[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1895 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 1895

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 24, 2002

Mr. Fitzgerald introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 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--
            (1) 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; and
            (2) the number of class-action lawsuits alleging conflicts 
        of interest on the part of investment advisers has increased 
        dramatically.

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 3-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) In this section, the term `publication' 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 180 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).
                                 <all>