[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 327 Enrolled Bill (ENR)]
S.327
One Hundred Fifteenth Congress
of the
United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Tuesday,
the third day of January, two thousand and seventeen
An Act
To direct the Securities and Exchange Commission to provide a safe
harbor related to certain investment fund research reports, 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 ``Fair Access to Investment Research
Act of 2017''.
SEC. 2. SAFE HARBOR FOR INVESTMENT FUND RESEARCH.
(a) Expansion of the Safe Harbor.--Not later than the end of the
180-day period beginning on the date of enactment of this Act, the
Securities and Exchange Commission shall propose, and not later than
the end of the 270-day period beginning on such date, the Commission
shall adopt, upon such terms, conditions, or requirements as the
Commission may determine necessary or appropriate in the public
interest, for the protection of investors, and for the promotion of
capital formation, revisions to section 230.139 of title 17, Code of
Federal Regulations, to provide that a covered investment fund research
report that is published or distributed by a broker or dealer, other
than a broker or dealer that is an investment adviser to the fund or an
affiliated person of the investment adviser to the fund--
(1) shall be deemed, for purposes of sections 2(a)(10) and 5(c)
of the Securities Act of 1933 (15 U.S.C. 77b(a)(10), 77e(c)), not
to constitute an offer for sale or an offer to sell a security that
is the subject of an offering pursuant to a registration statement
that is effective, even if the broker or dealer is participating or
will participate in the registered offering of the covered
investment fund's securities; and
(2) shall be deemed to satisfy the conditions of paragraph (1)
or (2) of section 230.139(a) of title 17, Code of Federal
Regulations, or any successor provisions, for purposes of the
Commission's rules and regulations under the Federal securities
laws and the rules of any self-regulatory organization.
(b) Implementation of Safe Harbor.--In implementing the safe harbor
pursuant to subsection (a), the Commission shall--
(1) not, in the case of a covered investment fund with a class
of securities in substantially continuous distribution, condition
the safe harbor on whether the broker's or dealer's publication or
distribution of a covered investment fund research report
constitutes such broker's or dealer's initiation or reinitiation of
research coverage on such covered investment fund or its
securities;
(2) not--
(A) require the covered investment fund to have been
registered as an investment company under the Investment
Company Act of 1940 (15 U.S.C. 80a-1 et seq.) or subject to the
reporting requirements of section 13 or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m, 78o(d)) for any period
exceeding the period of time referenced under section
230.139(a)(1)(i)(A)(1) of title 17, Code of Federal
Regulations; or
(B) impose a minimum float provision exceeding that
referenced in section 230.139(a)(1)(i)(A)(1)(i) of title 17,
Code of Federal Regulations;
(3) provide that a self-regulatory organization may not
maintain or enforce any rule that would--
(A) prohibit the ability of a member to publish or
distribute a covered investment fund research report solely
because the member is also participating in a registered
offering or other distribution of any securities of such
covered investment fund; or
(B) prohibit the ability of a member to participate in a
registered offering or other distribution of securities of a
covered investment fund solely because the member has published
or distributed a covered investment fund research report about
such covered investment fund or its securities; and
(4) provide that a covered investment fund research report
shall not be subject to section 24(b) of the Investment Company Act
of 1940 (15 U.S.C. 80a-24(b)) or the rules and regulations
thereunder, except that such report may still be subject to such
section and the rules and regulations thereunder to the extent that
it is otherwise not subject to the content standards in the rules
of any self-regulatory organization related to research reports,
including those contained in the rules governing communications
with the public regarding investment companies or substantially
similar standards.
(c) Rules of Construction.--Nothing in this Act shall be construed
as in any way limiting--
(1) the applicability of the antifraud or antimanipulation
provisions of the Federal securities laws and rules adopted
thereunder to a covered investment fund research report, including
section 17 of the Securities Act of 1933 (15 U.S.C. 77q), section
34(b) of the Investment Company Act of 1940 (15 U.S.C. 80a-33(b)),
and sections 9 and 10 of the Securities Exchange Act of 1934 (15
U.S.C. 78i, 78j); or
(2) the authority of any self-regulatory organization to
examine or supervise a member's practices in connection with such
member's publication or distribution of a covered investment fund
research report for compliance with applicable provisions of the
Federal securities laws or self-regulatory organization rules
related to research reports, including those contained in rules
governing communications with the public, or to require the filing
of communications with the public the purpose of which is not to
provide research and analysis of covered investment funds.
(d) Interim Effectiveness of Safe Harbor.--
(1) In general.--From and after the 270-day period beginning on
the date of enactment of this Act, if the Commission has not
adopted revisions to section 230.139 of title 17, Code of Federal
Regulations, as required by subsection (a), and until such time as
the Commission has done so, a broker or dealer distributing or
publishing a covered investment fund research report after such
date shall be able to rely on the provisions of section 230.139 of
title 17, Code of Federal Regulations, and the broker or dealer's
publication of such report shall be deemed to satisfy the
conditions of paragraph (1) or (2) of section 230.139(a) of title
17, Code of Federal Regulations, if the covered investment fund
that is the subject of such report satisfies the reporting history
requirements (without regard to Form S-3 or Form F-3 eligibility)
and minimum float provisions of such subsections for purposes of
the Commission's rules and regulations under the Federal securities
laws and the rules of any self-regulatory organization, as if
revised and implemented in accordance with subsections (a) and (b).
(2) Status of covered investment fund.--After such period and
until the Commission has adopted revisions to section 230.139 of
title 17, Code of Federal Regulations, and FINRA has revised rule
2210, for purposes of subsection (c)(7)(O) of such rule, a covered
investment fund shall be deemed to be a security that is listed on
a national securities exchange and that is not subject to section
24(b) of the Investment Company Act of 1940 (15 U.S.C. 80a-24(b)).
(3) Covered investment funds communications.--
(A) In general.--Except as provided in subparagraph (B),
communications that concern only covered investment funds that
fall within the scope of section 24(b) of the Investment
Company Act of 1940 (15 U.S.C. 80a-24(b)) shall not be required
to be filed with FINRA.
(B) Exception.--FINRA may require the filing of
communications with the public if the purpose of those
communications is not to provide research and analysis of
covered investment funds.
(e) Exception.--The safe harbor under subsection (a) shall not
apply to the publication or distribution by a broker or a dealer of a
covered investment fund research report, the subject of which is a
business development company or a registered closed-end investment
company, during the time period described in section
230.139(a)(1)(i)(A)(1) of title 17, Code of Federal Regulations, except
where expressly permitted by the rules and regulations of the
Securities and Exchange Commission under the Federal securities laws.
(f) Definitions.--For purposes of this Act:
(1) The term ``affiliated person'' has the meaning given the
term in section 2(a) of the Investment Company Act of 1940 (15
U.S.C. 80a-2(a)).
(2) The term ``covered investment fund'' means--
(A) an investment company registered under, or that has
filed an election to be treated as a business development
company under, the Investment Company Act of 1940 (15 U.S.C.
80a-1 et seq.) and that has filed a registration statement
under the Securities Act of 1933 (15 U.S.C. 77a et seq.) for
the public offering of a class of its securities, which
registration statement has been declared effective by the
Commission; and
(B) a trust or other person--
(i) issuing securities in an offering registered under
the Securities Act of 1933 (15 U.S.C. 77a et seq.) and
which class of securities is listed for trading on a
national securities exchange;
(ii) the assets of which consist primarily of
commodities, currencies, or derivative instruments that
reference commodities or currencies, or interests in the
foregoing; and
(iii) that provides in its registration statement under
the Securities Act of 1933 (15 U.S.C. 77a et seq.) that a
class of its securities are purchased or redeemed, subject
to conditions or limitations, for a ratable share of its
assets.
(3) The term ``covered investment fund research report'' means
a research report published or distributed by a broker or dealer
about a covered investment fund or any securities issued by the
covered investment fund, but does not include a research report to
the extent that the research report is published or distributed by
the covered investment fund or any affiliate of the covered
investment fund, or any research report published or distributed by
any broker or dealer that is an investment adviser (or an
affiliated person of an investment adviser) for the covered
investment fund.
(4) The term ``FINRA'' means the Financial Industry Regulatory
Authority.
(5) The term ``investment adviser'' has the meaning given the
term in section 2(a) of the Investment Company Act of 1940 (15
U.S.C. 80a-2(a)).
(6) The term ``research report'' has the meaning given that
term under section 2(a)(3) of the Securities Act of 1933 (15 U.S.C.
77b(a)(3)), except that such term shall not include an oral
communication.
(7) The term ``self-regulatory organization'' has the meaning
given that term under section 3(a)(26) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(26)).
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.