[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4648 Introduced in House (IH)]

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118th CONGRESS
  1st Session
                                H. R. 4648

 To amend the Securities Exchange Act of 1934 to provide for duties of 
  certain investment advisors, asset managers, and pension funds with 
  respect to voting on shareholder proposals, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 14, 2023

Mr. Loudermilk introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
 To amend the Securities Exchange Act of 1934 to provide for duties of 
  certain investment advisors, asset managers, and pension funds with 
  respect to voting on shareholder proposals, 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. DUTIES OF INVESTMENT ADVISORS, ASSET MANAGERS, AND PENSION 
              FUNDS.

    (a) In General.--Section 13(f) of the Securities Exchange Act of 
1934 (15 U.S.C. 78m(f)) is amended by adding at the end the following:
            ``(7) Disclosures by institutional investment managers in 
        connection with proxy advisory firms.--
                    ``(A) In general.--Every institutional investment 
                manager which uses the mails, or any means or 
                instrumentality of interstate commerce in the course of 
                its business as an institutional investment manager, 
                which engages a proxy advisory firm, and which 
                exercises voting power with respect to accounts holding 
                equity securities of a class described in subsection 
                (d)(1) or otherwise becomes or is deemed to become a 
                beneficial owner of any security of a class described 
                in subsection (d)(1) upon the purchase or sale of a 
                security-based swap that the Commission may define by 
                rule, shall file an annual report with the Commission 
                containing--
                            ``(i) an explanation of how the 
                        institutional investment manager voted with 
                        respect to each shareholder proposal;
                            ``(ii) the percentage of votes cast on 
                        shareholder proposals that were consistent with 
                        proxy advisory firm recommendations, for each 
                        proxy advisory firm retained by the 
                        institutional investment manager;
                            ``(iii) an explanation of--
                                    ``(I) how the institutional 
                                investment manager took into 
                                consideration proxy advisory firm 
                                recommendations in making voting 
                                decisions, including the degree to 
                                which the institutional investment 
                                manager used those recommendations in 
                                making voting decisions;
                                    ``(II) how often the institutional 
                                investment manager voted consistent 
                                with a recommendation made by a proxy 
                                advisory firm, expressed as a 
                                percentage;
                                    ``(III) how such votes are 
                                reconciled with the fiduciary duty of 
                                the institutional investment manager to 
                                vote in the best economic interests of 
                                shareholders;
                                    ``(IV) how frequently votes were 
                                changed when an error occurred or due 
                                to new information from issuers; and
                                    ``(V) the degree to which 
                                investment professionals of the 
                                institutional investment manager were 
                                involved in proxy voting decisions; and
                            ``(iv) a certification that the voting 
                        decisions of the institutional investment 
                        manager were based solely on the best economic 
                        interest of the shareholders on behalf of whom 
                        the institutional investment manager holds 
                        shares.
                    ``(B) Requirements for larger institutional 
                investment managers.--Every institutional investment 
                manager described in subparagraph (A) that has an 
                aggregate fair market value on the last trading day in 
                any of the preceding twelve months of at least 
                $100,000,000,000 shall--
                            ``(i) in any materials provided to 
                        customers and related to customers voting their 
                        shares, clarify that shareholders are not 
                        required to vote on every proposal;
                            ``(ii) with respect to each shareholder 
                        proposal for which the institutional investment 
                        manager votes (other than votes consistent with 
                        the recommendation of a board of directors 
                        composed of a majority of independent 
                        directors) perform an economic analysis before 
                        making such vote, to determine that the vote is 
                        in the best economic interest of the 
                        shareholders on behalf of whom the 
                        institutional investment manager holds shares; 
                        and
                            ``(iii) include each economic analysis 
                        required under clause (ii) in the annual report 
                        required under subparagraph (A).
                    ``(C) Certification requirement.--Each report 
                required under this paragraph shall be certified by the 
                chief executive officer and chief financial officer of 
                the institutional investment manager.
                    ``(D) Best economic interest defined.--In this 
                paragraph, the term `best economic interest' means 
                decisions that seek to maximize investment returns over 
                a time horizon consistent with the investment 
                objectives and risk management profile of the fund in 
                which shareholders are invested.''.
    (b) Proxy Advisory Firm Defined.--Section 3(a) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended by adding at the end 
the following:
            ``(82) Proxy advisory firm.--The term `proxy advisory 
        firm'--
                    ``(A) means any person who is primarily engaged in 
                the business of providing proxy voting advice, 
                research, analysis, ratings, or recommendations to 
                clients, which conduct constitutes a solicitation 
                within the meaning of section 14; and
                    ``(B) does not include any person that is exempt 
                under law or regulation from the requirements otherwise 
                applicable to persons engaged in such a 
                solicitation.''.
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