[Congressional Record Volume 164, Number 9 (Tuesday, January 16, 2018)]
[House]
[Pages H183-H185]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
EXPANDING INVESTMENT OPPORTUNITIES ACT
Mr. DUFFY. Mr. Speaker, I move to suspend the rules and pass the bill
(H.R. 4279) to direct the Securities and Exchange Commission to revise
any rules necessary to enable closed-end companies to use the
securities offering and proxy rules that are available to other issuers
of securities, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 4279
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 ``Expanding Investment
Opportunities Act''.
SEC. 2. PARITY FOR CLOSED-END COMPANIES REGARDING OFFERING
AND PROXY RULES.
(a) Revision to Rules.--Not later than the end of the 180
period beginning on the date of enactment of this Act, the
Securities and Exchange Commission shall propose and, not
later than 1 year after the date of enactment of this Act,
the Securities and Exchange Commission shall finalize any
rules, as appropriate, to allow any closed-end company, as
defined in section 5(a)(2) of the Investment Company Act of
1940 (15 U.S.C. 80a-5), that is registered as an investment
company under such Act, and is listed on a national
securities exchange or that makes periodic repurchase offers
pursuant to section 270.23c-3 of title 17, Code of Federal
Regulations, to use the securities offering and proxy rules,
subject to conditions the Commission determines appropriate,
that are available to other issuers that are required to file
reports under section 13 or section 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m; 78o(d)). Any action that
the Commission takes pursuant to this subsection shall
consider the availability of information to investors,
including what disclosures constitute adequate information to
be designated as a ``well-known seasoned issuer''.
(b) Treatment if Revisions Not Completed in a Timely
Manner.--If the Commission fails to complete the revisions
required by subsection (a) by the time required by such
subsection, any registered closed-end company that is listed
on a national securities exchange or that makes periodic
repurchase offers pursuant to section 270.23c-3 of title 17,
Code of Federal Regulations, shall be deemed to be an
eligible issuer under the final rule of the Commission titled
``Securities Offering Reform'' (70 Fed. Reg. 44722; published
August 3, 2005).
(c) Rules of Construction.--
(1) No effect on rule 482.--Nothing in this section or the
amendments made by this section shall be construed to impair
or limit in any way a registered closed-end company from
using section 230.482 of title 17, Code of Federal
Regulations, to distribute sales material.
(2) References.--Any reference in this section to a section
of title 17, Code of Federal Regulations, or to any form or
schedule means such rule, section, form, or schedule, or any
successor to any such rule, section, form, or schedule.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Wisconsin (Mr. Duffy) and the gentleman from Illinois (Mr. Foster) each
will control 20 minutes.
The Chair recognizes the gentleman from Wisconsin.
General Leave
Mr. DUFFY. Mr. Speaker, I ask unanimous consent that all Members may
have 5 legislative days within
[[Page H184]]
which to revise and extend their remarks and include extraneous
material on this bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Wisconsin?
There was no objection.
Mr. DUFFY. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, closed-end funds are important retirement savings and
investment vehicles for retail investors and serve as a long-term
source of capital for operating companies, which helps promote job
creation, research and development, and economic growth.
Despite the many benefits of closed-end funds, the number of closed-
end funds has been declining over the last several years.
Closed-end funds occupy a unique space within a framework of
regulated investment companies. They have opportunities to invest in
small enterprises and stocks and bonds that they may issue that would
not necessarily be ones that are open-ended or invested in by mutual
funds.
Since the SEC has adopted its 2005 offering reform for traditional
operating companies, the SEC has had more than 12 years to consider a
parallel framework for closed-end funds, but has failed to do so. H.R.
4279 would direct the SEC to draft rules as appropriate to permit
closed-end funds to take advantage of the 2005 offering reforms.
If the SEC does not finalize these rules within 1 year, closed-end
funds that otherwise meet the requirements could take advantage of the
2005 offering reforms until the SEC adopts a rule. By simplifying the
closed-end fund offering process and liberalizing existing restrictions
on communications, the legislation would reduce unnecessary regulatory
burdens that raise cost for investors. In turn, this would enhance the
ability of closed-end funds to act as a source of financing for the
economy.
I think this is a commonsense piece of legislation. I would also note
that, in a committee that often doesn't see a lot of bipartisanship,
this bill passed out of committee with a vote of 58-2, signifying broad
and wide support amongst the parties and from our committee.
Mr. Speaker, I reserve the balance of my time.
{time} 1645
Mr. FOSTER. Mr. Speaker, I yield myself such time as I may consume,
and rise today in support of H.R. 4279.
This was a thoroughly negotiated bill, incorporating the views of
affected funds and consumer and investor advocacy groups.
My staff worked with Congressman Hollingsworth's staff up to the
eleventh hour in committee, demonstrating the importance of bipartisan
relationships in creating legislation. The ranking member's staff and
the chairman's staff worked with us throughout this process, and I
offered an amendment that we all agreed to.
My amendment simply changed the approach the bill used to accomplish
parity for closed-end investment funds with operating companies under
the SEC's securities offering reforms of 2005.
Moving this bill in regular order, we heard in a legislative hearing
that there were reasons why parity might not mean identical treatment.
This amendment would direct the SEC to propose, within 180 days, a rule
that would allow closed-end funds that are listed or have periodic
redemptions--interval funds--to be treated as well-known seasoned
issuers, WKSIs.
This rule will have to be finalized within a year, or else the bill
will provide a statutory ability for these companies to qualify if they
meet the other criteria currently applicable to operating companies.
The SEC can act at any time thereafter to propose rules that would be
controlling for closed-end funds covered by the bill.
I encourage the SEC to consider the disclosure regime under the
Investment Company Act of 1940 to promulgate a rule that will allow
listed closed-end funds and interval funds to use the streamlined
offering and proxy rules that are available to WKSIs.
This bill will increase options for investors and savers while
ensuring that protections appropriate to a WKSI are applied to closed-
end and interval funds.
Mr. Speaker, I encourage all of my colleagues to support this bill as
it comes to a decision on the floor, and I reserve the balance of my
time.
Mr. DUFFY. Mr. Speaker, I yield 5 minutes to the gentleman from
Indiana (Mr. Hollingsworth), the sponsor of this legislation.
Mr. HOLLINGSWORTH. Mr. Speaker, I rise today in support of H.R. 4279.
There are two big problems that I hear a lot about in district. The
first is ensuring that mom-and-pop investors in retail Main Street
America have all of the options available to them to be able to invest
for their future retirement and invest for their kids' college
education. They want a cornucopia of different investment opportunities
for them to be able to pursue: making the decision as to whether mutual
funds are the right answer, making the decision as to whether open-end
funds are the right answer, making the decision as to whether ETFs are
the right answer, and making the decision as to whether, yes, closed-
end funds are the right answer.
Over the last 10 years, we have seen closed-end funds decline in
number by 81 percent. Some of that decline has been because of the
regulatory burden, the onerous burden that is on them, compared to some
of their counterparts. We want to make sure that ultimately there might
be reasons for a level playing field between them and some other well-
known seasoned issuers.
The second big problem that I continue to hear about is how dynamic
the market is; how fleeting opportunities are; and how we need to make
sure that there is not long, duplicative timelines and not onerous,
duplicative paperwork that companies and closed-end funds are having to
fill out and having to wait in order to take advantage of the
opportunities that may exist in the market. We want to truncate down
that time without removing any of the regulation and governance that is
so important to ensuring the transparency and credibility of U.S.
markets around the world.
I want to thank Mr. Foster because, as he well said, from day one he
has been diligently working on both of those problems. We have been
able to work together and, as he said, negotiate all the way through
the eleventh hour, not to come up with a shotgun solution that doesn't
address both of these, but, instead, to come up with a comprehensive
solution that solves both of these problems: the problem for the Main
Street mom-and-pop 401(k) investor that wants to be able to pursue
different opportunities in saving for their retirement, and for
companies that are pursuing dynamic opportunities in the market. I want
them to be as competitive as possible in this global marketplace.
Mr. Speaker, I thank Mr. Foster for all of his effort along the way.
I want to thank the committee for their 58-2 support of this
legislation. I am hopeful and I urge my colleagues on the floor to vote
for this legislation as well. I think this is a commonsense, thoughtful
approach to both of those problems that I hear far too often when I am
back home in my district.
Mr. FOSTER. Mr. Speaker, at this point I have no further speakers, so
I would like to close with a few words here.
This bipartisan bill will increase options for investors and savers
while ensuring that the protections appropriate to a WKSI are applied
to closed-end fund and interval funds. It is my hope that we can do
more bipartisan work like this in our committee and in our Congress for
the remainder of this term.
Mr. Speaker, I yield back the balance of my time.
Mr. DUFFY. Mr. Speaker, this is a unique space where, oftentimes, we
would look to the SEC to actually act. Because they haven't acted, I am
proud to say I am part of a group in Congress that are willing to act
proactively to make sure, again, we are protecting investors,
protecting savers, but also helping capital flow into spaces that are
so needed by this reform.
Mr. Speaker, again, I encourage all of my colleagues to support this
commonsense, bipartisan bill, and I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Wisconsin (Mr. Duffy) that the House suspend the rules
and pass the bill, H.R. 4279, as amended.
[[Page H185]]
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. DUFFY. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.
____________________