[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3671 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 3671

To require investment advisers to make prominent public disclosures of 
  ties with companies being analyzed by them, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 4, 2002

   Mr. Hastings of Florida introduced the following bill; which was 
            referred to the Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
To require investment advisers to make prominent public disclosures of 
  ties with companies being analyzed by them, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Independent Investment Advisers Act 
of 2002''.

SEC. 2. FINDINGS.

    Congress finds that, in the decade preceding the date of enactment 
of this Act, events have raised concerns about the independence of the 
research conducted by investment advisers, particularly those who are 
affiliated with brokerage houses and investment banking institutions.

SEC. 3. ENHANCED DISCLOSURES BY INVESTMENT ADVISERS.

    (a) The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) 
is amended by inserting after section 204A the following:

                 ``public disclosure of ties to issuers

    ``Sec. 204B. (a) If an investment adviser publishes any analysis or 
report regarding a company or the securities of a company, the 
investment adviser shall prominently disclose, in plain language--
            ``(1) the amount of any fees that the investment adviser, 
        or person associated with the investment adviser, has received 
        from that company during the 5-year period preceding the date 
        of publication;
            ``(2) any merger or acquisition transaction handled by the 
        investment adviser during the 5-year period preceding the date 
        of publication that involves any debt or equity instruments of 
        that company, including transactions that are concurrent with 
        the publication;
            ``(3) any personal debt or equity holdings that the 
        investment adviser or person associated with the investment 
        adviser has in the company; and
            ``(4) the extent to which the investment adviser or person 
        associated with the investment adviser has debt or equity 
        holdings in that company.
    ``(b) The Commission shall, by rule, prohibit any investment 
adviser from purchasing, selling, or otherwise engaging in any 
transactions with respect to any security of a company during the 30 
days beginning on the date on which such adviser publishes any analysis 
or report regarding such company or the securities of such company.
    ``(c) In this section, the term `publishes' has the meaning given 
that term by regulation of the Commission, and includes--
            ``(1) any written description of the subject company or the 
        securities of that company by the investment adviser; and
            ``(2) to the extent practicable--
                    ``(A) any public appearance by the investment 
                adviser or person associated with the investment 
                adviser, such as participation in a seminar or forum 
                regarding the subject company or the securities of that 
                company;
                    ``(B) participation by the investment adviser or 
                person associated with the investment adviser in an 
                interactive electronic discussion group by the 
                investment adviser regarding the subject company or the 
                securities of that company; and
                    ``(C) any radio or television interview of the 
                investment adviser or person associated with the 
                investment adviser regarding the subject company or the 
                securities of that company.''.
    (b) Commission Regulations.--Not later than 60 days after the date 
of enactment of this Act, the Securities and Exchange Commission shall 
issue final regulations to carry out section 204B of the Investment 
Advisers Act of 1940, as added by this section.
    (c) Effective Date.--Section 204B of the Investment Advisers Act of 
1940, as added by this Act, shall become effective on the date of 
issuance of final regulations under subsection (b).

SEC. 4. PROHIBITION ON AUDITOR TRADING.

    Section 10A of the Securities Exchange Act of 1934 (15 U.S.C. 78j-
1) is amended--
            (1) by redesignating subsections (e) and (f) as subsections 
        (f) and (g), respectively; and
            (2) by inserting after subsection (d) the following new 
        subsection:
    ``(e) Prohibition on Auditor Trading.--The Commission shall, by 
rule, prohibit any independent public accountant, or any person 
associated with such accountant, from purchasing, selling, or otherwise 
engaging in any transactions with respect to any security of a company 
during the 30 days preceding, and the 30 days following, the date on 
which such accountant certifies any financial statement or other 
financial document regarding such company or the securities of such 
company. An accountant shall be treated as certifying a statement or 
other document on the date the document is filed with the 
Commission.''.
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