[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 327 Reported in Senate (RS)]
<DOC>
Calendar No. 11
115th CONGRESS
1st Session
S. 327
To direct the Securities and Exchange Commission to provide a safe
harbor related to certain investment fund research reports, and for
other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 7 (legislative day, February 6), 2017
Mr. Heller (for himself, Mr. Peters, and Mr. Perdue) introduced the
following bill; which was read twice and referred to the Committee on
Banking, Housing, and Urban Affairs
March 13, 2017
Reported by Mr. Crapo, with amendments
[Omit the part struck through and insert the part printed in italic]
_______________________________________________________________________
A BILL
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
45-day 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 180-day 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--
(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
(a)(1) or (a)(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 paragraph
(a)(1)(i)(A)(1) of 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 paragraph (a)(1)(i)(A)(1)(i) of 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 180-day 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 (a)(1) or (a)(2) of that 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)). Communications concerning
only covered investment funds that fall within the scope of
such section shall not be required to be filed with FINRA.
(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) Definitions.--For purposes of this Act:
<DELETED> (1) 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.</DELETED>
(21) 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.
(2) 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.
(3) The term ``FINRA'' means the Financial Industry
Regulatory Authority.
(4) 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.
(5) The term ``self-regulatory organization'' has the
meaning given to that term under section 3(a)(26) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(26)).
Calendar No. 11
115th CONGRESS
1st Session
S. 327
_______________________________________________________________________
A BILL
To direct the Securities and Exchange Commission to provide a safe
harbor related to certain investment fund research reports, and for
other purposes.
_______________________________________________________________________
March 13, 2017
Reported with amendments