securities—

(i) in a fiduciary or agency capacity without sole discretionary power to vote such securities; or

(ii) solely to secure a debt, if such entity has not in fact exercised such power to vote;

(B) a corporation 20 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by another entity (referred to in this subparagraph as a “covered entity”), or by an entity that directly or indirectly owns, controls, or holds with power to vote, 20 percent or more of the outstanding voting securities of the covered entity, other than an entity that holds such securities—

(i) in a fiduciary or agency capacity without sole discretionary power to vote such securities; or

(ii) solely to secure a debt, if such entity has not in fact exercised such power to vote;

(C) a person whose business is operated under a lease or operating agreement by another entity, or person substantially all of whose property is operated under an operating agreement with that other entity; or

(D) an entity that operates the business or substantially all of the property of another entity under a lease or operating agreement.

(2) CAPITAL DISTRIBUTION.—The term “capital distribution” means—

(A) a cash or share dividend;

(B) a share repurchase;

(C) a share redemption;

(D) a share buyback;

(E) a payment of interest or fee on a share of stock; and

(F) any other transaction similar to a transaction described in subparagraphs (A) through (E).

(3) CHANGE IN CONTROL.—The term “change in control” means a change of economic interest with respect to—

(A) the power to vote more than 50 per centum of any class of voting securities of a corporation that engages in interstate commerce; or

(B) any lesser per centum of any class of voting securities of a corporation that engages in interstate commerce that is sufficient to make the acquirer of such an interest a person that has the ability to direct the actions of that corporation.

(4) CHANGE IN CONTROL TRANSACTION.—The term “change in control transaction” means a transaction that effects a change in control.

(5) COMMISSION.—The term “Commission” means the Securities and Exchange Commission.

(6) CONTROL PERSON.—The term “control person”—

(A) means—

(i) a person—

(I) that directly or indirectly owns, controls, or holds with power to vote, including through coordination with other persons, 20 percent or more of the outstanding voting interests of a target firm; or

(II) that operates the business or substantially all of the property of a target firm under a lease or operating agreement;

(ii) a corporation, other than a target firm, that has 20 percent or more of its outstanding voting interests directly or indirectly owned, controlled, or held with power to vote by a person that directly or indirectly owns, controls, or holds with power to vote, including through coordination with other persons, 20 percent or more of the outstanding voting interests of a target firm; and

(iii) a person that otherwise has the ability to direct the actions of a target firm; and

(B) does not include a person that—

(i) holds the voting interests of a corporation solely—

(I) in a fiduciary or agency capacity without sole discretionary power to vote the securities; or

(II) to secure a debt, if the person has not exercised the power to vote; or

(ii) (I) is a limited partner with respect to a person described in subparagraph (A) that is a partnership; and

(II) does not participate in the direction of the management or policy of a corporation.

(7) CORPORATION.—The term “corporation” means—

(A) a joint-stock company;

(B) a company or partnership association organized under a law that makes only the capital subscribed or callable up to a specified amount responsible for the debts of the association, including a limited partnership and a limited liability company;

(C) a trust; and

(D) an association having a power or privilege that a private corporation, but not an individual or a partnership, possesses.

(8) HOLDER OF AN ECONOMIC INTEREST.—The term “holder of an economic interest”—

(A) means a person that directly or indirectly has an economic interest in a corporation or a right to participate in the governance of a corporation, without regard to the form or source of that interest or right;

(B) if the economic interest described in subparagraph (A) is a security, does not include—

(i) an individual who is engaged in business as an underwriter of securities and who acquires that security through the good faith participation of the individual in a firm commitment underwriting registered under the Securities Act of 1933 (15 U.S.C. 77b) until the date that is 40 days after the date on which that acquisition occurs; or

(ii) a member of a national securities exchange solely because that member is the record holder of that security and, under the rules of that exchange—

(I) may direct the vote of that security, without instruction, on—

(aa) other than contested matters; or

(bb) matters that may substantially affect the rights or privileges of the holders of the security to be voted; and

(II) is otherwise precluded from voting without instruction; and

(C) does not include—

(i) a person that holds an economic interest solely to secure a debt if that person does not exercise any voting other governance rights with respect to the interest; or

(ii) a person that is not an insider with respect to a control person.

(9) INSIDER.—The term “insider” means any—

(A) director of a corporation;

(B) officer of a corporation;

(C) managing agent of a corporation;

(D) control person with respect to a corporation;

(E) affiliate of a corporation;

(F) consultant or contractor retained by a corporation;

(G) affiliate, relative, or agent of a person described in any of subparagraphs (A) through (E); and

(H) affiliate, relative, or agent of a person described in subparagraph (G).

(10) INVESTMENT ADVISER.—The term “investment adviser” has the meaning given the term in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a)).

(11) ISSUER.—The term “issuer” has the meaning given the term in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).

(12) NATIONAL SECURITIES EXCHANGE.—The term “national securities exchange” means an exchange that is registered as a national securities exchange under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f).

(13) PRIVATE FUND.—Except as otherwise expressly provided, the term “private fund”—

(A) means a company or partnership that—

(i) would be considered an investment company under section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3) but for the application of paragraph (1) or (7) of subsection (c) of such section 3;

(ii) directly or through an affiliate, acts as a control person; and

(iii) is not a venture capital fund, as defined in section 275.203(l)–1 of title 17, Code of Federal Regulations, as in effect on the date of enactment of this Act; and

(B) does not include an institution selected under section 107 of the Community Development Banking and Financial Institutions Act of 1994 (12 U.S.C. 4706).

(14) RELATIVE.—The term “relative” has the meaning given the term in section 101 of title 11, United States Code.

(15) TARGET FIRM.—The term “target firm” means a corporation that is acquired in a change in control transaction.

(a) In general.—Notwithstanding any other provision of law, or the terms of any contract or agreement, a private fund shall be jointly and severally liable for all liabilities of each target firm with respect to the private fund, and any affiliate of such a target firm, including—

(1) any debt incurred by the target firm or an affiliate of the target firm, including as part of the acquisition of the target firm by the private fund;

(2) any Federal or State civil monetary penalty, or obligation under a settlement or consent order with a Federal or State governmental agency or instrumentality, including a consumer restitution obligation, for which the target firm, or an affiliate of the target firm, is liable;

(3) any liability resulting from a violation of section 3 of the Worker Adjustment and Retraining Notification Act (29 U.S.C. 2102) by the target firm or an affiliate of the target firm;

(4) any withdrawal liability determined under part 1 of subtitle E of title IV of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1381 et seq.) that is incurred by the target firm or an affiliate of the target firm; and

(5) any claim for unfunded benefit liabilities owed to the Pension Benefit Guaranty Corporation under subtitle D of title IV of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1361 et seq.) with respect to the termination of a pension plan sponsored by the target firm or an affiliate of the target firm.

(b) Rule of construction.—Nothing in this section may be construed to diminish existing, as of the date of this Act, controlled group liability under the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.).

(a) In general.—Notwithstanding any other provision of law, or the terms of any contract or agreement, a holder of an economic interest in a private fund shall be jointly and severally liable for all liabilities of each target firm with respect to the private fund, and any affiliate of such a target firm, including—

(1) any debt incurred by the target firm or an affiliate of the target firm, including as part of the acquisition of the target firm by the private fund;

(2) any Federal or State civil monetary penalty, or obligation under a settlement or consent order with a Federal or State governmental agency or instrumentality, including a consumer restitution obligation, for which the target firm, or an affiliate of the target firm, is liable;

(3) any liability resulting from a violation of section 3 of the Worker Adjustment and Retraining Notification Act (29 U.S.C. 2102) by the target firm or an affiliate of the target firm;

(4) any withdrawal liability determined under part 1 of subtitle E of title IV of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1381 et seq.) that is incurred by the target firm or an affiliate of the target firm; and

(5) any claim for unfunded benefit liabilities owed to the Pension Benefit Guaranty Corporation under subtitle D of title IV of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1361 et seq.) with respect to the termination of a pension plan sponsored by the target firm or an affiliate of the target firm.

(b) Rule of construction.—Nothing in this section may be construed to diminish existing, as of the date of this Act, controlled group liability under the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.).

It shall be void as against public policy for a target firm, or an affiliate of a target firm, to indemnify a private fund that is a control person with respect to the target firm, or any affiliate of the target firm, with respect to the liabilities of the fund or the affiliate, as applicable, under sections 101 and 102.

(a) In general.—No target firm may, during the 2-year period beginning on the closing date of a change in control transaction that results in control of the target firm by a private fund—

(1) make a capital distribution or similarly reduce the equity capital of the target firm; or

(2) incur an obligation that commits the target firm to making a capital distribution or a similar reduction of the equity capital of the target firm after the end of that 2-year period.

(b) Void.—Any transfer made or obligation incurred by a target firm or an affiliate with respect to a target firm in violation of subsection (a) shall be void.

(c) Joint and several liability for aiders and abettors.—Any control person that is a private fund, any holder of an economic interest in a control person that is a private fund, or any affiliate of a target firm that aids, abets, facilitates, supports, or instructs any violation of subsection (a) shall be jointly and severally liable under this subsection for any transfer made or obligation incurred, including for reasonable attorney’s fees and costs awarded to a plaintiff under subsection (d)(2).

(d) Cause of action.—

(1) IN GENERAL.—Any employee or creditor, or representative of an employee or creditor, of a target firm that is a debtor under title 11, United States Code, or of an affiliate of a target firm that is such a debtor, may bring an action in an appropriate district court of the United States against the direct or indirect transferee or obligee or beneficiary of the transfer or obligation to void the transfer or obligation and recover any transferred property for the target firm.

(2) AWARD.—In a successful action to recover a transfer, the court shall also award the plaintiff reasonable attorney’s fees and costs.

(a) Limitation on safe harbors.—Section 546(e) of title 11, United States Code, is amended by inserting after “548(b) of this title,” the following: “and except in the case of a transfer made in connection with a change in control transaction, as defined in section 3 of the Stop Wall Street Looting Act, or during the protected period, as defined in section 548(f) of this title,”.

(b) Presumption of insolvency in transfers undertaken in connection with change in control transactions.—Section 548 of title 11, United States Code, is amended by adding at the end the following:

“(f) (1) In this subsection—

“(A) the terms ‘change in control transaction’, ‘control person’, and ‘target firm’ have the meanings given those terms in section 3 of the Stop Wall Street Looting Act; and

“(B) the term ‘protected period’ means the shorter of—

“(i) the 8-year period beginning on the date on which a change in control transaction closed; or

“(ii) the period beginning on the date on which a change in control transaction closed and ending on the earliest subsequent date on which a public offering of a controlling share of the common equity securities of the target firm occurs.

“(2) For purposes of this section, the debtor is presumed to have made a transfer or incurred an obligation described in subparagraphs (A) and (B) of subsection (a)(1) if—

“(A) the transfer is made to or obligation is incurred by a target firm or an affiliate in connection with a change in control transaction; or

“(B) the transfer is made to a target firm or an affiliate by, or obligation is incurred by a target firm or an affiliate from, a control person, an affiliate, or an insider during a protected period.

“(3) For the purposes of this section, a court shall, in analyzing related transactions, link together as a single transaction any interrelated yet formally distinct steps in an integrated transaction (commonly known as the ‘step transaction doctrine’).”.

(c) Statute of limitations.—Section 3306(b) of title 28, United States Code, is amended—

(1) in paragraph (2), by striking “or” at the end;

(2) in paragraph (3), by striking the period at the end and inserting “; or”; and

(3) by adding at the end the following:

“(4) within 8 years after the transfer was made or the obligation was incurred, if the transfer was made or the obligation was incurred—

“(A) in connection with a change in control transaction, as defined in section 3 of the Stop Wall Street Looting Act; or

“(B) during a protected period, as defined in section 548(f) of title 11.”.

(a) Imposition of tax.—Subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new part:

“Sec. 59B. Surtax on certain amounts received by investment firms from controlled target firms.

(b) Disallowance of credits against tax.—Subparagraph (B) of section 26(b)(2) of the Internal Revenue Code of 1986 is amended by inserting “or section 59B (relating to surtax on certain amounts received by investment firms from controlled target firms)” after “anti-abuse tax)”.

(c) Conforming amendments.—

(1) The table of parts for subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding after the item relating to part VII the following new item:

(2) Section 871(b)(1) of such Code is amended by inserting “and shall be taxable as provided in section 59B on applicable payments included in gross income which are effectively connected with the conduct of a trade or business within the United States” after “United States”.

(3) Section 882(a)(1) of such Code is amended by inserting “and shall be taxable as provided in section 59B on applicable payments included in gross income which are effectively connected with the conduct of a trade or business within the United States” after “United States”.

(4) Subparagraph (A) of section 6425(c)(1) of such Code is amended by striking “plus” at the end of clause (i), by striking “over” at the end of clause (ii) and inserting “plus” and by adding at the end the following new clause:

“(iii) the tax imposed by section 59B, over”.

(5) Paragraph (1) of section 6654(f) of such Code is amended by striking “tax” each place it appears and inserting “taxes”.

(6) Subparagraph (A) of section 6655(g)(1) of such Code is amended by striking “plus” at the end of clause (ii), by redesignating clause (iii) as clause (iv), and by inserting after clause (ii) the following new clause:

“(iii) the tax imposed by section 59B, plus”.

(d) Effective date.—The amendments made by this section shall apply to applicable payments (as defined in section 59B(b) of the Internal Revenue Code of 1986, as added by this section) paid or accrued on or after the date of enactment of this Act.

(a) In general.—Section 163(j) of the Internal Revenue Code of 1986 is amended by redesignating paragraph (10) as paragraph (11) and by inserting after paragraph (9) the following new paragraph:

“(10) MODIFICATION OF LIMITATION FOR CERTAIN BUSINESSES OWNED BY PRIVATE FIRMS.—

“(A) IN GENERAL.—In the case of a taxpayer which is an applicable entity controlled by an applicable controlling entity (or any person related within the meaning of section 267(b) or 707(b) to such entity) at any time during the taxable year—

“(i) if the ratio of debt to equity of the taxpayer as of the close of the taxable year (or on any other day during the taxable year as the Secretary may prescribe in regulations) exceeds 1, then paragraph (1) shall be applied by substituting ‘___ percent’ for ‘30 percent’, and

“(ii) in the case of the election under paragraph (7)(B) to treat any trade or business of the taxpayer as an electing real property trade or business—

“(I) the taxpayer may not make any such election during such taxable year, and

“(II) any such election of the taxpayer in effect as of the close of the taxable year preceding such taxable year with respect to a trade or business shall be revoked, effective for such taxable year and all succeeding taxable years.

“(B) RATIO OF DEBT TO EQUITY.—For purposes of this paragraph, the term ‘ratio of debt to equity’ means, with respect to any taxpayer, the ratio which the total indebtedness of the taxpayer bears to the sum of the taxpayer's money and all other assets reduced (but not below zero) by such total indebtedness. For purposes of the preceding sentence—

“(i) the amount taken into account with respect to any asset shall be the adjusted basis thereof for purposes of determining gain,

“(ii) the amount taken into account with respect to any indebtedness with original issue discount shall be its issue price plus the portion of the original issue discount previously accrued as determined under the rules of section 1272 (determined without regard to subsection (a)(7) or (b)(4) thereof), and

“(iii) there shall be such other adjustments as the Secretary may by regulations prescribe.

“(C) COORDINATION WITH DEPRECIATION RULES.—If the alternative depreciation system under section 168(g) applies to property by reason of an election under paragraph (7)(B) which is revoked under subparagraph (A)(ii)(II), then the depreciation deduction under section 167(a) with respect to such property for the taxable year of revocation and all succeeding taxable years shall be determined under section 168 in the same manner as if such revocation were a change in use of the property under section 168(i)(5) and the regulations thereunder.

“(D) DEFINITIONS AND RULES.—For purposes of this paragraph—

“(i) any term used in this paragraph which is also used in section 59B shall have the same meaning as when used in such section, and

“(ii) the constructive ownership rules of section 318 shall apply in the same manner as such rules apply for purposes of section 59B.”.

(b) Effective dates.—

(1) IN GENERAL.—The amendments made by this section shall apply to taxable years beginning on or after the date of enactment of this Act.

(2) REVOCATION OF ELECTIONS.—Subparagraphs (A)(ii)(II) and (C) of section 163(j)(10) of the Internal Revenue Code of 1986, as added by this section, shall apply to taxable years beginning on or after the date of enactment of this Act, with respect to elections under section 163(j)(7)(B) of such Code made before, on, or after such date.

Section 507(a) of title 11, United States Code, is amended—

(1) in paragraph (4)—

(A) by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively;

(B) in the matter preceding clause (i), as so redesignated, by inserting “(A)” before “Fourth”;

(C) in subparagraph (A), as so designated, in the matter preceding clause (i), as so redesignated—

(i) by striking “$10,000” and inserting “$20,000”;

(ii) by striking “within 180 days”; and

(iii) by striking “or the date of the cessation of the debtor’s business, whichever occurs first”; and

(D) by adding at the end the following:

“(B) Severance pay described in subparagraph (A)(i) shall be deemed earned in full upon the layoff or termination of employment of the individual to whom the severance pay is owed.”; and

(2) in paragraph (5)—

(A) in subparagraph (A)—

(i) by striking “within 180 days”; and

(ii) by striking “or the date of the cessation of the debtor’s business, whichever occurs first”; and

(B) by striking subparagraph (B) and inserting the following:

“(B) for each such plan, to the extent of the number of employees covered by each such plan multiplied by $20,000.”.

Section 503(b) of title 11, United States Code, is amended—

(1) in paragraph (8)(B), by striking “and” at the end;

(2) in paragraph (9), by striking the period and inserting a semicolon; and

(3) by adding at the end the following:

“(10) severance pay owed to employees of the debtor (other than to an insider of the debtor or a senior executive officer of the debtor), under a plan, program, or policy generally applicable to employees of the debtor (but not under an individual contract of employment), or owed pursuant to a collective bargaining agreement, for layoff or termination on or after the date of the filing of the petition, which pay shall be deemed earned in full upon such layoff or termination of employment; and

“(11) any contribution due on or after the date of the filing of the petition under an employee benefit plan.”.

(a) Allowance of administrative expenses in bankruptcy cases.—Section 503(b)(1)(A)(ii) of title 11, United States Code, is amended by inserting after “(ii)” the following: “any back pay, civil penalty, or damages for a violation of any Federal or State labor and employment law, including the Worker Adjustment and Retraining Notification Act (29 U.S.C. 2101 et seq.) and any comparable State law, and”.

(b) Administration and enforcement of worker adjustment and retraining notification requirements.—Section 5(a)(1) of the Worker Adjustment and Retraining Notification Act (29 U.S.C. 2104(a)(1)) is amended, in the matter following subparagraph (B)—

(1) by inserting “which for purposes of this sentence shall consist of the days, in the notification period, that are or that follow the date of the prohibited closing or layoff under this Act,” after “period of the violation,”; and

(2) by inserting “calendar” after “60”.

Section 503(c) of title 11, United States Code, is amended—

(1) in the matter preceding paragraph (1), by inserting “and subject to section 363(b)(3),” after “Notwithstanding subsection (b),”;

(2) in paragraph (1), in the matter preceding subparagraph (A)—

(A) by inserting “, a senior executive officer of the debtor, or any of the 20 next most highly compensated employees of the debtor, department or division managers of the debtor, or consultants providing services to the debtor (regardless of whether the executive officer, employee, manager, or consultant is an insider)” after “insider of the debtor”;

(B) by inserting “or for the payment of performance or incentive compensation, a bonus of any kind, or any other financial return designed to replace or enhance incentive, stock, or other compensation in effect before the date of the commencement of the case,” after “remain with the debtor’s business,”; and

(C) by inserting “clear and convincing” before “evidence in the record”;

(3) in paragraph (2), in the matter preceding subparagraph (A), by inserting “, a senior executive officer of the debtor, or any of the 20 next most highly compensated employees of the debtor, department or division managers of the debtor, or consultants providing services to the debtor (regardless of whether the executive officer, employee, manager, or consultant is an insider)” after “an insider of the debtor”; and

(4) by striking paragraph (3) and inserting the following:

“(3) any other transfer or obligation to or for the benefit of an insider of the debtor, a senior executive officer of the debtor, or any of the 20 next most highly compensated employees of the debtor, department or division managers of the debtor, or consultants providing services to the debtor (regardless of whether the executive officer, employee, manager, or consultant is an insider), absent a finding by the court, based upon clear and convincing evidence in the record, and without deference to a request by the debtor for such payment, that—

“(A) because of the essential and particularized nature of the services provided by the insider, executive officer, employee, manager, or consultant, the transfer or obligation is essential to—

“(i) the survival of the business of the debtor; or

“(ii) in a case in which some or all of the assets of the debtor are liquidated, the orderly liquidation of the assets;

“(B) in the case of a transfer or obligation under an incentive program, the transfer or obligation is part of a workforce incentive program generally applicable to the nonmanagement workforce of the debtor; and

“(C) the cost of the transfer or obligation—

“(i) is reasonable;

“(ii) is not excessive in the context of the financial circumstances of the debtor; and

“(iii) is not disproportionate in light of any economic loss incurred by the nonmanagement workforce of the debtor during the case.”.

Section 363 of title 11, United States Code, is amended—

(1) in subsection (b), by adding at the end the following:

“(3) No plan, program, or other transfer or obligation to or for the benefit of an insider of the debtor, a senior executive officer of the debtor, or any of the 20 next most highly compensated employees of the debtor, department or division managers of the debtor, or consultants providing services to the debtor (regardless of whether the executive officer, employee, manager, or consultant is an insider) shall be approved if the debtor has, on or after the date that is 1 year before the date of the filing of the petition—

“(A) discontinued any plan, program, policy or practice of paying severance pay to the nonmanagement workforce of the debtor; or

“(B) modified any plan, program, policy, or practice described in subparagraph (A) in order to reduce benefits under the plan, program, policy or practice.”; and

(2) in subsection (c)(1), by inserting before the period at the end the following: “, except that, for any transaction that constitutes a transfer or obligation subject to section 503(c), the trustee shall be required to obtain the prior approval of the court after notice and an opportunity for a hearing”.

Section 1129(a) of title 11, United States Code, is amended—

(1) in paragraph (4), by adding at the end the following: “Except for compensation subject to review under paragraph (5), any payment or other distribution under the plan to or for the benefit of an insider of the debtor, a senior executive officer of the debtor, or any of the 20 next most highly compensated employees of the debtor, department or division managers of the debtor, or consultants providing services to the debtor (regardless of whether the executive officer, employee, manager, or consultant is an insider), shall not be approved by the court except as part of a program of payments or distributions generally applicable to employees of the debtor, and only to the extent that the court determines that the payment or other distribution is not excessive or disproportionate in comparison to payments or other distributions to the nonmanagement workforce of the debtor.”; and

(2) in paragraph (5)—

(A) in subparagraph (A)(ii), by striking “and” at the end;

(B) in subparagraph (B), by striking the period at the end and inserting “; and”; and

(C) by adding at the end the following:

“(C) the compensation disclosed pursuant to subparagraph (B) has been approved by, or is subject to the approval of, the court as—

“(i) reasonable in comparison to compensation paid to individuals holding comparable positions at comparable companies in the same industry; and

“(ii) not disproportionate in light of any economic concession made by the nonmanagement workforce of the debtor during the case.”.

Section 506(c) of title 11, United States Code, is amended—

(1) by inserting “(1)” before “The trustee”; and

(2) by adding at the end the following:

“(2) If one or more employees of the debtor have not received wages, accrued vacation, severance, or any other compensation owed under a plan, program, policy, or practice of the debtor, or pursuant to the terms of a collective bargaining agreement, for services rendered on or after the date of the commencement of the case, or the debtor has not made a contribution due under an employee benefit plan on or after the date of the commencement of the case, such unpaid obligations shall be—

“(A) deemed—

“(i) reasonable, necessary costs and expenses of preserving, or disposing of, property securing an allowed secured claim; and

“(ii) benefiting the holder of the allowed secured claim; and

“(B) recovered by the trustee for payment to the employees or the employee benefit plan, as applicable, even if the trustee, or a predecessor or successor in interest, has otherwise waived the provisions of this subsection under an agreement with the holder of the allowed secured claim or a successor or predecessor in interest of the holder of the allowed secured claim.”.

Section 547 of title 11, United States Code, is amended by adding at the end the following:

“(j) (1) The trustee may avoid a transfer to or for the benefit of an insider of the debtor, a senior executive officer of the debtor, or any of the 20 next most highly compensated employees of the debtor, department or division managers of the debtor, or consultants providing services to the debtor (regardless of whether the executive officer, employee, manager, or consultant is an insider), that—

“(A) is made or incurred under a retention, bonus, or incentive plan devised before the date of the filing of the petition; and

“(B) does not meet the requirements under section 363(b)(3) or 503(c).

“(2) Subsection (c) shall not constitute a defense against the recovery of a transfer under paragraph (1) of this subsection.

“(3) (A) The trustee, or a committee appointed under section 1102, may commence an action to recover a transfer under paragraph (1) of this subsection.

“(B) If neither the trustee nor a committee commences an action to recover a transfer under subparagraph (A) before the date of the commencement of a hearing on the confirmation of a plan, any party in interest may apply to the court for authority to recover the transfer for the benefit of the estate, in which case the costs of recovery shall be borne by the estate.”.

(a) Requirement relating to preserving jobs and maintaining terms and conditions relating to employment.—Section 363 of title 11, United States Code, is amended by adding at the end the following:

“(q) (1) In approving a sale or lease of property of the estate under this section, or under a plan under chapter 11, the court shall give substantial weight to the extent to which a prospective purchaser or lessee, respectively, of the property will—

“(A) preserve the jobs of the workforce of the debtor; and

“(B) maintain the terms and conditions of employment of the workforce of the debtor.

“(2) If there are 2 or more offers to purchase or lease property of the estate under this section, or under a plan under chapter 11, that qualify under the procedures for the sale or lease, respectively, approved by the court, the court shall approve the offer that best—

“(A) preserves the jobs of the workforce of the debtor; and

“(B) maintains the terms and conditions of employment of the workforce of the debtor.

“(r) (1) Any party seeking to purchase or lease property of the estate under this section, or under a plan under chapter 11, shall represent to the court the effect of such a transaction with respect to—

“(A) the preservation of the jobs of the workforce of the debtor; and

“(B) the maintenance of the terms and conditions of employment of the workforce of the debtor.

“(2) The court shall expressly include in an order approving a purchase or lease of property of the estate under this section, or under a plan under chapter 11, any representation made by a purchaser or lessee of the property under paragraph (1).

“(3) With respect to a purchase or lease of property of the estate under this section, or under a plan under chapter 11—

“(A) the court shall have jurisdiction over the purchaser or lessee of the property in order to enforce the terms of the order approving the purchase or lease;

“(B) the purchaser or lessee shall promptly disclose to the court any material noncompliance with the terms of the order described in subparagraph (A) and explain the basis for such noncompliance; and

“(C) with respect to material noncompliance described in subparagraph (B), the court may impose any appropriate remedy, including injunctive relief, to address the noncompliance.”.

(b) Plans under chapter 11.—

(1) CONTENTS OF PLAN.—Section 1123(b)(4) of title 11, United States Code, is amended by inserting “, which sale shall be subject to the requirements under subsections (q) and (r) of section 363 of this title,” after “property of the estate”.

(2) CONFIRMATION OF PLAN.—Section 1129(a) of title 11, United States Code, is amended by adding at the end the following:

“(17) If the plan provides for the sale of all or substantially all of the property of the estate, the sale meets the requirements under subsections (q) and (r) of section 363 of this title.”.

(a) Definition of gift card.—Section 101(a) of title 11, United States Code, is amended by inserting after paragraph (26) the following:

“(26A) The term ‘gift card’ means a paper or electronic promise, plastic card, or other payment code or device that is—

“(A) redeemable at—

“(i) a single merchant; or

“(ii) an affiliated group of merchants that share the same name, mark, or logo;

“(B) issued in a specified amount, regardless of whether that amount may be increased in value or reloaded at the request of the holder;

“(C) purchased on a prepaid basis in exchange for payment; and

“(D) honored by the single merchant or affiliated group of merchants described in subparagraph (A) upon presentation for goods or services.”.

(b) Consumer deposit.—Section 507(a) of title 11, United States Code, is amended by striking paragraph (7) and inserting the following:

“(7) Seventh, allowed unsecured claims of individuals, to the extent of $1,800 for each such individual, arising from the deposit, before the commencement of the case, of money in connection with—

“(A) the purchase, lease, or rental of property;

“(B) the purchase of services, for the personal, family, or household use of such individuals, that were not delivered or provided; or

“(C) the purchase of a gift card with respect to which funds exist that have not been redeemed.”.

Section 365(d) of title 11, United States Code, is amended—

(1) by striking paragraph (4); and

(2) by redesignating paragraph (5) as paragraph (4).

Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

(a) Modification to election To include partnership interest in gross income in year of transfer.—Subsection (c) of section 83 is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph (3) the following new paragraph:

“(4) PARTNERSHIP INTERESTS.—Except as provided by the Secretary—

“(A) IN GENERAL.—In the case of any transfer of an interest in a partnership in connection with the provision of services to (or for the benefit of) such partnership—

“(i) the fair market value of such interest shall be treated for purposes of this section as being equal to the amount of the distribution which the partner would receive if the partnership sold (at the time of the transfer) all of its assets at fair market value and distributed the proceeds of such sale (reduced by the liabilities of the partnership) to its partners in liquidation of the partnership, and

“(ii) the person receiving such interest shall be treated as having made the election under subsection (b)(1) unless such person makes an election under this paragraph to have such subsection not apply.

“(B) ELECTION.—The election under subparagraph (A)(ii) shall be made under rules similar to the rules of subsection (b)(2).”.

(b) Effective date.—The amendments made by this section shall apply to interests in partnerships transferred after the date of enactment of this Act.

(a) In general.—Part I of subchapter K of chapter 1 is amended by adding at the end the following new section:

(b) Application of section 751 to indirect dispositions of investment services partnership interests.—

(1) IN GENERAL.—Subsection (a) of section 751 is amended by striking “or” at the end of paragraph (1), by inserting “or” at the end of paragraph (2), and by inserting after paragraph (2) the following new paragraph:

“(3) investment services partnership interests held by the partnership,”.

(2) CERTAIN DISTRIBUTIONS TREATED AS SALES OR EXCHANGES.—Subparagraph (A) of section 751(b)(1) is amended by striking “or” at the end of clause (i), by inserting “or” at the end of clause (ii), and by inserting after clause (ii) the following new clause:

“(iii) investment services partnership interests held by the partnership,”.

(3) APPLICATION OF SPECIAL RULES IN THE CASE OF TIERED PARTNERSHIPS.—Subsection (f) of section 751 is amended—

(A) by striking “or” at the end of paragraph (1), by inserting “or” at the end of paragraph (2), and by inserting after paragraph (2) the following new paragraph:

“(3) an investment services partnership interest held by the partnership,”, and

(B) by striking “partner.” and inserting “partner (other than a partnership in which it holds an investment services partnership interest).”.

(4) INVESTMENT SERVICES PARTNERSHIP INTERESTS; QUALIFIED CAPITAL INTERESTS.—Section 751 is amended by adding at the end the following new subsection:

“(g) Investment services partnership interests.—For purposes of this section—

“(1) IN GENERAL.—The term ‘investment services partnership interest’ has the meaning given such term by section 710(c).

“(2) ADJUSTMENTS FOR QUALIFIED CAPITAL INTERESTS.—The amount to which subsection (a) applies by reason of paragraph (3) thereof shall not include so much of such amount as is attributable to any portion of the investment services partnership interest which is a qualified capital interest (determined under rules similar to the rules of section 710(d)).

“(3) EXCEPTION FOR PUBLICLY TRADED PARTNERSHIPS.—Except as otherwise provided by the Secretary, in the case of an exchange of an interest in a publicly traded partnership (as defined in section 7704) to which subsection (a) applies—

“(A) this section shall be applied without regard to subsections (a)(3), (b)(1)(A)(iii), and (f)(3), and

“(B) such partnership shall be treated as owning its proportionate share of the property of any other partnership in which it is a partner.

“(4) RECOGNITION OF GAINS.—Any gain with respect to which subsection (a) applies by reason of paragraph (3) thereof shall be recognized notwithstanding any other provision of this title.

“(5) COORDINATION WITH INVENTORY ITEMS.—An investment services partnership interest held by the partnership shall not be treated as an inventory item of the partnership.

“(6) PREVENTION OF DOUBLE COUNTING.—Under regulations or other guidance prescribed by the Secretary, subsection (a)(3) shall not apply with respect to any amount to which section 710 applies.

“(7) VALUATION METHODS.—The Secretary shall prescribe regulations or other guidance which provide the acceptable methods for valuing investment services partnership interests for purposes of this section.”.

(c) Treatment for purposes of section 7704.—Subsection (d) of section 7704 is amended by adding at the end the following new paragraph:

“(6) INCOME FROM CERTAIN CARRIED INTERESTS NOT QUALIFIED.—

“(A) IN GENERAL.—Specified carried interest income shall not be treated as qualifying income.

“(B) SPECIFIED CARRIED INTEREST INCOME.—For purposes of this paragraph—

“(i) IN GENERAL.—The term ‘specified carried interest income’ means—

“(I) any item of income or gain allocated to an investment services partnership interest (as defined in section 710(c)) held by the partnership,

“(II) any gain on the disposition of an investment services partnership interest (as so defined) or a partnership interest to which (in the hands of the partnership) section 751 applies, and

“(III) any income or gain taken into account by the partnership under subsection (b)(4) or (e) of section 710.

“(ii) EXCEPTION FOR QUALIFIED CAPITAL INTERESTS.—A rule similar to the rule of section 710(d) shall apply for purposes of clause (i).

“(C) COORDINATION WITH OTHER PROVISIONS.—Subparagraph (A) shall not apply to any item described in paragraph (1)(E) (or so much of paragraph (1)(F) as relates to paragraph (1)(E)).

“(D) SPECIAL RULES FOR CERTAIN PARTNERSHIPS.—

“(i) CERTAIN PARTNERSHIPS OWNED BY REAL ESTATE INVESTMENT TRUSTS.—Subparagraph (A) shall not apply in the case of a partnership which meets each of the following requirements:

“(I) Such partnership is treated as publicly traded under this section solely by reason of interests in such partnership being convertible into interests in a real estate investment trust which is publicly traded.

“(II) Fifty percent or more of the capital and profits interests of such partnership are owned, directly or indirectly, at all times during the taxable year by such real estate investment trust (determined with the application of section 267(c)).

“(III) Such partnership meets the requirements of paragraphs (2), (3), and (4) of section 856(c).

“(ii) CERTAIN PARTNERSHIPS OWNING OTHER PUBLICLY TRADED PARTNERSHIPS.—Subparagraph (A) shall not apply in the case of a partnership which meets each of the following requirements:

“(I) Substantially all of the assets of such partnership consist of interests in one or more publicly traded partnerships (determined without regard to subsection (b)(2)).

“(II) Substantially all of the income of such partnership is ordinary income or section 1231 gain (as defined in section 1231(a)(3)).

“(E) TRANSITIONAL RULE.—Subparagraph (A) shall not apply to any taxable year of the partnership beginning before the date which is 10 years after the date of enactment of this paragraph.”.

(d) Imposition of penalty on underpayments.—

(1) IN GENERAL.—Subsection (b) of section 6662 is amended by inserting after paragraph (8) the following new paragraph:

“(9) The application of section 710(e) or the regulations or other guidance prescribed under section 710(g) to prevent the avoidance of the purposes of section 710.”.

(2) AMOUNT OF PENALTY.—

(A) IN GENERAL.—Section 6662 is amended by adding at the end the following new subsection:

“(l) Increase in penalty in case of property transferred for investment management services.—In the case of any portion of an underpayment to which this section applies by reason of subsection (b)(9), subsection (a) shall be applied with respect to such portion by substituting ‘40 percent’ for ‘20 percent’.”.

(B) CONFORMING AMENDMENT.—Subparagraph (B) of section 6662A(e)(2) is amended by striking “or (i)” and inserting “, (i), or (l)”.

(3) SPECIAL RULES FOR APPLICATION OF REASONABLE CAUSE EXCEPTION.—Subsection (c) of section 6664 is amended—

(A) by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively;

(B) by striking “paragraph (3)” in paragraph (5)(A), as so redesignated, and inserting “paragraph (4)”; and

(C) by inserting after paragraph (2) the following new paragraph:

“(3) SPECIAL RULE FOR UNDERPAYMENTS ATTRIBUTABLE TO INVESTMENT MANAGEMENT SERVICES.—

“(A) IN GENERAL.—Paragraph (1) shall not apply to any portion of an underpayment to which section 6662 applies by reason of subsection (b)(9) unless—

“(i) the relevant facts affecting the tax treatment of the item are adequately disclosed,

“(ii) there is or was substantial authority for such treatment, and

“(iii) the taxpayer reasonably believed that such treatment was more likely than not the proper treatment.

“(B) RULES RELATING TO REASONABLE BELIEF.—Rules similar to the rules of subsection (d)(4) shall apply for purposes of subparagraph (A)(iii).”.

(e) Income and loss from investment services partnership interests taken into account in determining net earnings from self-Employment.—

(1) INTERNAL REVENUE CODE.—

(A) IN GENERAL.—Section 1402(a) is amended by striking “and” at the end of paragraph (16), by striking the period at the end of paragraph (17) and inserting “; and”, and by inserting after paragraph (17) the following new paragraph:

“(18) notwithstanding the preceding provisions of this subsection, in the case of any individual engaged in the trade or business of providing services described in section 710(c)(2) with respect to any entity, investment services partnership income or loss (as defined in subsection (m)) of such individual with respect to such entity shall be taken into account in determining the net earnings from self-employment of such individual.”.

(B) INVESTMENT SERVICES PARTNERSHIP INCOME OR LOSS.—Section 1402 is amended by adding at the end the following new subsection:

“(m) Investment services partnership income or loss.—For purposes of subsection (a)—

“(1) IN GENERAL.—The term ‘investment services partnership income or loss’ means, with respect to any investment services partnership interest (as defined in section 710(c)) or disqualified interest (as defined in section 710(e)), the net of—

“(A) the amounts treated as ordinary income or ordinary loss under subsections (b) and (e) of section 710 with respect to such interest,

“(B) all items of income, gain, loss, and deduction allocated to such interest, and

“(C) the amounts treated as realized from the sale or exchange of property other than a capital asset under section 751 with respect to such interest.

“(2) EXCEPTION FOR QUALIFIED CAPITAL INTERESTS.—A rule similar to the rule of section 710(d) shall apply for purposes of applying paragraph (1)(B).”.

(2) SOCIAL SECURITY ACT.—Section 211(a) of the Social Security Act is amended by striking “and” at the end of paragraph (15), by striking the period at the end of paragraph (16) and inserting “; and”, and by inserting after paragraph (16) the following new paragraph:

“(17) Notwithstanding the preceding provisions of this subsection, in the case of any individual engaged in the trade or business of providing services described in section 710(c)(2) of the Internal Revenue Code of 1986 with respect to any entity, investment services partnership income or loss (as defined in section 1402(m) of such Code) shall be taken into account in determining the net earnings from self-employment of such individual.”.

(f) Separate accounting by partner.—Section 702(a) is amended by striking “and” at the end of paragraph (7), by striking the period at the end of paragraph (8) and inserting “, and”, and by inserting after paragraph (8) the following:

“(9) any amount treated as ordinary income or loss under subsection (a), (b), or (e) of section 710.”.

(g) Conforming amendments.—

(1) Subsection (d) of section 731 is amended by inserting “section 710(b)(4) (relating to distributions of partnership property),” after “to the extent otherwise provided by”.

(2) Section 741 is amended by inserting “or section 710 (relating to special rules for partners providing investment management services to partnerships)” before the period at the end.

(3) The table of sections for part I of subchapter K of chapter 1 is amended by adding at the end the following new item:

“Sec. 710. Special rules for partners providing investment management services to partnerships.”.

(4) (A) Part IV of subchapter O of chapter 1 is amended by striking section 1061.

(B) The table of sections for part IV of subchapter O of chapter 1 is amended by striking the item relating to section 1061.

(h) Effective date.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years ending after the date of enactment of this Act.

(2) PARTNERSHIP TAXABLE YEARS WHICH INCLUDE EFFECTIVE DATE.—In applying section 710(a) of the Internal Revenue Code of 1986 (as added by this section) in the case of any partnership taxable year which includes the date of enactment of this Act, the amount of the net capital gain referred to in such section shall be treated as being the lesser of the net capital gain for the entire partnership taxable year or the net capital gain determined by only taking into account items attributable to the portion of the partnership taxable year which is after such date.

(3) DISPOSITIONS OF PARTNERSHIP INTERESTS.—

(A) IN GENERAL.—Section 710(b) of such Code (as added by this section) shall apply to dispositions and distributions after the date of enactment of this Act.

(B) INDIRECT DISPOSITIONS.—The amendments made by subsection (b) shall apply to transactions after the date of enactment of this Act.

(4) OTHER INCOME AND GAIN IN CONNECTION WITH INVESTMENT MANAGEMENT SERVICES.—Section 710(e) of such Code (as added by this section) shall take effect on the date of enactment of this Act.

The Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) is amended by adding at the end the following:

(a) Fiduciary duties under ERISA.—Section 401(b)(1) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1101(b)(1)) is amended—

(1) by inserting “or a private fund (as defined in section 3 of the Stop Wall Street Looting Act)” before “, the assets”; and

(2) by inserting “or such private fund, as applicable” before the period at the end.

(b) Prohibition against waiving fiduciary duties.—Section 211(h) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–11(h)) is amended—

(1) in paragraph (1), by striking “and” at the end;

(2) in paragraph (2), by striking the period at the end and inserting “; and”; and

(3) by adding at the end the following:

“(3) promulgate rules that prohibit an investment adviser from requiring any person to which the investment adviser provides investment advice, including a pension plan (as defined in section 3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002)) that is subject to title I of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.), to, as a condition of the investment adviser providing that advice, sign a contract or other agreement in which that person waives a fiduciary duty owed by that person to another person.”.

(c) Applicability of benefits.—The general partner of a private fund may not provide any term or benefit to any limited partner of the fund unless the general partner provides that term or benefit to all limited partners of the fund.

Any investment adviser to a private fund shall disclose to potential investors with respect to the other private funds, as defined in section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C. 80b–2(a)), managed by that investment adviser (referred to in this section as “managed firms”) the following information:

(1) A list of all managed firms with respect to the investment adviser, including those managed firms that, as of the date on which the disclosure is made—

(A) have active investments; and

(B) have liquidated the assets of the firms.

(2) For each managed firm listed under paragraph (1), the following information:

(A) As applicable, the total term of the listed firm beginning with the commencement of the commitment period with respect to the firm and ending on the date on which the firm is dissolved, including, with respect to a listed firm that, as of the date on which the disclosure is made, is actively investing—

(i) the term specified by any limited partnership agreement; and

(ii) the nature of any provisions that would allow for the extension of that term.

(B) The performance of the listed firm’s net of fees, as measured by the public market equivalent or a similar measure.

(C) A list of target firms with respect to which the listed firm was a control person and the period of that control.

(D) The number of employees at each target firm identified under subparagraph (C), as of the date on which the listed firm became a control person with respect to the target firm, and the date on which the listed firm ceased to be a control person with respect to the target firm.

(E) A list of target firms with respect to the listed firm with respect to which a case has been commenced under title 11, United States Code.

(F) For each target firm with respect to the listed firm, and with respect to which the listed firm is a control person—

(i) a list of actions taken by any State or local regulatory agency; and

(ii) any legal or regulatory penalties paid, or settlements entered into, by the general partners of the target firm or the target firm itself.

(3) The percentage breakdown of the means employed by the investment adviser to divest ownership or control of target firms, including—

(A) the sale of target firms to other private funds;

(B) the sale of target firms to private entities;

(C) the sale of target firms to issuers, the securities of which are traded on a national securities exchange;

(D) the commencement of cases under title 11, United States Code, with respect to target firms; and

(E) initial public offerings with respect to target firms.

Section 15G of the Securities Exchange Act of 1934 (15 U.S.C. 78o–11) is amended—

(1) in subsection (a)(3)—

(A) in subparagraph (A), by striking “or” at the end;

(B) in subparagraph (B), by striking “and” at the end and inserting “or”; and

(C) by adding at the end the following:

“(C) a manager of a collateralized debt obligation; and”;

(2) by redesignating subsection (i) as subsection (j); and

(3) by inserting after subsection (h) the following:

“(i) Rules of construction.—With respect to a securitizer described in subsection (a)(3)(C)—

“(1) any provision of this section that requires that securitizer to retain a portion of the credit risk for an asset that such securitizer does not hold, or has never held, shall be construed as requiring that securitizer to obtain that portion of the credit risk for that asset; and

“(2) any reference in this section to an asset transferred by the securitizer shall be construed to include any transfer caused by the securitizer.”.

It shall be unlawful to conduct any activity, including by entering into an agreement or contract, engaging in a transaction, or structuring an entity, to willfully evade or attempt to evade any provision of this Act.

If any provision of this Act or the application of such a provision to any person or circumstance is held to be invalid or unconstitutional, the remainder of this Act and the application of the provisions of this Act to any person or circumstance shall remain and shall not be affected by that holding.