[House Report 114-414]
[From the U.S. Government Publishing Office]
114th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 114-414
======================================================================
PROVIDING FOR CONSIDERATION OF THE BILL (H.R. 1675) TO DIRECT THE
SECURITIES AND EXCHANGE COMMISSION TO REVISE ITS RULES SO AS TO
INCREASE THE THRESHOLD AMOUNT FOR REQUIRING ISSUERS TO PROVIDE CERTAIN
DISCLOSURES RELATING TO COMPENSATORY BENEFIT PLANS, AND PROVIDING FOR
CONSIDERATION OF THE BILL (H.R. 766) TO PROVIDE REQUIREMENTS FOR THE
APPROPRIATE FEDERAL BANKING AGENCIES WHEN REQUESTING OR ORDERING A
DEPOSITORY INSTITUTION TO TERMINATE A SPECIFIC CUSTOMER ACCOUNT, TO
PROVIDE FOR ADDITIONAL REQUIREMENTS RELATED TO SUBPOENAS ISSUED UNDER
THE FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT OF
1989, AND FOR OTHER PURPOSES
_______
February 2, 2016.--Referred to the House Calendar and ordered to be
printed
_______
Mr. Stivers, from the Committee on Rules,
submitted the following
R E P O R T
[To accompany H. Res. 595]
The Committee on Rules, having had under consideration
House Resolution 595, by a record vote of 9 to 4, report the
same to the House with the recommendation that the resolution
be adopted.
SUMMARY OF PROVISIONS OF THE RESOLUTION
The resolution provides for consideration of H.R. 1675, the
Encouraging Employee Ownership Act of 2015, under a structured
rule. The resolution provides one hour of general debate
equally divided and controlled by the chair and ranking
minority member of the Committee on Financial Services. The
resolution waives all points of order against consideration of
the bill. The resolution makes in order as original text for
the purpose of amendment an amendment in the nature of a
substitute consisting of the text of Rules Committee Print 114-
43 and provides that it shall be considered as read. The
resolution waives all points of order against that amendment in
the nature of a substitute. The resolution makes in order only
those further amendments printed in part A of this report. Each
such amendment may be offered only in the order printed in this
report, may be offered only by a Member designated in this
report, shall be considered as read, shall be debatable for the
time specified in this report equally divided and controlled by
the proponent and an opponent, shall not be subject to
amendment, and shall not be subject to a demand for division of
the question in the House or in the Committee of the Whole. The
resolution waives all points of order against the amendments
printed in part A of this report. The resolution provides one
motion to recommit with or without instructions.
Section 2 of the resolution provides for consideration of
H.R. 766, the Financial Institution Customer Protection Act of
2015, under a structured rule. The resolution provides one hour
of general debate equally divided and controlled by the chair
and ranking minority member of the Committee on Financial
Services. The resolution waives all points of order against
consideration of the bill. The resolution makes in order as
original text for the purpose of amendment an amendment in the
nature of a substitute consisting of the text of Rules
Committee Print 114-41 and provides that it shall be considered
as read. The resolution waives all points of order against that
amendment in the nature of a substitute. The resolution makes
in order only those further amendments printed in part B of
this report. Each such amendment may be offered only in the
order printed in this report, may be offered only by a Member
designated in this report, shall be considered as read, shall
be debatable for the time specified in this report equally
divided and controlled by the proponent and an opponent, shall
not be subject to amendment, and shall not be subject to a
demand for division of the question in the House or in the
Committee of the Whole. The resolution waives all points of
order against the amendments printed in part B of this report.
The resolution provides one motion to recommit with or without
instructions.
EXPLANATION OF WAIVERS
Although the resolution waives all points of order against
consideration of H.R. 1675, the Committee is not aware of any
points of order. The waiver is prophylactic in nature.
The waiver of all points of order against the amendment in
the nature of a substitute to H.R. 1675 made in order as
original text includes a waiver of clause 7 of rule XVI, which
requires that no motion or proposition on a subject different
from that under consideration shall be admitted under color of
amendment.
Although the resolution waives all points of order against
the amendments to H.R. 1675 printed in part A of this report,
the Committee is not aware of any points of order. The waiver
is prophylactic in nature.
The waiver of all points of order against consideration of
H.R. 766 includes a waiver of Clause 3(e)(1) of rule XIII
(``Ramseyer''), requiring a committee report accompanying a
bill amending or repealing statutes to show, by typographical
device, parts of statute affected.
The waiver is provided because the submission provided by
the Committee on Financial Services was insufficient to meet
the standards established by the rule in its current form. The
Committee on Rules continues to work with the House Office of
Legislative Counsel and committees to determine the steps
necessary to comply with the updated rule.
Although the resolution waives all points of order against
the amendment in the nature of a substitute to H.R. 766 made in
order as original text, the Committee is not aware of any
points of order. The waiver is prophylactic in nature.
Although the resolution waives all points of order against
the amendments to H.R. 766 printed in part B of this report,
the Committee is not aware of any points of order. The waiver
is prophylactic in nature.
COMMITTEE VOTES
The results of each record vote on an amendment or motion
to report, together with the names of those voting for and
against, are printed below:
Rules Committee record vote No. 142
Motion by Mr. Polis make in order and provide the
appropriate waivers for amendment #2 to H.R. 766, offered by
Rep. Perlmutter (CO) and Rep. Heck (WA), which provides a safe
harbor for banks and credit unions to provide financial
services to legal and licensed marijuana businesses. Regulators
would not be able to threaten or limit a bank's deposit
insurance, take any action against or force a depository
institution to halt providing banking services to a marijuana-
related legitimate business. Defeated: 3-9
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Majority Members Vote Minority Members Vote
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Ms. Foxx........................................ Nay Ms. Slaughter..................... Yea
Mr. Cole........................................ Nay Mr. McGovern...................... Yea
Mr. Woodall..................................... Nay Mr. Hastings of Florida........... ............
Mr. Burgess..................................... Nay Mr. Polis......................... Yea
Mr. Stivers..................................... Nay
Mr. Collins..................................... Nay
Mr. Byrne....................................... Nay
Mr. Newhouse.................................... Nay
Mr. Sessions, Chairman.......................... Nay
----------------------------------------------------------------------------------------------------------------
Rules Committee record vote No. 143
Motion by Ms. Foxx to report the rule. Adopted: 9-4
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Majority Members Vote Minority Members Vote
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Ms. Foxx........................................ Yea Ms. Slaughter..................... Nay
Mr. Cole........................................ Yea Mr. McGovern...................... Nay
Mr. Woodall..................................... Yea Mr. Hastings of Florida........... Nay
Mr. Burgess..................................... Yea Mr. Polis......................... Nay
Mr. Stivers..................................... Yea
Mr. Collins..................................... Yea
Mr. Byrne....................................... Yea
Mr. Newhouse.................................... Yea
Mr. Sessions, Chairman.......................... Yea
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SUMMARY OF THE AMENDMENTS TO H.R. 1675 IN PART A MADE IN ORDER
1. DeSaulnier (CA): Directs the SEC to study and report to
Congress the prevalence of employee ownership plans within
companies that include a flexible or social benefit component
in their articles of incorporation, as allowed under relevant
state laws. (10 minutes)
2. Huizenga (MI): Clarifies the disqualification from the
exemption of any broker or associated person who is subject to
suspension or revocation of registration, and the in-
applicability of the exemption to any M&A transaction where one
party or more is a shell company. (10 minutes)
3. Sherman (CA): Provides exclusions for when a mergers and
acquisitions broker is not exempt from registration with the
SEC. (10 minutes)
4. Ellison (MN), Polis (CO): Narrows the exemption to
emerging growth companies and only for a period of three years.
Nullifies that exemption if the Securities and Exchange
Commission permits corporations to file their information using
Inline XBRL formatting. (10 minutes)
5. Issa (CA), Polis (CO): Leaves intact the exemption from
XBRL reporting for Emerging Growth Companies (EGCs,) while
decreasing the exemption for other small companies with total
annual gross revenues of less than $250,000,000 from five years
to two years and allowing the Securities and Exchange
Commission to cancel the exemption within 180 days, instead of
two years, if a cost-benefit analysis shows the benefits of
XBRL reporting as outweighing the costs. (10 minutes)
6. Issa (CA), Polis (CO): Limits all exemptions granted
therein only to companies obligated to begin submitting
financial disclosures to the Securities and Exchange Commission
after the date of enactment. (10 minutes)
7. Ellison (MN), Maloney, Carolyn (NY), Quigley (IL), Polis
(CO): Repeals the Small Company Disclosure Act (H.R. 1965) in
its entirety from the bill thus preserving the S.E.C.
requirement that public companies report their information
related to corporate financial performance as searchable data.
(10 minutes)
SUMMARY OF THE AMENDMENTS TO H.R. 766 IN PART B MADE IN ORDER
1. Sherman (CA): Clarifies that H.R. 766 does not prevent
federal banking regulators from requesting or requiring a
financial institution to terminate a relationship with a
customer because (1) the customer poses a threat to national
security, (2) is engaged in terrorist financing, (3) is doing
business with Iran, North Korea, Syria, or another State
Sponsor of Terrorism, or (4) is doing business with an entity
in any of those countries. (10 minutes)
2. Gosar (AZ): Requires notice to banking customers if a
customer account is terminated at the direction of federal
banking regulators. (10 minutes)
PART A--TEXT OF AMENDMENTS TO H.R. 1675 MADE IN ORDER
1. An Amendment To Be Offered by Representative DeSaulnier of
California or His Designee, Debatable for 10 Minutes
Page 2, after line 17, insert the following:
SEC. 102. STUDY AND REPORT.
Not later than 1 year after the date of the enactment of this
Act, the Securities and Exchange Commission shall complete a
study and submit to Congress a report on the prevalence of
employee ownership plans within companies that have a flexible
or social benefit component in the articles of incorporation or
similar governing documents of such companies, as permitted
under applicable State law.
----------
2. An Amendment To Be Offered by Representative Huizenga of Michigan or
His Designee, Debatable for 10 Minutes
Page 9, after line 16, insert the following:
``(iii) Engages on behalf of any
party in a transaction involving a
public shell company.
``(C) Disqualifications.--An M&A broker is
not exempt from registration under this
paragraph if such broker is subject to--
``(i) suspension or revocation of
registration under paragraph (4);
``(ii) a statutory disqualification
described in section 3(a)(39);
``(iii) a disqualification under the
rules adopted by the Commission under
section 926 of the Investor Protection
and Securities Reform Act of 2010 (15
U.S.C. 77d note); or
``(iv) a final order described in
paragraph (4)(H).''.
Page 9, line 17, strike ``(C)'' and insert ``(D)''.
Page 9, line 23, strike ``(D)'' and insert ``(E)''.
Page 10, line 23, insert ``privately held'' after ``means
a''.
Page 13, beginning on line 6, strike ``year-end balance
sheet'' and all that follows through ``report of the
independent auditor'' and insert ``fiscal year-end financial
statements of the issuer of the securities as customarily
prepared by the management of the issuer in the normal course
of operations and, if the financial statements of the issuer
are audited, reviewed, or compiled, any related statement by
the independent accountant''.
Page 13, after line 20, insert the following:
``(iv) Public shell company.--The
term `public shell company' is a
company that at the time of a
transaction with an eligible privately
held company--
``(I) has any class of
securities registered, or
required to be registered, with
the Commission under section 12
or that is required to file
reports pursuant to subsection
(d);
``(II) has no or nominal
operations; and
``(III) has--
``(aa) no or nominal
assets;
``(bb) assets
consisting solely of
cash and cash
equivalents; or
``(cc) assets
consisting of any
amount of cash and cash
equivalents and nominal
other assets.''.
Page 13, line 21, strike ``(E)'' and insert ``(F)''.
Page 14, beginning on line 2, strike ``subparagraph
(D)(ii)(II)'' and insert ``subparagraph (E)(ii)(II)''.
----------
3. An Amendment To Be Offered by Representative Sherman of California
or His Designee, Debatable for 10 Minutes
Page 9, after line 16, insert the following:
``(C) Disqualification for certain conduct.--
An M&A broker may not make use of the exemption
under this paragraph if the broker--
``(i) has been barred from
association with a broker or dealer by
the Commission, any State, or any self-
regulatory organization; or
``(ii) is suspended from association
with a broker or dealer.
``(D) Transactions involving shell companies
prohibited.--
``(i) In general.--An M&A broker
making use of the exemption under this
paragraph may not engage in a
transaction involving a shell company,
other than a business combination
related shell company.
``(ii) Shell company defined.--In
this subparagraph, the term `shell
company' means a company that--
``(I) has no or nominal
operations; and
``(II) has--
``(aa) no or nominal
assets;
``(bb) assets
consisting solely of
cash and cash
equivalents; or
``(cc) assets
consisting of any
amount of cash and cash
equivalents and nominal
other assets.
``(iii) Business combination related
shell company defined.--In this
subparagraph, the term `business
combination related shell company'
means a shell company that is formed by
an entity that is not a shell company
solely for the purpose of--
``(I) changing the corporate
domicile of such entity solely
within the United States; or
``(II) completing a business
combination transaction (as
defined in section 230.165(f)
of title 17, Code of Federal
Regulations) among one or more
entities other than the shell
company, none of which is a
shell company.
``(E) Financing by m&a brokers prohibited.--
An M&A broker may not provide financing, either
directly or indirectly, related to the transfer
of ownership of an eligible privately held
company.
``(F) Disclosure and consent.--To the extent
an M&A broker represents both buyers and
sellers of an eligible privately held company,
the broker shall provide clear written
disclosure as to the parties the broker
represents and obtain written consent from all
parties to the joint representation.
``(G) Passive buyers prohibited.--An M&A
broker may not engage in a transaction
involving the transfer of ownership of an
eligible privately held company to a passive
buyer or group of passive buyers.
``(H) No authority to bind party to
transfer.--The M&A broker may not bind a party
to a transfer of ownership of an eligible
privately held company.
``(I) Restricted securities.--Any securities
purchased or received by the buyer or M&A
broker in connection with the transfer of
ownership of an eligible privately held company
are restricted securities (as defined in
section 230.144(a)(3) of title 17, Code of
Federal Regulations).
Page 10, line 8, insert ``, and'' after ``officer''.
Page 10, beginning on line 11, strike ``20 percent'' and
insert ``25 percent''.
Page 10, line 14, strike ``20 percent'' and insert ``25
percent''.
Page 10, line 19, strike ``20 percent'' and insert ``25
percent''.
Page 12, beginning on line 19, strike ``will be active in the
management of'' and insert ``will actively operate''.
----------
4. An Amendment To Be Offered by Representative Ellison of Minnesota or
His Designee, Debatable for 10 Minutes
Page 15, beginning on line 4, strike ``and other smaller
companies''.
Page 15, beginning on line 6, strike ``Exemption'' and all
that follows through ``Emerging'' on line 7 and insert ``In
General.--Emerging''.
Page 15, line 12, insert after the period the following: ``An
exemption under this subsection shall continue in effect until
the date that is three years after the date of enactment of
this Act.''.
Beginning on page 15, strike line 13 and all that follows
through page 16, line 3.
Page 16, beginning on line 8, strike ``the exemptions set
forth in subsections (a) and (b)'' and insert ``the exemption
set forth in subsection (a)''.
Strike section 402 and insert the following:
SEC. 402. NULLIFICATION OF EXEMPTION IF SEC ADOPTS DISCLOSURE FORMAT.
(a) Nullification of Exemption.--Notwithstanding any other
provision of this title, the exemption provided by section 401
shall have no force or effect if the Commission, by rule,
adopts the inline XBRL format (or a similar format) for
corporate financial information for which the Commission was
using the XBRL format as of the date of enactment of this Act,
and permits a filing in the inline XBRL format rather than
collecting each financial statement once as a document and
again as an XBRL file. For purposes of this section, an inline
XBRL format is a filing format that allows filers to embed XBRL
data directly in a required financial statement.
(b) Characteristics.--If the Commission adopts the inline
XBRL format (or similar format) as described in subsection (a),
that format adopted shall be a non-proprietary data standard,
both human-readable and machine-readable, that is consistent
with and implements applicable accounting principles, and
permits registrants to file financial statements with embedded
electronic tags.
Page 18, strike lines 6 and 7.
Page 18, line 14, strike ```issuer',''.
----------
5. An Amendment To Be Offered by Representative Issa of California or
His Designee, Debatable for 10 Minutes
Page 15, line 20, insert ``the earlier of'' after ``until''.
Page 15, line 21, strike ``five years'' and insert ``two
years''.
Page 15, line 23, strike ``two years'' and insert ``180
days''.
Page 16, beginning on line 2, strike ``, but no earlier than
three years after enactment of this Act''.
----------
6. An Amendment To Be Offered by Representative Issa of California or
His Designee, Debatable for 10 Minutes
Page 16, after line 9, insert the following:
(d) Limitation to New Filers.--The exemptions set forth in
subsections (a) and (b) shall apply only with respect to
issuers that are first required to file financial statements
and other periodic reporting with the Commission under the
securities laws after the date of the enactment of this Act.
----------
7. An Amendment To Be Offered by Representative Ellison of Minnesota or
His Designee, Debatable for 10 Minutes
Strike title IV.
----------
PART B--TEXT OF AMENDMENTS TO H.R 766 MADE IN ORDER
1. An Amendment To Be Offered by Representative Sherman of California
or His Designee, Debatable for 10 Minutes
Page 2, line 6, strike ``poses'' and all that follows through
``such belief'' and insert the following: ``is, or is acting as
a conduit for, an entity which--
(A) poses a threat to national security;
(B) is involved in terrorist financing;
(C) is an agency of the government of Iran,
North Korea, Syria, or any country listed from
time to time on the State Sponsors of Terrorism
list;
(D) is located in, or is subject to the
jurisdiction of, any country specified in
subparagraph (C); or
(E) does business with any entity described
in subparagraph (C) or (D), unless the
appropriate Federal banking agency determines
that the customer or group of customers has
used due diligence to avoid doing business with
any entity described in subparagraph (C) or
(D),
such belief
Page 2, line 9, strike ``materiality requirement under
paragraph (1)(A)'' and insert ``requirement under paragraph
(1)''.
Page 3, line 16, after ``security'' insert the following: ``,
or are otherwise described under subsection (a)(2)''.
----------
2. An Amendment To Be Offered by Representative Gosar of Arizona or His
Designee, Debatable for 10 Minutes
Page 3, strike lines 4 through 9 and insert the following:
(1) Notice required.--Except as provided under
paragraph (2), if an appropriate Federal banking agency
orders a depository institution to terminate a specific
customer account or a group of customer accounts, the
depository institution shall inform the customer or
customers of the justification for the customer's
account termination described under subsection (b).
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