Sponsor
James Conley Justice
Senator · R-WV
Senator · R-WV
The bill trades reduced automatic disqualifications and more targeted, predictable enforcement for increased agency discretion and potential delays—improving flexibility and confidentiality for firms but raising risks of uneven application and added compliance burdens.
Financial institutions: the CFTC and SEC must issue consistent, joint rules within one year, reducing cross-agency uncertainty and making compliance more predictable.
Investors and the public: disqualification decisions are tied to public interest and investor-protection considerations rather than automatic technical triggers, aligning enforcement with investor safety.
Financial institutions: regulators must consider mitigating factors and limit disqualifications to the same legal entity and business line, allowing targeted enforcement instead of broad, collateral penalties.
Investors, taxpayers, and market participants: giving agencies broad discretion to override automatic disqualifications could create perceptions (or realities) of uneven enforcement or regulatory forbearance.
Investors and customers: delaying the automatic effect of disqualifications until regulators make a determination can prolong potential risks to investors if regulators do not act promptly.
Financial institutions and SROs: joint rulemaking and new procedures may increase compliance costs and administrative burden as firms adapt to unified processes and possible new filings.
Based on analysis of 2 sections of legislative text.
Requires SEC and CFTC to adopt joint rules so entities aren’t automatically disqualified unless a regulator affirmatively decides to apply a disqualifying provision.
Official title: Ensure the fairness, transparency, and consistency of disqualifying provisions administered by the Commodity Futures Trading Commission and the Securities and Exchange Commission, and for other purposes.
Introduced July 27, 2026 by James Conley Justice · Last progress July 27, 2026
Requires the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to jointly write rules that stop automatic, across-the-board disqualifications of non-natural persons (entities) unless a regulator affirmatively decides to apply them. The rules must create a process for notice, confidentiality where needed, consideration of mitigating factors, and limits on scope so that disqualification is targeted to the same legal entity and business line where the triggering event occurred. The agencies must adopt the joint rules within one year and ensure consistent application across securities and commodities laws, SRO rules, and related regulations. The law preserves the agencies' authority to disqualify when it is necessary and in the public interest for investor protection, but makes automatic ineligibility inapplicable without the new affirmative determination process.