[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