[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2622 Reported in House (RH)]

<DOC>





                                                 Union Calendar No. 105
118th CONGRESS
  1st Session
                                H. R. 2622

                          [Report No. 118-134]

    To amend the Investment Advisers Act of 1940 to codify certain 
   Securities and Exchange Commission no-action letters that exclude 
brokers and dealers compensated for certain research services from the 
       definition of investment adviser, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 13, 2023

  Mr. Sessions (for himself and Mrs. Wagner) introduced the following 
    bill; which was referred to the Committee on Financial Services

                             July 11, 2023

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of introduced bill, see copy of bill as introduced on April 
                               13, 2023]


_______________________________________________________________________

                                 A BILL


 
    To amend the Investment Advisers Act of 1940 to codify certain 
   Securities and Exchange Commission no-action letters that exclude 
brokers and dealers compensated for certain research services from the 
       definition of investment adviser, 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. EXTENSION OF NO-ACTION LETTER; STUDY.

    (a) Findings.--Congress finds the following:
            (1) The Securities and Exchange Commission staff first 
        granted temporary no-action relief in 2017, prior to the 
        implementation of European rules designed to protect European 
        investors from excessive costs and conflicts of interest.
            (2) The Commission staff did not engage in any meaningful 
        cost-benefit analysis of the issues raised by the no-action 
        relief requested either prior to or following the granting of 
        no-action relief in 2017.
            (3) The Commission staff revised and extended the temporary 
        no-action relief in 2019, again without any meaningful cost-
        benefit analysis of the issues raised by the no-action relief 
        requested prior to or following the granting of the relief.
            (4) There are currently approximately 15,300 registered 
        investment advisers, including affiliates that provide the vast 
        majority of investment research.
            (5) The Commission has received complaints from investors 
        and investor advocacy groups expressing concerns with the no-
        action relief, as it currently exists.
            (6) The Commission has received concerns from broker-
        dealers related to the potential expiration of the no-action 
        relief.
    (b) Extension of No-action Letter.--The Commission shall provide an 
additional 6-month extension of the October 26, 2017, Securities 
Industry and Financial Markets Association, SEC Staff No-Action Letter, 
set to expire on July 3, 2023.
    (c) Study Required.--After the announcement extending the 
expiration date of the no-action letter under subsection (b), the 
Commission shall conduct, through notice and comment, a study of the 
impact of allowing the no-action letter's expiration or maintenance of 
the no-action letter, and give due regard to any comments received in 
conducting the study. The Commission or delegated staff shall report 
their findings and conclusions, including findings related to the 
expiration of the no-action relief, to the Committee on Financial 
Services of the House of Representatives and the Committee on Banking, 
Housing, and Urban Affairs of the Senate.
    (d) Contents of Study.--The study required under subsection (c) 
shall include potential impacts on the research market for smaller 
issuers, including--
            (1) the availability of such research, including--
                    (A) the number and types of firms who provide such 
                research;
                    (B) the volume of such research over time; and
                    (C) competition in the research market;
            (2) any unique challenges faced by minority-owned, women-
        owned, and veteran owned small issuers in obtaining research 
        coverage;
            (3) the impact on the availability of research coverage for 
        small issuers due to Commission rules;
            (4) a cost-benefit analysis of regulatory options that will 
        support research coverage of small entities and increase 
        transparency in the cost of research provided by broker-
        dealers;
            (5) the impact of the no-action relief on investors in 
        registered investment companies and exempt investment funds, 
        pension funds, endowments, and other asset owners, investment 
        advisers, broker-dealers that provide both investment research 
        and trading services, independent investment advisers that do 
        not provide trading services, broker-dealers that do not 
        provide investment research, and other market participants, 
        including issuers of securities; and
            (6) the potential impacts of the expiration of the no-
        action relief on investors in registered investment companies 
        and exempt investment funds, pension funds, endowments, 
        investment advisers, and other asset owners, broker-dealers 
        that provide both investment research and trading services, 
        independent investment advisers that do not provide trading 
        services, broker-dealers that do not provide investment 
        research, and other market participants, including issuers of 
        securities.
                                                 Union Calendar No. 105

118th CONGRESS

  1st Session

                               H. R. 2622

                          [Report No. 118-134]

_______________________________________________________________________

                                 A BILL

    To amend the Investment Advisers Act of 1940 to codify certain 
   Securities and Exchange Commission no-action letters that exclude 
brokers and dealers compensated for certain research services from the 
       definition of investment adviser, and for other purposes.

_______________________________________________________________________

                             July 11, 2023

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed