[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 4097 Introduced in Senate (IS)]
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117th CONGRESS
2d Session
S. 4097
To improve access for diverse-owned asset management firms, and for
other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 27, 2022
Mr. Kaine (for himself, Mr. Booker, Mrs. Murray, Mr. Menendez, and Mr.
Warner) introduced the following bill; which was read twice and
referred to the Committee on Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To improve access for diverse-owned asset management firms, 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 ``Too Narrow to Succeed Act''.
SEC. 2. PURPOSE.
The purpose of this Act is to improve access for diverse-owned,
including women- and minority-owned, asset management firms by--
(1) increasing transparency regarding the asset management
firm selection processes of Federal institutional investors;
(2) identifying common and potential barriers that limit
business opportunities for diverse-owned asset management firms
and developing strategies to remove these barriers; and
(3) enabling both public and private retirement funds to
adopt broader and more inclusive selection processes to reduce
systemic risk and maximize returns, consistent with
administrators' fiduciary responsibilities.
SEC. 3. DEFINITIONS.
In this Act:
(1) Asset management firm.--The term ``asset management
firm'' means any investment firm that--
(A) manages a portfolio of securities or other
assets for a defined benefit plan or other
institutional investor; or
(B) offers investment options, such as mutual,
private equity, real estate, or other commingled funds,
to participate in a defined contribution or other
comparable retirement plan.
(2) Diverse-owned.--The term ``diverse-owned'', when used
with respect to an asset management firm, means any threshold
or other requirements determined appropriate by the Secretary
under section 4(a)(3).
(3) Federal institutional investor.--The term ``Federal
institutional investor'' means each of the following:
(A) The Federal Retirement Thrift Investment Board.
(B) The entity that administers--
(i) the funds of the Pension Benefit
Guaranty Corporation established under section
4005 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1305);
(ii) the funds of the National Railroad
Retirement Investment Trust established under
section 15(j) of the Railroad Retirement Act of
1974 (45 U.S.C. 231n(j));
(iii) the funds of the Federal Reserve
System Retirement Plan;
(iv) the funds of the Federal Reserve
System Thrift Plan;
(v) the funds of the Tennessee Valley
Authority Retirement System;
(vi) the funds of the Tennessee Valley
Authority Retirement System Savings and
Deferral Retirement Plan;
(vii) the funds of the Army and Air Force
Exchange Service Retirement System;
(viii) the funds of the Navy Exchange
Service Command Retirement Plan; or
(ix) the endowment funds of the Smithsonian
Institution.
(C) Any other Federal entity that administers a
fund--
(i) with more than $1,000,000,000 in assets
invested for which the entity uses the services
of, or contracts with, an asset management
firm; and
(ii) that the Secretary determines is
similar to the Thrift Savings Fund or a fund
described in subparagraph (B).
(4) Federal investments.--The term ``Federal investments''
means investments of sums in a fund administered by a Federal
institutional investor.
(5) Secretary.--The term ``Secretary'' means the Secretary
of Labor.
(6) Subcontractor asset management firm.--The term
``subcontractor asset management firm'' means an asset
management firm that--
(A) enters into a contract (including a
subcontract) with an asset management firm that is the
primary manager of Federal investments, through the use
of services or by contract, for a Federal institutional
investor; and
(B) under the terms of the contract, manages
Federal investments of the Federal institutional
investor.
SEC. 4. IMPROVING ACCESS FOR DIVERSE-OWNED ASSET MANAGEMENT FIRMS.
(a) Annual Reports by Federal Institutional Investors That Invest
in Externally Managed Assets.--
(1) Annual reports.--
(A) Reports required.--By not later than December
31, 2022, and annually thereafter, each Federal
institutional investor that uses the services of, or
contracts with, an asset management firm to manage
Federal investments shall prepare and submit a report
to the Secretary on the usage of diverse-owned asset
management firms by the Federal institutional investor.
(B) Inclusion of subcontractor asset management
firms.--The report under subparagraph (A) shall also
include all subcontractor asset management firms of the
Federal institutional investor.
(2) Content of reports.--Each report described in paragraph
(1) shall include, with respect to any fund administered by the
Federal institutional investor that uses the services of, or
contracts with, an asset management firm--
(A) the amounts of assets in such fund that are
managed by non-diverse-owned asset management firms and
by diverse-owned asset management firms, as determined
by the Secretary under paragraph (3), disaggregated by
race, ethnicity, and gender;
(B) the challenges, if any, the Federal
institutional investor faces in reporting on diverse-
owned and non-diverse-owned asset management firms;
(C) the challenges the Federal institutional
investor faces in selecting diverse-owned asset
management firms (including through subcontractor asset
management firms) to manage investments of sums in the
fund administered by the Federal institutional
investor;
(D) the actions taken during the reporting period,
or planned to be taken, by the Federal institutional
investor to alleviate barriers that limit participation
of diverse-owned asset management firms; and
(E) the actions taken during the reporting period,
or planned to be taken, by the Federal institutional
investor to increase opportunities for diverse-owned
asset management firms to compete for contracts.
(3) Diverse-owned.--The Secretary shall evaluate industry
benchmarks to determine the threshold or other requirements
necessary for an asset management firm to qualify as diverse-
owned.
(4) Public availability.--The Secretary shall make each
report submitted under paragraph (1) publicly available.
(b) Sense of Congress Relating to Diverse-Owned Asset Management
Firms and Covered Private Sector Plans.--It is the sense of Congress
that the Advisory Council on Employee Welfare and Pension Benefit Plans
(commonly known as the ``ERISA Advisory Council'') routinely consider
barriers to the usage of diverse-owned asset management firms among
covered private sector plans, and methods to overcome such barriers.
(c) Survey of Fund Management Best Practices.--
(1) In general.--The Secretary shall--
(A) conduct a survey of the best practices in fund
asset management with respect to increasing the
utilization and capacity of diverse-owned asset
management firms; and
(B) prepare and submit a report to Congress not
less often than every 3 years, or more frequently as
the Secretary considers to be appropriate.
(2) Requirements of survey.--The Secretary shall survey a
sample of public and private-sector pension plans subject to
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1001 et seq.) and other retirement funds that are engaged in
(or looking to engage in) strategies to improve access to, and
representation by, diverse-owned asset management firms.
(3) Report.--The Secretary shall make publicly available a
report to Congress on the best practices of pension funds and
other retirement funds with respect to implementing strategies
to improve access to diverse-owned asset management firms. The
report shall include--
(A) the challenges pension funds and other
retirement funds may face in adopting or executing
strategies to engage more with diverse-owned asset
management firms as the primary institutional fund
manager or as subcontractor asset management firms,
including women- and minority-owned asset management
firms; and
(B) an identification of the strategies adopted to
implement programs.
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