118 HR 4767 RH: Protecting Americans’ Retirement Savings from Politics Act
U.S. House of Representatives
2023-12-19
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.Short title; Table of contents(a)This Act may be cited as the Protecting Americans’ Retirement Savings from Politics Act
. (b)The table of contents for this Act is as follows:Sec. 1. Short title; Table of contents.Title I—Performance over PoliticsSec. 101. Exclusion of certain substantially similar shareholder proposals.Title II—No Expensive, Stifling GovernanceSec. 201. Exclusion of certain shareholder proposals.Title III—Exclusion of certain ESG shareholder proposalsSec. 301. Exclusion of certain ESG shareholder proposals.Title IV—Exclusions available regardless of significant social policy issueSec. 401. Exclusions available regardless of significant social policy issue.Title V—Corporate Governance ExaminationSec. 501. Study of certain issues with respect to shareholder proposals, proxy advisory firms, and the proxy process.Title VI—Registration of proxy advisory firmsSec. 601. Registration of proxy advisory firms.Title VII—Liability for certain failures to disclose material information or making of material misstatementsSec. 701. Liability for certain failures to disclose material information or making of material misstatements.Title VIII—Duties of investment advisors, asset managers, and pension fundsSec. 801. Duties of investment advisors, asset managers, and pension funds.Title IX—Protecting Americans’ SavingsSec. 901. Requirements related to proxy voting.Title X—Empowering ShareholdersSec. 1001. Proxy voting of passively managed funds.Title XI—Protecting Retail Investors’ SavingsSec. 1101. Best interest based on pecuniary factors.Sec. 1102. Study on climate change and other environmental disclosures in municipal bond market.Sec. 1103. Study on solicitation of municipal securities business.<enum>I</enum><header>Performance over Politics</header><section id="H8251D7D384D54E3F832083167185B3D8" section-type="subsequent-section"><enum>101.</enum><header>Exclusion of certain substantially similar shareholder proposals</header><text display-inline="no-display-inline">The Securities and Exchange Commission shall revise the resubmission requirements in section 240.14a-8(i)(12) of title 17, Code of Federal Regulations, to provide that a shareholder proposal may be excluded by an issuer from its proxy or consent solicitation material for a meeting of the shareholders of such issuer if the shareholder proposal addresses substantially the same subject matter as a proposal, or proposals, previously included in the proxy or consent solicitation material for a meeting of the shareholders of such issuer—</text><paragraph id="H0E2739F67A0946198C5717A3FFEB37B7"><enum>(1)</enum><text>for a meeting of the shareholders conducted in the preceding 5 calendar years; and</text></paragraph><paragraph id="H7E41EBBB62A64D2BA141129A19DF5EFC"><enum>(2)</enum><text>if the most recent vote— </text><subparagraph id="H74C49FB67C5A4836ACB56F01CA65862C"><enum>(A)</enum><text>occurred in the preceding 3 calendar years; and</text></subparagraph><subparagraph id="HA7F6299D3BAC4079A0326C03777CF968"><enum>(B)</enum><clause commented="no" display-inline="yes-display-inline" id="H0651522C9D5846738315FFEFB84E4A1B"><enum>(i)</enum><text>if voted on once during such 5-year period, received less than 10 percent of the votes cast; </text></clause><clause id="HA425C657575449C88761D5C2402422C2" indent="up1"><enum>(ii)</enum><text>if voted on twice during such 5-year period, received less than 20 percent of the votes cast; or</text></clause><clause id="H3B0E51FD26444C88953004A901505FDB" indent="up1"><enum>(iii)</enum><text>if voted on three or more times during such 5-year period, received less than 40 percent of the votes cast.</text></clause></subparagraph></paragraph></section><enum>II</enum><header>No Expensive, Stifling Governance</header><section id="H0D42F2DCC5D54672819FE8C440E08ED3" section-type="subsequent-section"><enum>201.</enum><header>Exclusion of certain shareholder proposals</header><subsection id="H3010F13473BA4C93BF400B2CAE9407D0" display-inline="no-display-inline"><enum>(a)</enum><header>Exclusion of certain shareholder proposals</header><text display-inline="yes-display-inline">A shareholder proposal submitted to an issuer pursuant to section 240.14a-8 of title 17, Code of Federal Regulations, may be excluded by an issuer from its proxy or consent solicitation material for a meeting of the shareholders of such issuer if the shareholder proposal—</text><paragraph id="H3B16A41E72A04D1999072836A3618D8F"><enum>(1)</enum><text display-inline="yes-display-inline">has been substantially implemented by the issuer by implementing policies, practices, or procedures that compare favorably with the guidelines of the proposal and address the proposal’s underlying concerns; or</text></paragraph><paragraph id="H2D1CE193F12F4388B16488144839AD13"><enum>(2)</enum><text display-inline="yes-display-inline">substantially duplicates by having the same principal thrust or principal focus as another proposal previously submitted to the issuer by another proponent that will be included in such material.</text></paragraph></subsection><subsection id="H7621123AE150484BA6DBAF135BEB8A97"><enum>(b)</enum><header>Nullification of proposed rule</header><text>The Securities and Exchange Commission may not finalize or apply the positions contained in the proposed rule entitled <quote>Substantial Implementation, Duplication, and Resubmission of Shareholder Proposals under Exchange Act Rule 14a-8</quote> (87 Fed. Reg. 45052), issue any substantially similar rule, or apply any substantially similar rule, including with respect to a no-action or other interpretive request.</text></subsection></section><enum>III</enum><header>Exclusion of certain ESG shareholder proposals</header><section id="H26FB77F5F44B4E469F89D125AFD5FDD7" section-type="subsequent-section"><enum>301.</enum><header>Exclusion of certain ESG shareholder proposals</header><text display-inline="no-display-inline">A shareholder proposal submitted to an issuer pursuant to section 240.14a-8 of title 17, Code of Federal Regulations, may be excluded by an issuer from its proxy or consent solicitation material for a meeting of the shareholders of such issuer if the subject matter of the shareholder proposal is environmental, social, or political (or a similar subject matter).</text></section><enum>IV</enum><header>Exclusions available regardless of significant social policy issue</header><section id="H8C47CF74FDAC4FDBB13FE4124FD8668E" section-type="subsequent-section"><enum>401.</enum><header>Exclusions available regardless of significant social policy issue</header><text display-inline="no-display-inline">An issuer may exclude a shareholder proposal pursuant to section 240.14a-8(i) of title 17, Code of Federal Regulations, without regard to whether such shareholder proposal relates to a significant social policy issue. </text></section><enum>V</enum><header>Corporate Governance Examination</header><section id="HEF58071D65D34A24BEA4CB4DF5B26F75" section-type="subsequent-section"><enum>501.</enum><header>Study of certain issues with respect to shareholder proposals, proxy advisory firms, and the proxy process</header><text display-inline="no-display-inline">Section 4(j) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78d">15 U.S.C. 78d(j)</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" id="HB70051C619B141A085DB123060A5DCA5" display-inline="no-display-inline" changed="added" reported-display-style="italic" committee-id="HBA00"><paragraph id="HCF1EAB5B4B7F4B7ABB3A6A2CB4B4FED1"><enum>(10)</enum><header>Study of certain issues with respect to shareholder proposals, proxy advisory firms, and the proxy process</header><subparagraph id="H1A07FAF6257244D8896C3569CABAC12E"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">Not later than 180 days after the date of the enactment of this paragraph, and every 5 years thereafter, the Commission shall conduct a comprehensive study on shareholder proposals, proxy advisory firms, and the proxy process.</text></subparagraph><subparagraph id="H8078765F2E3B45BFB5FD8C0B9C82216D"><enum>(B)</enum><header>Scope of study</header><text>The studies required under subparagraph (A) shall cover—</text><clause id="H9E2FDA8004B246C6B354A7BCF4AF9884"><enum>(i)</enum><text>the previous 10 years, with respect to the initial study; and</text></clause><clause id="H0F64F0E70EF243D8BEDE44E0E1B09560"><enum>(ii)</enum><text>the previous 5 years, with respect to each other study.</text></clause></subparagraph><subparagraph id="HC9DE00DEFBF74518A6556F058333C0D7"><enum>(C)</enum><header>Contents</header><text display-inline="yes-display-inline">Each study required under subparagraph (A) shall address the following issues:</text><clause id="H0BB1678C3EA54AC9B5A2CAC77F82FEBF"><enum>(i)</enum><text>The financial and other incentives and obligations of all groups involved in the proxy process.</text></clause><clause id="HB82F860700CC4713BDDD6D455D54DFFF"><enum>(ii)</enum><text>A consideration of whether financial and other incentives have created a process that no longer serves the economic interests of long-term retail investors.</text></clause><clause id="HD59963B876E148F6A2396422C098694B"><enum>(iii)</enum><text display-inline="yes-display-inline">An analysis of whether regulations and financial incentives have created and protected the outsized influence of proxy advisors or a duopoly in proxy advice, and if so, what are the benefits and costs of that outsized influence or duopoly.</text></clause><clause id="H7FB4A4823F484EEFAFE96D89B2E55869"><enum>(iv)</enum><text>The costs incurred by issuers in responding to politically-, environmentally-, or socially-motivated shareholder proposals.</text></clause><clause id="H2DE36F8B297B4B69A45DC7853879764A"><enum>(v)</enum><text display-inline="yes-display-inline">An assessment, including a cost-benefit analysis, of the adequacy of the current submission thresholds in Rule 14a-8 (17 CFR 240.14a-8) to ensure that shareholder proponents have demonstrated a meaningful economic stake in a company, which is appropriate to effectively serve markets and shareholders at large.</text></clause><clause id="H9C4377D4937045039BD1EF29B44D4391"><enum>(vi)</enum><text>An examination of the extent to which the politicization of the shareholder proposal process is increasing the operating costs of public companies.</text></clause><clause id="HD4061135DEFA44EBA14340C664CBDE13"><enum>(vii)</enum><text>An analysis of the impact that shareholder proposals have on discouraging private companies from going public.</text></clause><clause id="HBF01546E790441A3B7F5DA8789BA87E4"><enum>(viii)</enum><text>An evaluation of the risk that shareholder proposals may contribute to the balkanization of the U.S. economy over time.</text></clause><clause id="HF839B41A5EE04ECE9D06166AE61BCF2D"><enum>(ix)</enum><text>A thorough assessment of the economic analysis, if any, conducted by proxy advisory firms and institutional shareholders when recommending or voting in favor of shareholder proposals.</text></clause><clause id="H87D1A45E16AA4AD2949E4BC0E5DBDABE"><enum>(x)</enum><text>A review of the extent to which institutional investors, who owe fiduciary duties, rely on proxy advisory firm recommendations.</text></clause><clause id="H348006E8850C4C7DAFB0A2B79E4B591C"><enum>(xi)</enum><text display-inline="yes-display-inline">An assessment of whether, in light of their significant influence on corporate actions and vote outcomes, proxy advisors are subject to sufficient and effective regulation to ensure that their policies and recommendations are accurate, free of conflicts, and benefit the economic best interest of shareholders at large.</text></clause></subparagraph><subparagraph id="H91EB85FF4D0841C58700366D5E053A67"><enum>(D)</enum><header>Report</header><text display-inline="yes-display-inline">At the completion of each study required under subparagraph (A) the Commission shall issue a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives that includes the results of the study.</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></section><enum>VI</enum><header>Registration of proxy advisory firms</header><section id="H897629C8A6C04435923D75089B7767DF" section-type="subsequent-section"><enum>601.</enum><header>Registration of proxy advisory firms</header><subsection id="H976B68149E6D459AB96B52CC0B2E3C82"><enum>(a)</enum><header>Amendment</header><text display-inline="yes-display-inline">The Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78a">15 U.S.C. 78a et seq.</external-xref>) is amended by inserting after section 15G the following new section:</text><quoted-block id="HBF34374D78EB4D168F407835D3EFDCA0" changed="added" reported-display-style="italic" committee-id="HBA00"><section id="H0C55D820132043B0A8550A070FE51032"><enum>15H.</enum><header>Registration of proxy advisory firms</header><subsection id="HE4BF980256284203874735530658FC59"><enum>(a)</enum><header>Conduct prohibited</header><text>It shall be unlawful for a proxy advisory firm to make use of the mails or any means or instrumentality of interstate commerce to provide proxy voting advice, research, analysis, ratings or recommendations to any client, unless such proxy advisory firm is registered under this section.</text></subsection><subsection id="HBDD039314A8D46CC871987E30E304ACD"><enum>(b)</enum><header>Registration procedures</header><paragraph id="HC3567356640B4AFD816E0A7AC2083477"><enum>(1)</enum><header>Application for registration</header><subparagraph id="H6CB124C91A404CB8A98927117B5B9E8E"><enum>(A)</enum><header>In general</header><text>A proxy advisory firm shall file with the Commission an application for registration, in such form as the Commission shall require, by rule, and containing the information described in subparagraph (B).</text></subparagraph><subparagraph id="H6B38661C983B45D88D57261D74904A65"><enum>(B)</enum><header>Required information</header><text>An application for registration under this section shall contain—</text><clause id="HF09088E25AE14A638F9EBABE8513A860"><enum>(i)</enum><text>a certification that the applicant is able to consistently provide proxy advice based on accurate information;</text></clause><clause id="H6BA93BEC2CAE48439FBF2AE26135AEBB"><enum>(ii)</enum><text display-inline="yes-display-inline">with respect to clients of the applicant that vote shares held on behalf of shareholders, a certification that the applicant—</text><subclause id="H2756CAE0926C46FC9947A1D83BE9214A"><enum>(I)</enum><text>will provide proxy voting advice only in the best economic interest of those shareholders; and</text></subclause><subclause id="HDBDC0CB43C4B48B9B23CD1C8F8D736CE"><enum>(II)</enum><text>has the requisite expertise to ensure that voting recommendations are in the best economic interest of those shareholders;</text></subclause></clause><clause id="HF1E1EC4CC3D84CD282967F767172DB3D"><enum>(iii)</enum><text display-inline="yes-display-inline">information on the procedures and methodologies that the applicant uses to ensure that proxy voting recommendations are in the best economic interest of the ultimate shareholders;</text></clause><clause id="H911D3619A3F84D0BAA155C5AA3D09DC5"><enum>(iv)</enum><text display-inline="yes-display-inline">information on the organizational structure of the applicant;</text></clause><clause id="HFDC6992C699D467CB63C1BBCB7CADF83"><enum>(v)</enum><text>an explanation of whether or not the applicant has in effect a code of ethics, and if not, the reasons therefor;</text></clause><clause id="H38026C0544314EA399B469C4E968BAC0"><enum>(vi)</enum><text display-inline="yes-display-inline">a description of any potential or actual conflict of interest relating to the provision of proxy advisory services, including those arising out of or resulting from the ownership structure of the applicant or the provision of other services by the applicant or any person associated with the applicant;</text></clause><clause id="HAF9E1FAD32C04DCE9AF6E78CE465EA48"><enum>(vii)</enum><text display-inline="yes-display-inline">the policies and procedures in place to publicly disclose and manage conflicts of interest under subsection (f);</text></clause><clause id="H8CB4718C03EA415CB2E910E5EACD61F5"><enum>(viii)</enum><text>information related to the professional and academic qualifications of staff tasked with providing proxy advisory services; and</text></clause><clause id="HD64CA44C20174A9E80C79AEA2900C23F"><enum>(ix)</enum><text>any other information and documents concerning the applicant and any person associated with such applicant as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors.</text></clause></subparagraph></paragraph><paragraph id="HA546DB4218A64CE0972DB4703DD4F8C3"><enum>(2)</enum><header>Review of application</header><subparagraph id="H066ACA3CEEFC4628A926744A0168B597"><enum>(A)</enum><header>Initial determination</header><text>Not later than 90 days after the date on which the application for registration is filed with the Commission under paragraph (1) (or within such longer period as to which the applicant consents) the Commission shall—</text><clause id="HE5CB9A7E6C754F9497233DB796D7D035"><enum>(i)</enum><text>by order, grant registration; or</text></clause><clause id="H488DB15973784CCEBF7BBA55E640311D"><enum>(ii)</enum><text>institute proceedings to determine whether registration should be denied.</text></clause></subparagraph><subparagraph id="H4065BEF8BD3241FB9082A0F6C07B2669"><enum>(B)</enum><header>Conduct of proceedings</header><clause id="HD7802D8FCA1B4475AA1DD1BCC03492A7"><enum>(i)</enum><header>Content</header><text>Proceedings referred to in subparagraph (A)(ii) shall—</text><subclause id="HB871DA5D31634E80BF361E635E7988F3"><enum>(I)</enum><text>include notice of the grounds for denial under consideration and an opportunity for hearing; and</text></subclause><subclause id="H9F8D13B7005E4E5896B3214EBD8DC0AC"><enum>(II)</enum><text>be concluded not later than 120 days after the date on which the application for registration is filed with the Commission under paragraph (1).</text></subclause></clause><clause id="HF818EF3F138E42BF97454E94C6E2FA8A"><enum>(ii)</enum><header>Determination</header><text>At the conclusion of such proceedings, the Commission, by order, shall grant or deny such application for registration.</text></clause><clause id="H590C6E1881AC48E5B73D5F0CA5E111DB"><enum>(iii)</enum><header>Extension authorized</header><text>The Commission may extend the time for conclusion of such proceedings for not longer than 90 days, if the Commission finds good cause for such extension and publishes its reasons for so finding, or for such longer period as to which the applicant consents.</text></clause></subparagraph><subparagraph id="HAC65BF6C3AC14E2296F6B17194CBE380"><enum>(C)</enum><header>Grounds for decision</header><text>The Commission shall grant registration under this subsection—</text><clause id="H48996C631CD447AA85C4908567AC37CF"><enum>(i)</enum><text>if the Commission finds that the requirements of this section are satisfied; and</text></clause><clause id="H14648E4CBBCF4F8DB5A64302D36A2FBC"><enum>(ii)</enum><text>unless the Commission finds (in which case the Commission shall deny such registration) that—</text><subclause id="HF4542965960848D3A6AAFFBA69250D47"><enum>(I)</enum><text display-inline="yes-display-inline">the applicant has failed to certify to the Commission’s satisfaction that it is able to consistently provide proxy advice based on accurate information and to materially comply with the procedures and methodologies disclosed under paragraph (1)(B) and with subsections (f) and (g); or</text></subclause><subclause id="HC29AA23CB3A2423F80AF79AC37005AB5"><enum>(II)</enum><text>if the applicant were so registered, its registration would be subject to suspension or revocation under subsection (d).</text></subclause></clause></subparagraph></paragraph><paragraph id="H27A8F4FFE4104424B84F861A17A4C8F5"><enum>(3)</enum><header>Public availability of information</header><text>Subject to section 24, the Commission shall make the information and documents submitted to the Commission by a proxy advisory firm in its completed application for registration, or in any amendment submitted under paragraph (1) or (2) of subsection (c), publicly available on the Commission’s website, or through another comparable, readily accessible means.</text></paragraph></subsection><subsection id="H9B4264D94EDA47B68EA6B9D98AC89EE9"><enum>(c)</enum><header>Update of registration</header><paragraph id="H36187DCE616D46AE85B4543C0D5F3488"><enum>(1)</enum><header>Update</header><text display-inline="yes-display-inline">Each registered proxy advisory firm shall promptly amend and update its application for registration under this section if any information or document provided therein becomes materially inaccurate, except that a registered proxy advisory firm is not required to amend the information required to be filed under subsection (b)(1)(B)(i) by filing information under this paragraph, but shall amend such information in the annual submission of the organization under paragraph (2) of this subsection.</text></paragraph><paragraph id="H60051D3CD7A449CDB56E51DAFA7251BB"><enum>(2)</enum><header>Certification</header><text>Not later than 90 calendar days after the end of each calendar year, each registered proxy advisory firm shall file with the Commission an amendment to its registration, in such form as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors—</text><subparagraph id="H1AE19C3D505F42DE95100266E3219F09"><enum>(A)</enum><text display-inline="yes-display-inline">certifying that the information and documents in the application for registration of such registered proxy advisory firm continue to be accurate in all material respects; and</text></subparagraph><subparagraph id="H93A70FACCEB14FCBAFCBD73AB3F99260"><enum>(B)</enum><text>listing any material change that occurred to such information or documents during the previous calendar year.</text></subparagraph></paragraph></subsection><subsection id="HE5F3AB1E698A43499B776060FA70DC96"><enum>(d)</enum><header>Censure, denial, or suspension of registration; notice and hearing</header><text>The Commission, by order, shall censure, place limitations on the activities, functions, or operations of, suspend for a period not exceeding 12 months, or revoke the registration of any registered proxy advisory firm if the Commission finds, on the record after notice and opportunity for hearing, that such censure, placing of limitations, suspension, or revocation is necessary for the protection of investors and in the public interest and that such registered proxy advisory firm, or any person associated with such an organization, whether prior to or subsequent to becoming so associated—</text><paragraph id="HE513BB7A4B864A1A9B2EDB1A5DF7F390"><enum>(1)</enum><text>has committed or omitted any act, or is subject to an order or finding, enumerated in subparagraph (A), (D), (E), (H), or (G) of section 15(b)(4), has been convicted of any offense specified in section 15(b)(4)(B), or is enjoined from any action, conduct, or practice specified in subparagraph (C) of section 15(b)(4), during the 10-year period preceding the date of commencement of the proceedings under this subsection, or at any time thereafter;</text></paragraph><paragraph id="H659C9036771D4C779F8192039AF33759"><enum>(2)</enum><text>has been convicted during the 10-year period preceding the date on which an application for registration is filed with the Commission under this section, or at any time thereafter, of—</text><subparagraph id="H19424B5140BD40C4A7785EC9D82EDCF1"><enum>(A)</enum><text>any crime that is punishable by imprisonment for 1 or more years, and that is not described in section 15(b)(4)(B); or</text></subparagraph><subparagraph id="H059A01ED435F430DB6A593705484FA41"><enum>(B)</enum><text>a substantially equivalent crime by a foreign court of competent jurisdiction;</text></subparagraph></paragraph><paragraph id="HF741AEF682C44FB69B3B29A52AC6E256"><enum>(3)</enum><text>is subject to any order of the Commission barring or suspending the right of the person to be associated with a registered proxy advisory firm;</text></paragraph><paragraph id="HB34FC49F24E3418DA08BEFA631F10E65"><enum>(4)</enum><text display-inline="yes-display-inline">fails to furnish the certifications required under subsections (b)(2)(C)(ii)(I) and (c)(2);</text></paragraph><paragraph id="H7ACE1EB2696641C2BE41801D71B05A03"><enum>(5)</enum><text>has engaged in one or more prohibited acts enumerated in paragraph (1);</text></paragraph><paragraph id="H623CE94F6E4D4E1DAC966278BDF66DC3"><enum>(6)</enum><text display-inline="yes-display-inline">fails to maintain adequate financial and managerial resources to consistently offer advisory services to clients that vote shares held on behalf of shareholders consistent with the best economic interest of those shareholders, including by failing to comply with subsections (f) or (g);</text></paragraph><paragraph id="H6F6E6960166D4ADDBB11EE58ADB85BD0"><enum>(7)</enum><text display-inline="yes-display-inline">fails to maintain adequate expertise to ensure that proxy advisory services for clients that vote shares held on behalf of shareholders are tied to the best economic interest of those shareholders; or</text></paragraph><paragraph id="H9F96B1D5DE444F869058C61A2DE5A17F" commented="no"><enum>(8)</enum><text>engages in a prohibited act enumerated in subsection (j).</text></paragraph></subsection><subsection id="H2BB4B90370DD455E96E95183CD85257C"><enum>(e)</enum><header>Termination of registration</header><paragraph id="H34B3772D629445B78BFE66B6EC33691A"><enum>(1)</enum><header>Voluntary withdrawal</header><text>A registered proxy advisory firm may, upon such terms and conditions as the Commission may establish as necessary in the public interest or for the protection of investors, which terms and conditions shall include at a minimum that the registered proxy advisory firm will no longer conduct such activities as to bring it within the definition of proxy advisory firm in section 3(a)(82), withdraw from registration by filing a written notice of withdrawal to the Commission.</text></paragraph><paragraph id="H682159DC688945E6BFB310632DB5173E"><enum>(2)</enum><header>Commission authority</header><text>In addition to any other authority of the Commission under this title, if the Commission finds that a registered proxy advisory firm is no longer in existence or has ceased to do business as a proxy advisory firm, the Commission, by order, shall cancel the registration under this section of such registered proxy advisory firm.</text></paragraph></subsection><subsection id="H75CE55551F9B4037965CDDEDA18FD9DE"><enum>(f)</enum><header>Management of conflicts of interest</header><paragraph id="H734AD9D2AD484AE5A1FEDE6BCB33114A"><enum>(1)</enum><header>Organization policies and procedures</header><text display-inline="yes-display-inline">Each registered proxy advisory firm shall establish, maintain, and enforce written policies and procedures reasonably designed, taking into consideration the nature of the business of such registered proxy advisory firm and associated persons, to publicly disclose and manage any conflicts of interest that arise or would reasonably be expected to arise from such business.</text></paragraph><paragraph id="HF905F0588FCE4E0881A71392ECC68D04"><enum>(2)</enum><header>Commission authority</header><text>The Commission shall, within one year of the date of enactment of this section, issue final rules to prohibit, or require the management and public disclosure of, any conflicts of interest relating to the offering of proxy advisory services by a registered proxy advisory firm, including, without limitation, conflicts of interest relating to—</text><subparagraph id="H3BD4E163C2814BBA8AEDE5C6B32D9D52"><enum>(A)</enum><text>the manner in which a registered proxy advisory firm is compensated by the client, any affiliate of the client, or any other person for providing proxy advisory services;</text></subparagraph><subparagraph id="HA42328FBAEB9434BBD6A13C6EEC341F8"><enum>(B)</enum><text>business relationships, ownership interests, or any other financial or personal interests between a registered proxy advisory firm, or any person associated with such registered proxy advisory firm, and any client, or any affiliate of such client;</text></subparagraph><subparagraph id="HF2CA8307F09247E4A44D5115C7A51508"><enum>(C)</enum><text>the formulation of proxy voting policies;</text></subparagraph><subparagraph id="HD4242383119D4797A17A8D9DBB3379DE"><enum>(D)</enum><text display-inline="yes-display-inline">the execution, or assistance with the execution, of proxy votes if such votes are based upon recommendations made by the proxy advisory firm in which a person other than the issuer is a proponent; and</text></subparagraph><subparagraph id="HF66BE77F3920496AAD8EF264758EB779"><enum>(E)</enum><text>any other potential conflict of interest, as the Commission deems necessary or appropriate in the public interest or for the protection of investors.</text></subparagraph></paragraph><paragraph id="H4C7CB61D3D7D44DB8F631FB1BF8E84B9"><enum>(3)</enum><header>Disclosure on factors influencing recommendations</header><text display-inline="yes-display-inline">Each registered proxy advisory firm shall annually disclose to the Commission and make publicly available the economic and other factors that a reasonable investor would expect to influence the recommendations of such proxy advisory firm, including the ownership composition of such proxy advisory firm and any meetings with, or feedback received from, outside entities.</text></paragraph></subsection><subsection id="HA95D811ABB344B5CA3A8E3D232D4596E"><enum>(g)</enum><header>Reliability of proxy advisory firm services</header><paragraph id="H2E38E2F2432D4BCB80AC5FC536D5848B"><enum>(1)</enum><header>In general</header><text display-inline="yes-display-inline">Each registered proxy advisory firm shall—</text><subparagraph id="HF4903DCFDFF947C3B2A8DAB25F06264B"><enum>(A)</enum><text display-inline="yes-display-inline">have staff and other resources sufficient to produce proxy voting recommendations that are based on accurate and current information and designed for clients that vote shares held on behalf of shareholders to advance the best economic interest of those shareholders;</text></subparagraph><subparagraph id="HACC315E03F114844B6C4E4FD821DE42F"><enum>(B)</enum><text display-inline="yes-display-inline">implement procedures that permit issuers that are the subject of proxy voting recommendations—</text><clause id="HF169B34B2BD04F319752CA63EAE7B706"><enum>(i)</enum><text>access in a reasonable time to data and information used to make recommendations; and</text></clause><clause id="HFFD4C36DB4D248F49D9FFE4560BD67B5"><enum>(ii)</enum><text display-inline="yes-display-inline">a reasonable opportunity to provide meaningful comment and corrections to such data and information, including the opportunity to present (in person or telephonically) details to the person responsible for developing such data and information prior to the publication of proxy voting recommendations to clients;</text></clause></subparagraph><subparagraph id="HB47900D149C44C3597E3CE2DD31F3DE0" commented="no"><enum>(C)</enum><text>employ an ombudsman to receive complaints about the accuracy of information used in making recommendations from the companies that are the subject of the proxy advisory firm’s voting recommendations and seek to resolve those complaints in a timely fashion and prior to the publication of proxy voting recommendations to clients; and</text></subparagraph><subparagraph id="H74EF52CD94364B189E74C2095A0B8033"><enum>(D)</enum><text display-inline="yes-display-inline">if the ombudsman is unable to resolve a complaint to a company’s satisfaction prior to the publication of proxy voting recommendations to clients, include in the final report of the firm to clients—</text><clause id="H133B432920994571AA435E8CE53585D8"><enum>(i)</enum><text>a statement detailing the company’s complaints, if requested in writing by the company; and</text></clause><clause id="HE7EBA7CAB6594371A332DC74AF2D0ECB"><enum>(ii)</enum><text display-inline="yes-display-inline">a statement explaining why the proxy voting recommendation is in the best economic interest of shareholders.</text></clause></subparagraph></paragraph><paragraph id="H8F63F1EEA9DA43308D7C771D8ECBC35E"><enum>(2)</enum><header>Definitions</header><text>In this subsection:</text><subparagraph id="H18796F0D09BD4631A39029E11CEE4630"><enum>(A)</enum><header>Data and information used to make recommendations</header><text display-inline="yes-display-inline">The term <term>data and information used to make voting recommendations</term>—</text><clause id="H457A0998585448D48D4B6F50D3E23D9E"><enum>(i)</enum><text display-inline="yes-display-inline">means the financial, operational, or descriptive data and information on an issuer used by proxy advisory firms and any contextual or substantive analysis impacting the recommendation; and</text></clause><clause id="H55585A4E77954718862A63D2D57CB938"><enum>(ii)</enum><text>does not include the entirety of the proxy advisory firm’s final report to its clients.</text></clause></subparagraph><subparagraph id="H7ED273392DA44F98A2B2171FF29238A0" commented="no"><enum>(B)</enum><header>Reasonable time</header><text>The term <term>reasonable time</term>—</text><clause id="H6F50269D83304FEE8A4A7151A314D870" commented="no"><enum>(i)</enum><text display-inline="yes-display-inline">means not less than 1 week before the publication of proxy voting recommendations for clients; and</text></clause><clause id="H44131B27F60C4FA39CC4531003F67064" commented="no"><enum>(ii)</enum><text>shall not otherwise interfere with a proxy advisory firm’s ability to provide its clients with timely access to accurate proxy voting research, analysis, or recommendations.</text></clause></subparagraph></paragraph></subsection><subsection id="HBC8014302C61495681117F74E911B553" commented="no"><enum>(h)</enum><header>Private right of action with respect to illegal recommendations</header><text display-inline="yes-display-inline">Any proxy advisory firm that endorses a proposal that is not supported by the issuer but is approved and subsequently found by a court of competent jurisdiction to violate State or Federal law shall be liable to the applicable issuer for the costs associated with the approval of such proposal, including implementation costs and any penalties incurred by the issuer.</text></subsection><subsection id="HF895FE0D42994FEDB6DEF6FFD8174178"><enum>(i)</enum><header>Designation of compliance officer</header><text display-inline="yes-display-inline">Each registered proxy advisory firm shall designate an individual who reports directly to senior management as responsible for administering the policies and procedures that are required to be established pursuant to subsections (f) and (g), and for ensuring compliance with the securities laws and the rules and regulations thereunder, including those promulgated by the Commission pursuant to this section.</text></subsection><subsection id="HB23C0975F4DE4AD2ACE74CAE0C8F0558"><enum>(j)</enum><header>Prohibited conduct</header><paragraph id="H3D46BF29725B424FA38060B17F67DF7C"><enum>(1)</enum><header>Prohibited acts and practices</header><text display-inline="yes-display-inline">Not later than one year after the date of enactment of this section, the Commission shall issue final rules to prohibit any act or practice relating to the offering of proxy advisory services by a registered proxy advisory firm that the Commission determines to be unfair, coercive, or abusive, including any act or practice relating to—</text><subparagraph id="HDEC099A528E5434B810EC44DBE8CFFEB"><enum>(A)</enum><text display-inline="yes-display-inline">advisory or consulting services (offered directly or indirectly, including through an affiliate) related to corporate governance issues; or</text></subparagraph><subparagraph id="H9E45C4FEAA9B42D0AB1E1B003357B462"><enum>(B)</enum><text display-inline="yes-display-inline">modifying a voting recommendation or otherwise departing from its adopted systematic procedures and methodologies in the provision of proxy advisory services, based on whether an issuer, or affiliate thereof, subscribes or will subscribe to other services or product of the registered proxy advisory firm or any person associated with such organization.</text></subparagraph></paragraph><paragraph id="H09AFA656D0154C59981CC0B32C395B12"><enum>(2)</enum><header>Rule of construction</header><text>Nothing in paragraph (1), or in any rules or regulations adopted thereunder, may be construed to modify, impair, or supersede the operation of any of the antitrust laws (as defined in the first section of the Clayton Act, except that such term includes section 5 of the Federal Trade Commission Act, to the extent that such section 5 applies to unfair methods of competition).</text></paragraph></subsection><subsection id="HB7C4E5C03DF64B04AA9E08C70C7DDEC0"><enum>(k)</enum><header>Statements of financial condition</header><text>Each registered proxy advisory firm shall, on a confidential basis, file with the Commission, at intervals determined by the Commission, such financial statements, certified (if required by the rules or regulations of the Commission) by an independent public auditor, and information concerning its financial condition, as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors.</text></subsection><subsection id="HFB221533D0E84015962F76EB91FA3B6D"><enum>(l)</enum><header>Annual report</header><paragraph id="H8B4206182C114044B5B6BD44104A4A8A"><enum>(1)</enum><header>In general</header><text>Each registered proxy advisory firm shall, not later than 90 calendar days after the end of each fiscal year, file with the Commission and make publicly available an annual report in such form as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors.</text></paragraph><paragraph id="HC647D0C8DC784C459A29FD51819050E0"><enum>(2)</enum><header>Contents</header><text>Each annual report required under paragraph (1) shall include, at a minimum, disclosure by the registered proxy advisory firm of the following:</text><subparagraph id="HEFBAFE5B09724D5BA3E1ED11CCFF5C62"><enum>(A)</enum><text display-inline="yes-display-inline">A list of shareholder proposals the staff of the registered proxy advisory firm reviewed in the prior fiscal year.</text></subparagraph><subparagraph id="HB7CB62220D7B4543A68FB6BD44295FF1"><enum>(B)</enum><text>A list of the recommendations made in the prior fiscal year.</text></subparagraph><subparagraph id="H0392A82497394477B419AB0CF3DE0B2E"><enum>(C)</enum><text>The economic analysis conducted to determine that final recommendations provided in the prior fiscal year (other than recommendations relating to an issuer-sponsored proposal or recommendations consistent with that of a board of directors composed of a majority of independent directors) delivered to clients that vote shares held on behalf of shareholders were in the best economic interest of those shareholders.</text></subparagraph><subparagraph id="H7FFA23418481404EBEBCFF22CF36A4E6"><enum>(D)</enum><text>The staff who reviewed and made recommendations on such proposals in the prior fiscal year.</text></subparagraph><subparagraph id="HC35DB38A354F4C28BE4C60D7D276696D"><enum>(E)</enum><text display-inline="yes-display-inline">The qualifications of such staff to ensure that each of the recommendations for clients that vote shares held on behalf of shareholders were tied to the best economic interest of those shareholders.</text></subparagraph><subparagraph id="H9EF8CB5990FC45599CA80BA033EF9DA4"><enum>(F)</enum><text>The recommendations made in the prior fiscal year where the proponent of such recommendation was a client of or received services from the proxy advisory firm.</text></subparagraph><subparagraph id="HA9E44FF1347D44BF893A11AF0B0D7F69"><enum>(G)</enum><text>A certification by the chief executive officer, chief financial officer, and the primary executive responsible for overseeing the compilation and dissemination of proxy voting advice that the final recommendations (other than recommendations relating to an issuer-sponsored proposal or recommendations consistent with that of a board of directors composed of a majority of independent directors) delivered to clients that vote shares held on behalf of shareholders in the last fiscal year—</text><clause id="H1E15E54C1D2647D6B8622447CB4A40F7"><enum>(i)</enum><text>were based on internal controls and procedures that are designed to ensure accurate information and that such internal controls and procedures are effective;</text></clause><clause id="HE731FD577E86445FB5D83C0BA9BD3E43"><enum>(ii)</enum><text>do not violate applicable State or Federal law; and</text></clause><clause id="H70EF1E37664745B9A7465ABB051751E6"><enum>(iii)</enum><text>were based on the best economic interest of those shareholders.</text></clause></subparagraph><subparagraph id="H453A2A55A4BC4E05BC4119D420ED5B7A"><enum>(H)</enum><text>The economic and other factors that a reasonable investor would expect to influence the recommendations of such proxy advisory firm, including the ownership composition of such proxy advisory firm.</text></subparagraph></paragraph></subsection><subsection id="H36C4D14D85BA4649B3C60A5119F28321"><enum>(m)</enum><header>Transparent policies</header><text display-inline="yes-display-inline">Each registered proxy advisory firm shall file with the Commission and make publicly available its methodology for the formulation of proxy voting policies and voting recommendations to clients that vote shares held on behalf of shareholders and how that methodology ensures that the firm’s voting recommendations are in the best economic interest of those shareholders.</text></subsection><subsection id="H9526C836E27B477C95F5FE4FEB48C0A1"><enum>(n)</enum><header>Rules of construction</header><text>Registration under and compliance with this section does not constitute a waiver of, or otherwise diminish, any right, privilege, or defense that a registered proxy advisory firm may otherwise have under any provision of State or Federal law, including any rule, regulation, or order thereunder.</text></subsection><subsection id="H972325E59CB147EC88688A52BF23A603"><enum>(o)</enum><header>Regulations</header><paragraph id="HF0DAFC07D9A343FF8CC4E0AC09DE0495"><enum>(1)</enum><header>New provisions</header><text>Such rules and regulations as are required by this section or are otherwise necessary to carry out this section, including the application form required under subsection (a)—</text><subparagraph id="HAFF6281D03EF4A45B04679AEFF11ED4F"><enum>(A)</enum><text>shall be issued by the Commission, not later than 180 days after the date of enactment of this section; and</text></subparagraph><subparagraph id="HFBCEECBCA28C40B99BA4F90AA8553D6E"><enum>(B)</enum><text>shall become effective not later than 1 year after the date of enactment of this section.</text></subparagraph></paragraph><paragraph id="HFC5CF26D9591473590FE27C39A0E9070"><enum>(2)</enum><header>Review of existing regulations</header><text>Not later than 270 days after the date of enactment of this section, the Commission shall—</text><subparagraph id="HF65D148717DD4CBE86214261F7A99797"><enum>(A)</enum><text display-inline="yes-display-inline">review its existing rules and regulations which affect the operations of proxy advisory firms; and</text></subparagraph><subparagraph id="H5AF07BDE787749DFA5D8DAE11484C14B"><enum>(B)</enum><text>amend or revise such rules and regulations in accordance with the purposes of this section, and issue such guidance as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.</text></subparagraph></paragraph></subsection><subsection id="HACACDC95D52E452881F6DE9DA99B897B"><enum>(p)</enum><header>Applicability</header><text>This section, other than subsection (n), which shall apply on the date of enactment of this section, shall apply on the earlier of—</text><paragraph id="H9B60E4314E6B48BF987BC2295DD59792"><enum>(1)</enum><text>the date on which regulations are issued in final form under subsection (o)(1); or</text></paragraph><paragraph id="HF2FD14AF2F4343A8B963F65830F72EAE"><enum>(2)</enum><text>270 days after the date of enactment of this section.</text></paragraph></subsection><subsection id="H27ADDC5C5F0A46CEA687144DCA715423"><enum>(q)</enum><header>Best economic interest defined</header><text display-inline="yes-display-inline">In this section, the term <quote>best economic interest</quote> means decisions that seek to maximize investment returns over a time horizon consistent with the investment objectives and risk management profile of the fund in which the shareholders are invested.</text></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="HB702B56FB377436C92D12FC223CB37F0"><enum>(b)</enum><header>Conforming amendment</header><text display-inline="yes-display-inline">Section 17(a)(1) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78q">15 U.S.C. 78q(a)(1)</external-xref>) is amended by inserting <quote>proxy advisory firm,</quote> after <quote>nationally recognized statistical rating organization,</quote>.</text></subsection><subsection id="HC193A9944B954C50BEC2DE7A7E6DD891"><enum>(c)</enum><header>Proxy advisory firm definitions</header><text display-inline="yes-display-inline">Section 3(a) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)</external-xref>) is amended—</text><paragraph id="H83FCF0F80CD14F5AAFB9104CEB0530CB"><enum>(1)</enum><text>by redesignating the second paragraph (80) (relating to funding portal) as paragraph (81); and</text></paragraph><paragraph id="HE1414AAD5CA4423187FE666CB8D6D8A4"><enum>(2)</enum><text>by adding at the end the following:</text><quoted-block style="OLC" display-inline="no-display-inline" id="H1A61D0D35FFE40269832268C02189DD5" changed="added" reported-display-style="italic" committee-id="HBA00"><paragraph id="H17F84C6668B944B3B4BC2E229A3B79C9" display-inline="no-display-inline"><enum>(82)</enum><header>Proxy advisory firm</header><text display-inline="yes-display-inline">The term <term>proxy advisory firm</term>—</text><subparagraph id="H81D2CF3BD7414759BDBB0EEF1528C8EE" commented="no"><enum>(A)</enum><text display-inline="yes-display-inline">means any person who is primarily engaged in the business of providing proxy voting advice, research, analysis, ratings, or recommendations to clients, which conduct constitutes a solicitation within the meaning of section 14; and</text></subparagraph><subparagraph id="HF86769EDB0244715AB9E1A1BCD05D713"><enum>(B)</enum><text>does not include any person that is exempt under law or regulation from the requirements otherwise applicable to persons engaged in such a solicitation.</text></subparagraph></paragraph><paragraph id="H3EEBF8D376D848AA8720776D1138727A"><enum>(83)</enum><header>Person associated with a proxy advisory firm</header><text display-inline="yes-display-inline">With respect to a proxy advisory firm—</text><subparagraph id="H51A426A992AE4AFB9CA4DD5383B2439B"><enum>(A)</enum><text display-inline="yes-display-inline">a person is <quote>associated</quote> with the proxy advisory firm if the person is—</text><clause id="HA1D1F2BE7D7E4551BE48C4CAB3399A97"><enum>(i)</enum><text>a partner, officer, or director of the proxy advisory firm (or any person occupying a similar status or performing similar functions);</text></clause><clause id="H8DD99172701F424C93BC9024FD4D1C5F"><enum>(ii)</enum><text>a person directly or indirectly controlling, controlled by, or under common control with the proxy advisory firm; </text></clause><clause id="HB4413F3EC9594D0CBABE88DE6316263C"><enum>(iii)</enum><text>an employee of the proxy advisory firm; or</text></clause><clause id="H48516E13AD134C62892032B00B0FDDD8" commented="no"><enum>(iv)</enum><text>a person the Commission determines by rule is controlled by the proxy advisory firm; and</text></clause></subparagraph><subparagraph id="H7A19C57C5FDC441F8A00B043082D5532"><enum>(B)</enum><text display-inline="yes-display-inline">a person is not <quote>associated</quote> with the proxy advisory firm if the person only performs clerical or ministerial functions with respect to a proxy advisory firm. </text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></paragraph></subsection></section><enum>VII</enum><header>Liability for certain failures to disclose material information or making of material misstatements</header><section id="H13903125E18E470C9AC4E90C541EB018" section-type="section-one"><enum>701.</enum><header>Liability for certain failures to disclose material information or making of material misstatements</header><text display-inline="no-display-inline">Section 14 of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78n">15 U.S.C. 78n</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" id="HC9E04C9E8E924A5B976F512A183D8098" display-inline="no-display-inline" changed="added" reported-display-style="italic" committee-id="HBA00"><subsection id="H988A8AAD5AB04CF087A3A8CA5590C24A"><enum>(l)</enum><header>False or misleading statements</header><text display-inline="yes-display-inline">For purposes of section 18, the failure to disclose material information (such as a proxy voting advice business’s methodology, sources of information, or conflicts of interest) or the making of a material misstatement regarding proxy voting advice that makes a recommendation to a security holder as to the security holder’s vote, consent, or authorization on a specific matter for which security holder approval is solicited, and that is furnished by a person that markets the person’s expertise as a provider of such proxy voting advice separately from other forms of investment advice, and sells such proxy voting advice for a fee, shall be considered to be false or misleading with respect to a material fact.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></section><enum>VIII</enum><header>Duties of investment advisors, asset managers, and pension funds</header><section id="H23A0B7C7D0F24847AA47A5E635F5BAC6" commented="no" section-type="subsequent-section"><enum>801.</enum><header>Duties of investment advisors, asset managers, and pension funds</header><text display-inline="no-display-inline">Section 13(f) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78m">15 U.S.C. 78m(f)</external-xref>) is amended by adding at the end the following:</text><quoted-block style="OLC" id="HCB76DCFBAB4F478CA6B5B16EEB929283" display-inline="no-display-inline" changed="added" reported-display-style="italic" committee-id="HBA00"><paragraph id="H292EDF56DF3649969D2BB2EC305E1B1F"><enum>(7)</enum><header>Disclosures by institutional investment managers in connection with proxy advisory firms</header><subparagraph id="H643AA9357A364DF1A6548E00F0A71F72"><enum>(A)</enum><header>In general</header><text>Every institutional investment manager which uses the mails, or any means or instrumentality of interstate commerce in the course of its business as an institutional investment manager, which engages a proxy advisory firm, and which exercises voting power with respect to accounts holding equity securities of a class described in subsection (d)(1) or otherwise becomes or is deemed to become a beneficial owner of any security of a class described in subsection (d)(1) upon the purchase or sale of a security-based swap that the Commission may define by rule, shall file an annual report with the Commission containing—</text><clause id="HA2A3410ABDE745C5B48338B1DD0EA160"><enum>(i)</enum><text display-inline="yes-display-inline">an explanation of how the institutional investment manager voted with respect to each shareholder proposal;</text></clause><clause id="H6A902A93AD6842B589E394EF5AF1BBB6"><enum>(ii)</enum><text display-inline="yes-display-inline">the percentage of votes cast on shareholder proposals that were consistent with proxy advisory firm recommendations, for each proxy advisory firm retained by the institutional investment manager;</text></clause><clause id="H3C6EA22B296D4E02A2D33714E5F6C05E"><enum>(iii)</enum><text display-inline="yes-display-inline">an explanation of—</text><subclause id="H6C2BC9B73C594F7DBF4509B72ABD2265"><enum>(I)</enum><text>how the institutional investment manager took into consideration proxy advisory firm recommendations in making voting decisions, including the degree to which the institutional investment manager used those recommendations in making voting decisions;</text></subclause><subclause id="H300EF129E7A544C7B93BD6DDC1D9615C"><enum>(II)</enum><text>how often the institutional investment manager voted consistent with a recommendation made by a proxy advisory firm, expressed as a percentage;</text></subclause><subclause id="H048AB8EEB583402E8710CF73E1AFF00C"><enum>(III)</enum><text display-inline="yes-display-inline">how such votes are reconciled with the fiduciary duty of the institutional investment manager to vote in the best economic interests of shareholders;</text></subclause><subclause id="H053C9DB2309F47308AC87A55DC9C0AED"><enum>(IV)</enum><text>how frequently votes were changed when an error occurred or due to new information from issuers; and</text></subclause><subclause id="H3FE4F7CE443D45E9830983E02661E7A7"><enum>(V)</enum><text display-inline="yes-display-inline">the degree to which investment professionals of the institutional investment manager were involved in proxy voting decisions; and</text></subclause></clause><clause id="H42C27002B0ED441B92B957134378C6E0"><enum>(iv)</enum><text display-inline="yes-display-inline">a certification that the voting decisions of the institutional investment manager were based solely on the best economic interest of the shareholders on behalf of whom the institutional investment manager holds shares.</text></clause></subparagraph><subparagraph id="H1366ECAF2A844D62B737FEF3762769AD"><enum>(B)</enum><header>Requirements for larger institutional investment managers</header><text display-inline="yes-display-inline">Every institutional investment manager described in subparagraph (A) that has assets under management with an aggregate fair market value on the last trading day in any of the preceding twelve months of at least $100,000,000,000 shall—</text><clause id="H6DC4B83C35894DA1B39D690D2D649535"><enum>(i)</enum><text display-inline="yes-display-inline">in any materials provided to customers and related to customers voting their shares, clarify that shareholders are not required to vote on every proposal;</text></clause><clause id="H30CC24C282A44DD89CEC17A74E4F7F7B"><enum>(ii)</enum><text display-inline="yes-display-inline">with respect to each shareholder proposal for which the institutional investment manager votes (other than votes consistent with the recommendation of a board of directors composed of a majority of independent directors) perform an economic analysis before making such vote, to determine that the vote is in the best economic interest of the shareholders on behalf of whom the institutional investment manager holds shares; and</text></clause><clause id="H1502645263844ECFB0CFF0A33E0F4A89"><enum>(iii)</enum><text display-inline="yes-display-inline">include each economic analysis required under clause (ii) in the annual report required under subparagraph (A).</text></clause></subparagraph><subparagraph id="H36773924EBDE456A802093F6E9CD8569"><enum>(C)</enum><header>Best economic interest defined</header><text>In this paragraph, the term <quote>best economic interest</quote> means decisions that seek to maximize investment returns over a time horizon consistent with the investment objectives and risk management profile of the fund in which shareholders are invested. </text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></section><enum>IX</enum><header>Protecting Americans’ Savings</header><section id="HD1C5137EB9924B0A8F1FDD9A6EB096FE" section-type="subsequent-section"><enum>901.</enum><header>Requirements related to proxy voting</header><text display-inline="no-display-inline">Section 14 of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78n">15 U.S.C. 78n</external-xref>), as amended by section 701, is further amended by adding at the end the following:</text><quoted-block style="OLC" id="HB8B814F8A25542FBB94EA0B9C12B41FF" display-inline="no-display-inline" changed="added" reported-display-style="italic" committee-id="HBA00"><subsection id="H205CA4BADC05426BBD7EE20462EB8749"><enum>(m)</enum><header>Prohibition on robovoting</header><paragraph id="HB09E1403C521404796426F3DA0C4B8EB"><enum>(1)</enum><header>In general</header><text>The Commission shall issue final rules prohibiting the use of robovoting with respect to votes related to proxy or consent solicitation materials.</text></paragraph><paragraph id="H5B2136967C1444D79E864BF701EF704D"><enum>(2)</enum><header>Robovoting defined</header><text display-inline="yes-display-inline">In this subsection, the term <term>robovoting</term> means the practice of automatically voting in a manner consistent with the recommendations of a proxy advisory firm or pre-populating votes on a proxy advisory firm’s electronic voting platform with the proxy advisory firm’s recommendations, in either case, without independent review and analysis.</text></paragraph></subsection><subsection id="HCF5EDAE51BA84C778121D798DDA17BC9"><enum>(n)</enum><header>Prohibition on outsourcing voting decisions by institutional investors</header><text display-inline="yes-display-inline">With respect to votes related to proxy or consent solicitation materials, an institutional investor may not outsource voting decisions to any person other than an investment adviser or a broker or dealer that is registered with the Commission and has a fiduciary or best interest duty to the institutional investor. </text></subsection><subsection id="HA53CB62B50A0481583D3BBEF0FACA5D2"><enum>(o)</enum><header>No requirement to vote</header><text display-inline="yes-display-inline">No person may be required to cast votes related to proxy or consent solicitation materials.</text></subsection><subsection id="H1ECB1F6D065A42FE8B0F74DF8AA225E1"><enum>(p)</enum><header>Proxy advisory firm calculation of votes</header><text display-inline="yes-display-inline">With respect to votes related to proxy or consent solicitation materials with respect to an issuer, a proxy advisor firm shall calculate the vote result consistent with the law of the State in which the issuer is incorporated.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></section><enum>X</enum><header>Empowering Shareholders</header><section id="H5AB18D0F2CBF4AF3813B11BE381EB0D7" section-type="subsequent-section"><enum>1001.</enum><header>Proxy voting of passively managed funds</header><subsection id="HB73DA01450F9483EA71FEE3BA81F8F9E"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">The Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-1">15 U.S.C. 80b–1 et seq.</external-xref>) is amended by inserting after section 208 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-8">15 U.S.C. 80b–8</external-xref>) the following:</text><quoted-block id="HF6629B0838614B97ABC742367970B1F8" style="OLC" act-name="" changed="added" reported-display-style="italic" committee-id="HBA00"><section id="H8E19AEFB0A904AD0A2B31AA059F7109F" section-type="subsequent-section"><enum>208A.</enum><header>Proxy voting of passively managed funds</header><subsection id="H979A5204052F49FEAB65BA257F82C7C4"><enum>(a)</enum><header>Investment adviser proxy voting</header><paragraph id="H4D748BA539674C91864A9C70085347C9"><enum>(1)</enum><header>In general</header><text>An investment adviser that holds authority to vote a proxy solicited by an issuer pursuant to section 14 of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78n">15 U.S.C. 78n</external-xref>) in connection with any vote of covered securities held by a passively managed fund shall—</text><subparagraph id="HF68589F8E44748EE809B980EF5F4367B"><enum>(A)</enum><text>vote in accordance with the instructions of the beneficial owner of a voting security of the passively managed fund; </text></subparagraph><subparagraph id="H5717947131104740A4D6907143BB7CF9"><enum>(B)</enum><text>vote in accordance with the voting recommendations of such issuer; or</text></subparagraph><subparagraph id="HE9D1131F7F1549E4840585CC9B924BBE"><enum>(C)</enum><text>abstain from voting but make reasonable efforts to be considered present for purposes of establishing a quorum. </text></subparagraph></paragraph><paragraph id="H0380A22957D54492ACADF891C803BEF0"><enum>(2)</enum><header>Exception</header><text>Paragraph (1) shall not apply with respect to a vote on a routine matter. </text></paragraph></subsection><subsection id="HF813E1A1A9384DBB98B9279FA5EB2359"><enum>(b)</enum><header>Safe harbor</header><text>With respect to a matter that is not a routine matter, in the case of a vote described in subsection (a)(1), an investment adviser shall not be liable to any person under any law or regulation of the United States, any constitution, law, or regulation of any State or political subdivision thereof, or under any contract or other legally enforceable agreement (including any arbitration agreement), for any of the following:</text><paragraph id="H32F0078253F94BCB91594756941881A4"><enum>(1)</enum><text display-inline="yes-display-inline">Voting in accordance with the instructions of the beneficial owner of a voting security of the passively managed fund.</text></paragraph><paragraph id="HF848A82923F7478AACB4D327C29B0504"><enum>(2)</enum><text>Not soliciting voting instructing from any person under subsection (a)(1) with respect to such vote.</text></paragraph><paragraph id="HDB2861094E594E58A5D48C4C94C9CA7C"><enum>(3)</enum><text display-inline="yes-display-inline">Voting in accordance with the voting recommendations of an issuer pursuant to subparagraph (B) of such subsection.</text></paragraph><paragraph id="H7DEE093C9368428495CCD2370164E5EE"><enum>(4)</enum><text>Abstaining from voting in accordance with subparagraph (C) of such subsection.</text></paragraph></subsection><subsection id="HB935AE37809647F399B20C97D22940F2"><enum>(c)</enum><header>Foreign private issuers exemption</header><text display-inline="yes-display-inline">Subsection (a) shall not apply with respect to a foreign private issuer if the voting policy of the investment advisor with respect to such foreign private issuers is fully and fairly disclosed to beneficial owners, including the extent to which such policy differs from the voting policy for non-exempt issuers. </text></subsection><subsection id="HBD37B148979F4DA0B263B12763320D80"><enum>(d)</enum><header>Definitions</header><text>In this section:</text><paragraph id="H25791FF8A725433FB73A8A040E0CF63F"><enum>(1)</enum><header>Covered security</header><text>The term <term>covered security</term>— </text><subparagraph id="HC16AA1BAAC794778B7D6632E4293B1E6"><enum>(A)</enum><text>means a voting security, as that term is defined in section 2(a) of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-2">15 U.S.C. 80a–2(a)</external-xref>), in which a qualified fund is invested; and</text></subparagraph><subparagraph id="H224C5A3536A14E9BB97B0E0B5D27A143"><enum>(B)</enum><text>does not include any voting security (as defined in subparagraph (A)) of an issuer registered with the Commission as an investment company under section 8 of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-8">15 U.S.C. 80a–8</external-xref>).</text></subparagraph></paragraph><paragraph id="H956E6A53883E46B38F62A0DA330A07EB"><enum>(2)</enum><header>Passively managed fund</header><text>The term <term>passively managed fund</term> means a qualified fund that—</text><subparagraph id="H1D98DAC0C29448C5AC615FBD6719F8E0"><enum>(A)</enum><text>is designed to track, or is derived from, an index of securities or a portion of such an index;</text></subparagraph><subparagraph id="HB5E366F795BB4C2FB5420C724F7AD3EF"><enum>(B)</enum><text>discloses that the qualified fund is a passive index fund; or</text></subparagraph><subparagraph id="H1B7C8DD539B84B868A054601B47B20FA"><enum>(C)</enum><text>allocates not less than 60 percent of the total assets of the qualified fund to an investment strategy that is designed to track, or is derived from, an index of securities or a portion of such an index fund.</text></subparagraph></paragraph><paragraph id="HD4EEB82BA3E94E5EB830266F8EF04733"><enum>(3)</enum><header>Qualified fund</header><text>The term <term>qualified fund</term> means—</text><subparagraph id="H2EAD4393A0864B4E93123E39E8E21119"><enum>(A)</enum><text>an investment company, as that term is defined in section 3 of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-3">15 U.S.C. 80a–3</external-xref>);</text></subparagraph><subparagraph id="H4555AA4A19804FB99209FD6B44B9B2C2"><enum>(B)</enum><text>a private fund; </text></subparagraph><subparagraph id="HDFFAFA379E9241D1846CD9ACB27288E3"><enum>(C)</enum><text>an eligible deferred compensation plan, as that term is defined in <external-xref legal-doc="usc" parsable-cite="usc/26/457">section 457(b)</external-xref> of the Internal Revenue Code of 1986;</text></subparagraph><subparagraph id="H92B9AC727B144721B04EFE40DB876F5A"><enum>(D)</enum><text>a trust, plan, account, or other entity described in section 3(c)(11) of the Investment Company Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80a-3">15 U.S.C. 80a–3(c)(11)</external-xref>); </text></subparagraph><subparagraph id="H0A3DBCEA23144501964A5EBC53150F42"><enum>(E)</enum><text>a plan maintained by an employer described in clause (i), (ii), or (iii) of <external-xref legal-doc="usc" parsable-cite="usc/26/403">section 403(b)(1)(A)</external-xref> of the Internal Revenue Code of 1986 to provide annuity contracts described in section 403(b) of such Code; </text></subparagraph><subparagraph id="HF322A5BDC8F343BA973176A9FAC99AE5"><enum>(F)</enum><text>a common trust fund, or similar fund, maintained by a bank;</text></subparagraph><subparagraph id="H0436B8E454794459A1F271988FFC5300"><enum>(G)</enum><text>any fund established under section 8438(b)(1) of title 5, United States Code; or</text></subparagraph><subparagraph id="H797D2146F0A6434EB98F55988FEF86CD"><enum>(H)</enum><text>any separate managed account of a client of an investment adviser.</text></subparagraph></paragraph><paragraph id="H3E981B0FD9D84BF7BA82D301B145F4FF"><enum>(4)</enum><header>Registrant</header><text>The term <term>registrant</term> means an issuer of covered securities.</text></paragraph><paragraph id="H12D0B82A968A4312819DA56E9E242488"><enum>(5)</enum><header>Routine matter</header><text>The term <term>routine matter</term>—</text><subparagraph id="H0D986E40C12C438380A413EF9561D1FF"><enum>(A)</enum><text>includes a proposal that relates to—</text><clause id="H2598F122D9794DF99D52DD9A4DD22317"><enum>(i)</enum><text>an election with respect to the board of directors of the registrant;</text></clause><clause id="HB4EBE1E843B54B6B88DB4BAC01934BFC"><enum>(ii)</enum><text>the compensation of management or the board of directors of the registrant;</text></clause><clause id="HEA9BDBE5EB2B4455856037C2680D0F0B"><enum>(iii)</enum><text>the selection of auditors;</text></clause><clause id="H4B28F1E63821406AB6619E808C1C152E"><enum>(iv)</enum><text display-inline="yes-display-inline">a matter where there is a material conflict of interest between or among the issuer, members of management, members of the board of directors, or an affiliate of the issuer;</text></clause><clause id="H40B45D8161BD4B30B55B73F3E76256DD"><enum>(v)</enum><text>declassification; or</text></clause><clause id="H94F640BD2F544C42A6AB2189D1BEE54F" commented="no"><enum>(vi)</enum><text>transactions that would transform the structure of the registrant, including—</text><subclause id="H9F664426DAC6445C8960151354236B46" commented="no"><enum>(I)</enum><text>a merger or consolidation; and</text></subclause><subclause id="H6E8149F657B34E38BC0E9CEE6DFEA962" commented="no"><enum>(II)</enum><text>the sale, lease, or exchange of all, or substantially all, of the property and assets of a registrant; and</text></subclause></clause></subparagraph><subparagraph id="H55F650CDB54841B4BC4BBE3984D2B6D2"><enum>(B)</enum><text>does not include—</text><clause id="H3C21ABD1427E4CFBB65B5F10C9095A76"><enum>(i)</enum><text>a proposal that is not submitted to a holder of covered securities by means of a proxy statement comparable to that described in section 240.14a–101 of title 17, Code of Federal Regulations, or any successor regulation; or</text></clause><clause id="HC085A90760844387A9C603B1EA245897"><enum>(ii)</enum><text>a proposal that is— </text><subclause id="H4CF10158BC784B7AA8C6743412AB1B77"><enum>(I)</enum><text>the subject of a counter-solicitation; or </text></subclause><subclause id="H034F48E31C73431C9CA649E438E7A135"><enum>(II)</enum><text>part of a proposal made by a person other than the applicable registrant.</text></subclause></clause></subparagraph></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H6BB649ABA74F4065B62A2E534C033472"><enum>(b)</enum><header>Effective date</header><text>The amendment made by this section shall take effect on the first August 1 that occurs after the date that is 2 years after the date of enactment of this Act.</text></subsection></section><enum>XI</enum><header>Protecting Retail Investors’ Savings</header><section id="H89C1465BB293421CB14439A0239210F2" section-type="subsequent-section"><enum>1101.</enum><header>Best interest based on pecuniary factors</header><subsection id="H4C1B2B1B1B224568A57888D5816B73F3"><enum>(a)</enum><header>In general</header><text>Section 211(g) of the Investment Advisers Act of 1940 (<external-xref legal-doc="usc" parsable-cite="usc/15/80b-11">15 U.S.C. 80b–11(g)</external-xref>) is amended by adding at the end the following:</text><quoted-block id="H0763101D16DC4CD885DB31F82FC503D5" style="OLC" changed="added" reported-display-style="italic" committee-id="HBA00"><paragraph id="HBAF1F90B1AFE4B4D9C8D4580A8565381"><enum>(3)</enum><header>Best interest based on pecuniary factors</header><subparagraph id="H6059C5BD92924AFE98AE492063CB758A"><enum>(A)</enum><header>In general</header><text>For purposes of paragraph (1), the best interest of a customer shall be determined using pecuniary factors, which may not be subordinated to or limited by non-pecuniary factors, unless the customer provides informed consent, in writing, that such non-pecuniary factors be considered.</text></subparagraph><subparagraph id="H3E9AAC58F8D945258A61F4C4BC9E7B44"><enum>(B)</enum><header>Disclosure of pecuniary factors</header><text>If a customer provides a broker, dealer, or investment adviser with the informed consent to consider non-pecuniary factors described under subparagraph (A), the broker, dealer, or investment adviser shall—</text><clause id="HD7ADB1BD97B7483EAD74E099240B8275"><enum>(i)</enum><text>disclose the expected pecuniary effects to the customer over a time period selected by the customer and not to exceed three years; and</text></clause><clause id="H321A27AD6D97490983F951E82AA2C55B"><enum>(ii)</enum><text>at the end of the time period described in clause (i), disclose, by comparison to a reasonably comparable index or basket of securities selected by the customer, the actual pecuniary effects of that time period, including all fees, costs, and other expenses incurred to consider non-pecuniary factors.</text></clause></subparagraph><subparagraph id="H1B99714092B2410980A7536DBA1CE688"><enum>(C)</enum><header>Pecuniary factor defined</header><text>In this paragraph, the term <quote>pecuniary factor</quote> means a factor that a fiduciary prudently determines is expected to have a material effect on the risk or return of an investment based on appropriate investment horizons.</text></subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection><subsection id="H025FB652D93E4D7D8E17E9653BD29EAD"><enum>(b)</enum><header>Rulemaking</header><text>Not later than the end of the 12-month period beginning on the date of enactment of this Act, the Securities and Exchange Commission shall revise or issue such rules as may be necessary to implement the amendment made by subsection (a).</text></subsection><subsection id="H3F579666CDDA433EA64223F7FDC4BC82"><enum>(c)</enum><header>Applicability</header><text>The amendment made by subsection (a) shall apply to actions taken by a broker, dealer, or investment adviser beginning on the date that is 12 months after the date of enactment of this Act.</text></subsection></section><section id="H08850C6D509A4E528E4006027F5D7A18"><enum>1102.</enum><header>Study on climate change and other environmental disclosures in municipal bond market</header><subsection id="HF6456B55E17A4B6385F8BE85DCEA9CFA"><enum>(a)</enum><header>In general</header><text>The Securities and Exchange Commission shall—</text><paragraph id="H4C6B5DB501104F2D87CCB3FF90954013"><enum>(1)</enum><text>conduct a study to determine the extent to which issuers of municipal securities (as such term is defined in section 3(a)(29) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)(29)</external-xref>) make disclosures to investors regarding climate change and other environmental matters; and</text></paragraph><paragraph id="H1CF4EA4486D54CDE93FCB57F02028923"><enum>(2)</enum><text>solicit public comment with respect to such study.</text></paragraph></subsection><subsection id="H7B9AD7E8EBFB4002BA9EE2572FA609F2"><enum>(b)</enum><header>Contents</header><text>The study required under subsection (a) shall consider and analyze—</text><paragraph id="HD9D247F17A9441679CC94CA979B64C03"><enum>(1)</enum><text>the frequency with which disclosures described in subsection (a)(1) are made;</text></paragraph><paragraph id="HA8B80EA6FF66401DA2919B3711096964"><enum>(2)</enum><text>whether such disclosures made by issuers of municipal securities in connection with offerings of securities align with such disclosures made by issuers of municipal securities in other contexts or to audiences other than investors;</text></paragraph><paragraph id="HC62A2F86132C41E78CFB7BE332D97FEC"><enum>(3)</enum><text>any voluntary or mandatory disclosure standards observed by issuers of municipal securities in the course of making such disclosures;</text></paragraph><paragraph id="H75699E588B5940508CD93314F3039C75"><enum>(4)</enum><text>the degree to which investors consider such disclosures in connection with making an investment decision; and</text></paragraph><paragraph id="H50A534F89F5B4B1EB30104621A390FFE"><enum>(5)</enum><text>such other information as the Securities and Exchange Commission determines appropriate.</text></paragraph></subsection><subsection id="HB0382CDB7C2A41F2B7901C2C67422B0B"><enum>(c)</enum><header>Report</header><text>Not later than 1 year after the date of the enactment of this Act, the Securities and Exchange Commission shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report that includes—</text><paragraph id="H759F5BE4D9FC4975BD7526F1405F09ED"><enum>(1)</enum><text>the results of the study required under this section;</text></paragraph><paragraph id="H2DEA5519BE864DA3AD199164AD44493E"><enum>(2)</enum><text>a detailed discussion of the financial risks to investors from investments in municipal securities;</text></paragraph><paragraph id="H22C8EB7F69E3426DBD6F8FA02382B0C6"><enum>(3)</enum><text>whether such risks are adequately disclosed to investors; and</text></paragraph><paragraph id="H3D97BC7229AD4986AFEFE57CC23B0F69"><enum>(4)</enum><text>recommended regulatory or legislative steps to address any concerns identified in the study.</text></paragraph></subsection></section><section id="H6A3CB7603A954DF88010DBBB6B7DEB63"><enum>1103.</enum><header>Study on solicitation of municipal securities business</header><subsection id="H205F40A2FA9F4B42BBABD5AEC2C71910"><enum>(a)</enum><header>In general</header><text>The Securities and Exchange Commission shall—</text><paragraph id="H8F09E1997C21465B8E748AFB9CDB6C10"><enum>(1)</enum><text>conduct a study on the effectiveness of each covered rule in preventing the payment of funds to elected officials or candidates for elected office in exchange for the receipt of government business in connection with the offer or sale of municipal securities; and</text></paragraph><paragraph id="H5A859F37A361460D89C7E5F625F0619E"><enum>(2)</enum><text>solicit public comment with respect to such study.</text></paragraph></subsection><subsection id="HD4FA1B7C1C65421C91EAA0BAFDADCAFD"><enum>(b)</enum><header>Contents</header><text>The study required under subsection (a) shall consider and analyze—</text><paragraph id="HE6E20A49221446EDA17589097FB680E5"><enum>(1)</enum><text>the effectiveness of each covered rule, including whether each covered rule accomplishes the intended effect of such covered rule and has any unintended adverse effects;</text></paragraph><paragraph id="H3469A00772564F07865768775BBC41AD"><enum>(2)</enum><text>the frequency and scope of enforcement actions undertaken pursuant to each covered rule;</text></paragraph><paragraph id="H467A78615B3542E8883EACCAAE53EA5C"><enum>(3)</enum><text>the degree to which—</text><subparagraph id="H5F7679B1479B4F69B91227DC14BBD687"><enum>(A)</enum><text>persons subject to each covered rule—</text><clause id="HA73FE7261FDA4CAB864A30A26DBE42BC"><enum>(i)</enum><text>have in effect policies and procedures intended to ensure compliance with each such covered rule; and</text></clause><clause id="H16D28BF9D35B45FC917FCCF244EDD928"><enum>(ii)</enum><text>are disadvantaged from participating in the political process generally and in relation to persons who solicit or receive government business or government licenses, permits, and approvals other than in connection with the offer or sale of municipal securities; and</text></clause></subparagraph><subparagraph id="HD4CA94C02F234FF4B2CA8583303A6F46"><enum>(B)</enum><text>other State and Federal laws and regulations impact the solicitation of municipal securities business; and</text></subparagraph></paragraph><paragraph id="HBED8D3C1404E4D649A0A409296FBDAAC"><enum>(4)</enum><text>such other information as the Securities and Exchange Commission determines appropriate.</text></paragraph></subsection><subsection id="HA0F90BBC4FF8402192D7167DCA2CF540"><enum>(c)</enum><header>Report</header><text>Not later than 1 year after the date of the enactment of this Act, the Securities and Exchange Commission shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report that includes—</text><paragraph id="HA008EFB0BCF848D999EB247440BE6D90"><enum>(1)</enum><text>the results of the study required under this section;</text></paragraph><paragraph id="H5EFE7BBA4DFE4770A27287F342504451"><enum>(2)</enum><text>an analysis of the extent to which persons affiliated with small businesses, as well as persons affiliated with minority and women opened businesses, have been affected by the covered rules; and</text></paragraph><paragraph id="H684A82D38535400480B6140A30507629"><enum>(3)</enum><text>recommended regulatory or legislative steps to address any concerns identified in the study.</text></paragraph></subsection><subsection id="HFDDD9CC7C7434484A680EA3AE066C640"><enum>(d)</enum><header>Definitions</header><text>In this section:</text><paragraph id="HC1A52413E21B4C39ACF4A2EC9956DA83"><enum>(1)</enum><header>Covered rule</header><text>The term <quote>covered rule</quote> means—</text><subparagraph id="H53A88905880D430385A15F5C3FEFFAB6"><enum>(A)</enum><text>Rule G–38 of the Municipal Securities Rulemaking Board; and</text></subparagraph><subparagraph id="H99D86FE2905C46FAA6F79FC8EBA1FFD9"><enum>(B)</enum><text>Rule 206(4)–5 (17 CFR 275.206(4)–5).</text></subparagraph></paragraph><paragraph id="H0F3BC39743954150B3E119E9AB692835"><enum>(2)</enum><header>Municipal securities</header><text>The term <quote>municipal securities</quote> has the meaning given the term in section 3(a)(29) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)(29)</external-xref>).</text></paragraph></subsection></section>December 19, 2023Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed