[Congressional Record Volume 163, Number 146 (Monday, September 11, 2017)]
[Senate]
[Pages S5166-S5168]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             FAIR ACCESS TO INVESTMENT RESEARCH ACT OF 2017

  Mr. McCONNELL. Mr. President, I ask unanimous consent that the Senate 
proceed to the immediate consideration of Calendar No. 11, S. 327.
  The PRESIDING OFFICER. The clerk will report the bill by tile.
  The senior assistant legislative clerk read as follows:

       A bill (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.

  There being no objection, the Senate proceeded to consider the bill, 
which had been reported from the Committee on Banking, Housing, and 
Urban Affairs, with amendments, as follows:
  (The parts of the bill intended to be stricken are shown in boldface 
brackets and the parts of the bill intended to be inserted are shown in 
italics.)

                                 S. 327

       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

[[Page S5167]]

     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:
       [(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.]
       ([2]1) 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)).
  Mr. McCONNELL. Mr. President, I ask unanimous consent that the 
committee-reported amendments be considered; the Warren-Heller 
amendment at the desk be considered and agreed to; the committee-
reported amendments, as amended, be agreed to; the bill, as amended, be 
considered read a third time and passed; and the motion to reconsider 
be considered made and laid upon the table.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 935) was agreed to, as follows:

                     (Purpose: To improve the bill)

       On page 2, line 14, insert ``, other than a broker or 
     dealer that is an investment adviser to the fund or an 
     affiliated person of the investment adviser to the fund'' 
     before the dash.
       On page 8, strike line 6 and insert the following:
       (e) Exception.--The safe harbor under subsection (a) shall 
     not apply to the publication or distribution by a broker or a 
     dealer of a covered investment fund research report, the 
     subject of which is a business development company or a 
     registered closed-end investment company, during the time 
     period described in section 230.139(a)(1)(i)(A)(1) of title 
     17, Code of Federal Regulations, except where expressly 
     permitted by the rules and regulations of the Securities and 
     Exchange Commission under the Federal securities laws.
       (f) Definitions.--For purposes of this Act:
       (1) The term ``affiliated person'' has the meaning given 
     the term in section 2(a) of the Investment Company Act of 
     1940 (15 U.S.C. 80a-2(a)).
       On page 8, line 15, strike ``(1)'' and insert ``(2)''.
       On page 9, line 20, strike ``(2)'' and insert ``(3)''.
       On page 10, line 2, insert ``, or any research report 
     published or distributed by any broker or dealer that is an 
     investment adviser (or an affiliated person of an investment 
     adviser) for the covered investment fund'' before the period 
     at the end.
       On page 10, line 3, strike ``(3)'' and insert ``(4)''.
       On page 10, after line 4, add the following:
       (5) The term ``investment adviser'' has the meaning given 
     the term in section 2(a) of the Investment Company Act of 
     1940 (15 U.S.C. 80a-2(a)).
       On page 10, line 5, strike ``(4)'' and insert ``(6)''.
       On page 10, line 10, strike ``(5)'' and insert ``(7)''.
  The committee-reported amendments, as amended, were agreed to.
  The bill (S. 327), as amended, was ordered to be engrossed for a 
third reading, was read the third time, and passed, as follows:

                                 S. 327

       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 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 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, other than a broker or 
     dealer that is an investment adviser to the fund or an 
     affiliated person of the investment adviser to the fund--
       (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 
     (1) or (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 
     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 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

[[Page S5168]]

     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 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 (1) or (2) of 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)).
       (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) Exception.--The safe harbor under subsection (a) shall 
     not apply to the publication or distribution by a broker or a 
     dealer of a covered investment fund research report, the 
     subject of which is a business development company or a 
     registered closed-end investment company, during the time 
     period described in section 230.139(a)(1)(i)(A)(1) of title 
     17, Code of Federal Regulations, except where expressly 
     permitted by the rules and regulations of the Securities and 
     Exchange Commission under the Federal securities laws.
       (f) Definitions.--For purposes of this Act:
       (1) The term ``affiliated person'' has the meaning given 
     the term in section 2(a) of the Investment Company Act of 
     1940 (15 U.S.C. 80a-2(a)).
       (2) 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.
       (3) 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, or any research 
     report published or distributed by any broker or dealer that 
     is an investment adviser (or an affiliated person of an 
     investment adviser) for the covered investment fund.
       (4) The term ``FINRA'' means the Financial Industry 
     Regulatory Authority.
       (5) The term ``investment adviser'' has the meaning given 
     the term in section 2(a) of the Investment Company Act of 
     1940 (15 U.S.C. 80a-2(a)).
       (6) 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.
       (7) The term ``self-regulatory organization'' has the 
     meaning given that term under section 3(a)(26) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(26)).

                          ____________________