[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 3578 Introduced in Senate (IS)]

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115th CONGRESS
  2d Session
                                S. 3578

To require the Securities and Exchange Commission to carry out a study 
 to evaluate the issues affecting the provision of, and reliance upon, 
                investment research into small issuers.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 11, 2018

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

_______________________________________________________________________

                                 A BILL


 
To require the Securities and Exchange Commission to carry out a study 
 to evaluate the issues affecting the provision of, and reliance upon, 
                investment research into small issuers.

    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 ``Improving Investment Research for 
Small and Emerging Issuers Act''.

SEC. 2. RESEARCH STUDY.

    (a) Study Required.--The Securities and Exchange Commission shall 
conduct a study to evaluate the issues affecting the provision of, and 
reliance upon, investment research into small issuers (referred to in 
this section as ``covered research''), including emerging growth 
companies and companies considering initial public offerings.
    (b) Contents of Study.--The study required under subsection (a) 
shall consider--
            (1) factors relating to the demand for covered research by 
        institutional and retail investors;
            (2) the availability of covered research, including--
                    (A) the number and types of firms that provide 
                covered research;
                    (B) the volume of covered research over time; and
                    (C) competition in the research market;
            (3) conflicts of interest relating to the production and 
        distribution of investment research;
            (4) the costs of covered research;
            (5) the impacts of different payment mechanisms for covered 
        research, including whether that research is paid for by--
                    (A) hard-dollar payments from research clients;
                    (B) payments directed from the commission income of 
                a client, including payments commonly referred to as 
                ``soft dollars''; or
                    (C) payments from the issuer that is the subject of 
                covered research;
            (6) any unique challenges faced by minority-owned, women-
        owned, and veteran-owned small issuers in obtaining research 
        coverage; and
            (7) the impact on the availability of research coverage for 
        small issuers due to--
                    (A) investment adviser concentration and 
                consolidation, including any potential impacts of the 
                size of a fund on the demand for investment research of 
                small issuers;
                    (B) broker and dealer concentration and 
                consolidation, including any relationships between the 
                size of a firm and allocation of resources for 
                investment research into small issuers;
                    (C) rules of the Securities and Exchange 
                Commission;
                    (D) rules of registered national securities 
                associations;
                    (E) State and Federal liability concerns;
                    (F) the settlement agreements referenced in 
                Securities and Exchange Commission Litigation Release 
                No. 18438 (relating to the Global Research Analyst 
                Settlement; issued October 31, 2003); and
                    (G) Directive 2014/65/EU of the European Parliament 
                and of the Council of 15 May 2014 (relating to markets 
                in financial instruments and amending Directive 2002/
                92/EC and Directive 2011/61/EU), as implemented by the 
                member states of the European Union.
    (c) Report Required.--Not later than 180 days after the date of 
enactment of this Act, the Securities and Exchange Commission shall 
submit to Congress a report that includes--
            (1) the results of the study required under subsection (a); 
        and
            (2) recommendations to increase the demand for, volume of, 
        and quality of investment research into small issuers, 
        including emerging growth companies and companies considering 
        initial public offerings.
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