[House Report 118-324]
[From the U.S. Government Publishing Office]


118th Congress }                                          { Report 
                        HOUSE OF REPRESENTATIVES
 1st Session   }                                          { 118-324

======================================================================
 
       PROTECTING AMERICANS' RETIREMENT SAVINGS FROM POLITICS ACT

                                _______
                                

 December 19, 2023.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. McHenry, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 4767]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 4767) to make revisions to the Federal 
securities laws with respect to shareholder proposals, proxy 
voting, and the registration of proxy advisory firms, and for 
other purposes, having considered the same, reports favorably 
thereon with an amendment and recommends that the bill as 
amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Protecting 
Americans' Retirement Savings from Politics Act''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; Table of contents.

                   TITLE I--PERFORMANCE OVER POLITICS

Sec. 101. Exclusion of certain substantially similar shareholder 
proposals.

              TITLE II--NO EXPENSIVE, STIFLING GOVERNANCE

Sec. 201. Exclusion of certain shareholder proposals.

       TITLE III--EXCLUSION OF CERTAIN ESG SHAREHOLDER PROPOSALS

Sec. 301. Exclusion of certain ESG shareholder proposals.

TITLE IV--EXCLUSIONS AVAILABLE REGARDLESS OF SIGNIFICANT SOCIAL POLICY 
                                 ISSUE

Sec. 401. Exclusions available regardless of significant social policy 
issue.

               TITLE V--CORPORATE GOVERNANCE EXAMINATION

Sec. 501. Study of certain issues with respect to shareholder 
proposals, proxy advisory firms, and the proxy process.

             TITLE VI--REGISTRATION OF PROXY ADVISORY FIRMS

Sec. 601. Registration of proxy advisory firms.

    TITLE VII--LIABILITY FOR CERTAIN FAILURES TO DISCLOSE MATERIAL 
            INFORMATION OR MAKING OF MATERIAL MISSTATEMENTS

Sec. 701. Liability for certain failures to disclose material 
information or making of material misstatements.

TITLE VIII--DUTIES OF INVESTMENT ADVISORS, ASSET MANAGERS, AND PENSION 
                                 FUNDS

Sec. 801. Duties of investment advisors, asset managers, and pension 
funds.

                TITLE IX--PROTECTING AMERICANS' SAVINGS

Sec. 901. Requirements related to proxy voting.

                    TITLE X--EMPOWERING SHAREHOLDERS

Sec. 1001. Proxy voting of passively managed funds.

             TITLE XI--PROTECTING RETAIL INVESTORS' SAVINGS

Sec. 1101. Best interest based on pecuniary factors.
Sec. 1102. Study on climate change and other environmental disclosures 
in municipal bond market.
Sec. 1103. Study on solicitation of municipal securities business.

                   TITLE I--PERFORMANCE OVER POLITICS

SEC. 101. EXCLUSION OF CERTAIN SUBSTANTIALLY SIMILAR SHAREHOLDER 
                    PROPOSALS.

  The Securities and Exchange Commission shall revise the resubmission 
requirements in section 240.14a-8(i)(12) of title 17, Code of Federal 
Regulations, to provide that a shareholder proposal may be excluded by 
an issuer from its proxy or consent solicitation material for a meeting 
of the shareholders of such issuer if the shareholder proposal 
addresses substantially the same subject matter as a proposal, or 
proposals, previously included in the proxy or consent solicitation 
material for a meeting of the shareholders of such issuer--
          (1) for a meeting of the shareholders conducted in the 
        preceding 5 calendar years; and
          (2) if the most recent vote--
                  (A) occurred in the preceding 3 calendar years; and
                  (B)(i) if voted on once during such 5-year period, 
                received less than 10 percent of the votes cast;
                  (ii) if voted on twice during such 5-year period, 
                received less than 20 percent of the votes cast; or
                  (iii) if voted on three or more times during such 5-
                year period, received less than 40 percent of the votes 
                cast.

              TITLE II--NO EXPENSIVE, STIFLING GOVERNANCE

SEC. 201. EXCLUSION OF CERTAIN SHAREHOLDER PROPOSALS.

  (a) Exclusion of Certain Shareholder Proposals.--A shareholder 
proposal submitted to an issuer pursuant to section 240.14a-8 of title 
17, Code of Federal Regulations, may be excluded by an issuer from its 
proxy or consent solicitation material for a meeting of the 
shareholders of such issuer if the shareholder proposal--
          (1) has been substantially implemented by the issuer by 
        implementing policies, practices, or procedures that compare 
        favorably with the guidelines of the proposal and address the 
        proposal's underlying concerns; or
          (2) substantially duplicates by having the same principal 
        thrust or principal focus as another proposal previously 
        submitted to the issuer by another proponent that will be 
        included in such material.
  (b) Nullification of Proposed Rule.--The Securities and Exchange 
Commission may not finalize or apply the positions contained in the 
proposed rule entitled ``Substantial Implementation, Duplication, and 
Resubmission of Shareholder Proposals under Exchange Act Rule 14a-8'' 
(87 Fed. Reg. 45052), issue any substantially similar rule, or apply 
any substantially similar rule, including with respect to a no-action 
or other interpretive request.

       TITLE III--EXCLUSION OF CERTAIN ESG SHAREHOLDER PROPOSALS

SEC. 301. EXCLUSION OF CERTAIN ESG SHAREHOLDER PROPOSALS.

  A shareholder proposal submitted to an issuer pursuant to section 
240.14a-8 of title 17, Code of Federal Regulations, may be excluded by 
an issuer from its proxy or consent solicitation material for a meeting 
of the shareholders of such issuer if the subject matter of the 
shareholder proposal is environmental, social, or political (or a 
similar subject matter).

TITLE IV--EXCLUSIONS AVAILABLE REGARDLESS OF SIGNIFICANT SOCIAL POLICY 
                                 ISSUE

SEC. 401. EXCLUSIONS AVAILABLE REGARDLESS OF SIGNIFICANT SOCIAL POLICY 
                    ISSUE.

  An issuer may exclude a shareholder proposal pursuant to section 
240.14a-8(i) of title 17, Code of Federal Regulations, without regard 
to whether such shareholder proposal relates to a significant social 
policy issue.

               TITLE V--CORPORATE GOVERNANCE EXAMINATION

SEC. 501. STUDY OF CERTAIN ISSUES WITH RESPECT TO SHAREHOLDER 
                    PROPOSALS, PROXY ADVISORY FIRMS, AND THE PROXY 
                    PROCESS.

  Section 4(j) of the Securities Exchange Act of 1934 (15 U.S.C. 
78d(j)) is amended by adding at the end the following:
          ``(10) Study of certain issues with respect to shareholder 
        proposals, proxy advisory firms, and the proxy process.--
                  ``(A) In general.--Not later than 180 days after the 
                date of the enactment of this paragraph, and every 5 
                years thereafter, the Commission shall conduct a 
                comprehensive study on shareholder proposals, proxy 
                advisory firms, and the proxy process.
                  ``(B) Scope of study.--The studies required under 
                subparagraph (A) shall cover--
                          ``(i) the previous 10 years, with respect to 
                        the initial study; and
                          ``(ii) the previous 5 years, with respect to 
                        each other study.
                  ``(C) Contents.--Each study required under 
                subparagraph (A) shall address the following issues:
                          ``(i) The financial and other incentives and 
                        obligations of all groups involved in the proxy 
                        process.
                          ``(ii) A consideration of whether financial 
                        and other incentives have created a process 
                        that no longer serves the economic interests of 
                        long-term retail investors.
                          ``(iii) An analysis of whether regulations 
                        and financial incentives have created and 
                        protected the outsized influence of proxy 
                        advisors or a duopoly in proxy advice, and if 
                        so, what are the benefits and costs of that 
                        outsized influence or duopoly.
                          ``(iv) The costs incurred by issuers in 
                        responding to politically-, environmentally-, 
                        or socially-motivated shareholder proposals.
                          ``(v) An assessment, including a cost-benefit 
                        analysis, of the adequacy of the current 
                        submission thresholds in Rule 14a-8 (17 CFR 
                        240.14a-8) to ensure that shareholder 
                        proponents have demonstrated a meaningful 
                        economic stake in a company, which is 
                        appropriate to effectively serve markets and 
                        shareholders at large.
                          ``(vi) An examination of the extent to which 
                        the politicization of the shareholder proposal 
                        process is increasing the operating costs of 
                        public companies.
                          ``(vii) An analysis of the impact that 
                        shareholder proposals have on discouraging 
                        private companies from going public.
                          ``(viii) An evaluation of the risk that 
                        shareholder proposals may contribute to the 
                        balkanization of the U.S. economy over time.
                          ``(ix) A thorough assessment of the economic 
                        analysis, if any, conducted by proxy advisory 
                        firms and institutional shareholders when 
                        recommending or voting in favor of shareholder 
                        proposals.
                          ``(x) A review of the extent to which 
                        institutional investors, who owe fiduciary 
                        duties, rely on proxy advisory firm 
                        recommendations.
                          ``(xi) An assessment of whether, in light of 
                        their significant influence on corporate 
                        actions and vote outcomes, proxy advisors are 
                        subject to sufficient and effective regulation 
                        to ensure that their policies and 
                        recommendations are accurate, free of 
                        conflicts, and benefit the economic best 
                        interest of shareholders at large.
                  ``(D) Report.--At the completion of each study 
                required under subparagraph (A) the Commission shall 
                issue a report to the Committee on Banking, Housing, 
                and Urban Affairs of the Senate and the Committee on 
                Financial Services of the House of Representatives that 
                includes the results of the study.''.

             TITLE VI--REGISTRATION OF PROXY ADVISORY FIRMS

SEC. 601. REGISTRATION OF PROXY ADVISORY FIRMS.

  (a) Amendment.--The Securities Exchange Act of 1934 (15 U.S.C. 78a et 
seq.) is amended by inserting after section 15G the following new 
section:

``SEC. 15H. REGISTRATION OF PROXY ADVISORY FIRMS.

  ``(a) Conduct Prohibited.--It shall be unlawful for a proxy advisory 
firm to make use of the mails or any means or instrumentality of 
interstate commerce to provide proxy voting advice, research, analysis, 
ratings or recommendations to any client, unless such proxy advisory 
firm is registered under this section.
  ``(b) Registration Procedures.--
          ``(1) Application for registration.--
                  ``(A) In general.--A proxy advisory firm shall file 
                with the Commission an application for registration, in 
                such form as the Commission shall require, by rule, and 
                containing the information described in subparagraph 
                (B).
                  ``(B) Required information.--An application for 
                registration under this section shall contain--
                          ``(i) a certification that the applicant is 
                        able to consistently provide proxy advice based 
                        on accurate information;
                          ``(ii) with respect to clients of the 
                        applicant that vote shares held on behalf of 
                        shareholders, a certification that the 
                        applicant--
                                  ``(I) will provide proxy voting 
                                advice only in the best economic 
                                interest of those shareholders; and
                                  ``(II) has the requisite expertise to 
                                ensure that voting recommendations are 
                                in the best economic interest of those 
                                shareholders;
                          ``(iii) information on the procedures and 
                        methodologies that the applicant uses to ensure 
                        that proxy voting recommendations are in the 
                        best economic interest of the ultimate 
                        shareholders;
                          ``(iv) information on the organizational 
                        structure of the applicant;
                          ``(v) an explanation of whether or not the 
                        applicant has in effect a code of ethics, and 
                        if not, the reasons therefor;
                          ``(vi) a description of any potential or 
                        actual conflict of interest relating to the 
                        provision of proxy advisory services, including 
                        those arising out of or resulting from the 
                        ownership structure of the applicant or the 
                        provision of other services by the applicant or 
                        any person associated with the applicant;
                          ``(vii) the policies and procedures in place 
                        to publicly disclose and manage conflicts of 
                        interest under subsection (f);
                          ``(viii) information related to the 
                        professional and academic qualifications of 
                        staff tasked with providing proxy advisory 
                        services; and
                          ``(ix) any other information and documents 
                        concerning the applicant and any person 
                        associated with such applicant as the 
                        Commission, by rule, may prescribe as necessary 
                        or appropriate in the public interest or for 
                        the protection of investors.
          ``(2) Review of application.--
                  ``(A) Initial determination.--Not later than 90 days 
                after the date on which the application for 
                registration is filed with the Commission under 
                paragraph (1) (or within such longer period as to which 
                the applicant consents) the Commission shall--
                          ``(i) by order, grant registration; or
                          ``(ii) institute proceedings to determine 
                        whether registration should be denied.
                  ``(B) Conduct of proceedings.--
                          ``(i) Content.--Proceedings referred to in 
                        subparagraph (A)(ii) shall--
                                  ``(I) include notice of the grounds 
                                for denial under consideration and an 
                                opportunity for hearing; and
                                  ``(II) be concluded not later than 
                                120 days after the date on which the 
                                application for registration is filed 
                                with the Commission under paragraph 
                                (1).
                          ``(ii) Determination.--At the conclusion of 
                        such proceedings, the Commission, by order, 
                        shall grant or deny such application for 
                        registration.
                          ``(iii) Extension authorized.--The Commission 
                        may extend the time for conclusion of such 
                        proceedings for not longer than 90 days, if the 
                        Commission finds good cause for such extension 
                        and publishes its reasons for so finding, or 
                        for such longer period as to which the 
                        applicant consents.
                  ``(C) Grounds for decision.--The Commission shall 
                grant registration under this subsection--
                          ``(i) if the Commission finds that the 
                        requirements of this section are satisfied; and
                          ``(ii) unless the Commission finds (in which 
                        case the Commission shall deny such 
                        registration) that--
                                  ``(I) the applicant has failed to 
                                certify to the Commission's 
                                satisfaction that it is able to 
                                consistently provide proxy advice based 
                                on accurate information and to 
                                materially comply with the procedures 
                                and methodologies disclosed under 
                                paragraph (1)(B) and with subsections 
                                (f) and (g); or
                                  ``(II) if the applicant were so 
                                registered, its registration would be 
                                subject to suspension or revocation 
                                under subsection (d).
          ``(3) Public availability of information.--Subject to section 
        24, the Commission shall make the information and documents 
        submitted to the Commission by a proxy advisory firm in its 
        completed application for registration, or in any amendment 
        submitted under paragraph (1) or (2) of subsection (c), 
        publicly available on the Commission's website, or through 
        another comparable, readily accessible means.
  ``(c) Update of Registration.--
          ``(1) Update.--Each registered proxy advisory firm shall 
        promptly amend and update its application for registration 
        under this section if any information or document provided 
        therein becomes materially inaccurate, except that a registered 
        proxy advisory firm is not required to amend the information 
        required to be filed under subsection (b)(1)(B)(i) by filing 
        information under this paragraph, but shall amend such 
        information in the annual submission of the organization under 
        paragraph (2) of this subsection.
          ``(2) Certification.--Not later than 90 calendar days after 
        the end of each calendar year, each registered proxy advisory 
        firm shall file with the Commission an amendment to its 
        registration, in such form as the Commission, by rule, may 
        prescribe as necessary or appropriate in the public interest or 
        for the protection of investors--
                  ``(A) certifying that the information and documents 
                in the application for registration of such registered 
                proxy advisory firm continue to be accurate in all 
                material respects; and
                  ``(B) listing any material change that occurred to 
                such information or documents during the previous 
                calendar year.
  ``(d) Censure, Denial, or Suspension of Registration; Notice and 
Hearing.--The Commission, by order, shall censure, place limitations on 
the activities, functions, or operations of, suspend for a period not 
exceeding 12 months, or revoke the registration of any registered proxy 
advisory firm if the Commission finds, on the record after notice and 
opportunity for hearing, that such censure, placing of limitations, 
suspension, or revocation is necessary for the protection of investors 
and in the public interest and that such registered proxy advisory 
firm, or any person associated with such an organization, whether prior 
to or subsequent to becoming so associated--
          ``(1) has committed or omitted any act, or is subject to an 
        order or finding, enumerated in subparagraph (A), (D), (E), 
        (H), or (G) of section 15(b)(4), has been convicted of any 
        offense specified in section 15(b)(4)(B), or is enjoined from 
        any action, conduct, or practice specified in subparagraph (C) 
        of section 15(b)(4), during the 10-year period preceding the 
        date of commencement of the proceedings under this subsection, 
        or at any time thereafter;
          ``(2) has been convicted during the 10-year period preceding 
        the date on which an application for registration is filed with 
        the Commission under this section, or at any time thereafter, 
        of--
                  ``(A) any crime that is punishable by imprisonment 
                for 1 or more years, and that is not described in 
                section 15(b)(4)(B); or
                  ``(B) a substantially equivalent crime by a foreign 
                court of competent jurisdiction;
          ``(3) is subject to any order of the Commission barring or 
        suspending the right of the person to be associated with a 
        registered proxy advisory firm;
          ``(4) fails to furnish the certifications required under 
        subsections (b)(2)(C)(ii)(I) and (c)(2);
          ``(5) has engaged in one or more prohibited acts enumerated 
        in paragraph (1);
          ``(6) fails to maintain adequate financial and managerial 
        resources to consistently offer advisory services to clients 
        that vote shares held on behalf of shareholders consistent with 
        the best economic interest of those shareholders, including by 
        failing to comply with subsections (f) or (g);
          ``(7) fails to maintain adequate expertise to ensure that 
        proxy advisory services for clients that vote shares held on 
        behalf of shareholders are tied to the best economic interest 
        of those shareholders; or
          ``(8) engages in a prohibited act enumerated in subsection 
        (j).
  ``(e) Termination of Registration.--
          ``(1) Voluntary withdrawal.--A registered proxy advisory firm 
        may, upon such terms and conditions as the Commission may 
        establish as necessary in the public interest or for the 
        protection of investors, which terms and conditions shall 
        include at a minimum that the registered proxy advisory firm 
        will no longer conduct such activities as to bring it within 
        the definition of proxy advisory firm in section 3(a)(82), 
        withdraw from registration by filing a written notice of 
        withdrawal to the Commission.
          ``(2) Commission authority.--In addition to any other 
        authority of the Commission under this title, if the Commission 
        finds that a registered proxy advisory firm is no longer in 
        existence or has ceased to do business as a proxy advisory 
        firm, the Commission, by order, shall cancel the registration 
        under this section of such registered proxy advisory firm.
  ``(f) Management of Conflicts of Interest.--
          ``(1) Organization policies and procedures.--Each registered 
        proxy advisory firm shall establish, maintain, and enforce 
        written policies and procedures reasonably designed, taking 
        into consideration the nature of the business of such 
        registered proxy advisory firm and associated persons, to 
        publicly disclose and manage any conflicts of interest that 
        arise or would reasonably be expected to arise from such 
        business.
          ``(2) Commission authority.--The Commission shall, within one 
        year of the date of enactment of this section, issue final 
        rules to prohibit, or require the management and public 
        disclosure of, any conflicts of interest relating to the 
        offering of proxy advisory services by a registered proxy 
        advisory firm, including, without limitation, conflicts of 
        interest relating to--
                  ``(A) the manner in which a registered proxy advisory 
                firm is compensated by the client, any affiliate of the 
                client, or any other person for providing proxy 
                advisory services;
                  ``(B) business relationships, ownership interests, or 
                any other financial or personal interests between a 
                registered proxy advisory firm, or any person 
                associated with such registered proxy advisory firm, 
                and any client, or any affiliate of such client;
                  ``(C) the formulation of proxy voting policies;
                  ``(D) the execution, or assistance with the 
                execution, of proxy votes if such votes are based upon 
                recommendations made by the proxy advisory firm in 
                which a person other than the issuer is a proponent; 
                and
                  ``(E) any other potential conflict of interest, as 
                the Commission deems necessary or appropriate in the 
                public interest or for the protection of investors.
          ``(3) Disclosure on factors influencing recommendations.--
        Each registered proxy advisory firm shall annually disclose to 
        the Commission and make publicly available the economic and 
        other factors that a reasonable investor would expect to 
        influence the recommendations of such proxy advisory firm, 
        including the ownership composition of such proxy advisory firm 
        and any meetings with, or feedback received from, outside 
        entities.
  ``(g) Reliability of Proxy Advisory Firm Services.--
          ``(1) In general.--Each registered proxy advisory firm 
        shall--
                  ``(A) have staff and other resources sufficient to 
                produce proxy voting recommendations that are based on 
                accurate and current information and designed for 
                clients that vote shares held on behalf of shareholders 
                to advance the best economic interest of those 
                shareholders;
                  ``(B) implement procedures that permit issuers that 
                are the subject of proxy voting recommendations--
                          ``(i) access in a reasonable time to data and 
                        information used to make recommendations; and
                          ``(ii) a reasonable opportunity to provide 
                        meaningful comment and corrections to such data 
                        and information, including the opportunity to 
                        present (in person or telephonically) details 
                        to the person responsible for developing such 
                        data and information prior to the publication 
                        of proxy voting recommendations to clients;
                  ``(C) employ an ombudsman to receive complaints about 
                the accuracy of information used in making 
                recommendations from the companies that are the subject 
                of the proxy advisory firm's voting recommendations and 
                seek to resolve those complaints in a timely fashion 
                and prior to the publication of proxy voting 
                recommendations to clients; and
                  ``(D) if the ombudsman is unable to resolve a 
                complaint to a company's satisfaction prior to the 
                publication of proxy voting recommendations to clients, 
                include in the final report of the firm to clients--
                          ``(i) a statement detailing the company's 
                        complaints, if requested in writing by the 
                        company; and
                          ``(ii) a statement explaining why the proxy 
                        voting recommendation is in the best economic 
                        interest of shareholders.
          ``(2) Definitions.--In this subsection:
                  ``(A) Data and information used to make 
                recommendations.--The term `data and information used 
                to make voting recommendations'--
                          ``(i) means the financial, operational, or 
                        descriptive data and information on an issuer 
                        used by proxy advisory firms and any contextual 
                        or substantive analysis impacting the 
                        recommendation; and
                          ``(ii) does not include the entirety of the 
                        proxy advisory firm's final report to its 
                        clients.
                  ``(B) Reasonable time.--The term `reasonable time'--
                          ``(i) means not less than 1 week before the 
                        publication of proxy voting recommendations for 
                        clients; and
                          ``(ii) shall not otherwise interfere with a 
                        proxy advisory firm's ability to provide its 
                        clients with timely access to accurate proxy 
                        voting research, analysis, or recommendations.
  ``(h) Private Right of Action With Respect to Illegal 
Recommendations.--Any proxy advisory firm that endorses a proposal that 
is not supported by the issuer but is approved and subsequently found 
by a court of competent jurisdiction to violate State or Federal law 
shall be liable to the applicable issuer for the costs associated with 
the approval of such proposal, including implementation costs and any 
penalties incurred by the issuer.
  ``(i) Designation of Compliance Officer.--Each registered proxy 
advisory firm shall designate an individual who reports directly to 
senior management as responsible for administering the policies and 
procedures that are required to be established pursuant to subsections 
(f) and (g), and for ensuring compliance with the securities laws and 
the rules and regulations thereunder, including those promulgated by 
the Commission pursuant to this section.
  ``(j) Prohibited Conduct.--
          ``(1) Prohibited acts and practices.--Not later than one year 
        after the date of enactment of this section, the Commission 
        shall issue final rules to prohibit any act or practice 
        relating to the offering of proxy advisory services by a 
        registered proxy advisory firm that the Commission determines 
        to be unfair, coercive, or abusive, including any act or 
        practice relating to--
                  ``(A) advisory or consulting services (offered 
                directly or indirectly, including through an affiliate) 
                related to corporate governance issues; or
                  ``(B) modifying a voting recommendation or otherwise 
                departing from its adopted systematic procedures and 
                methodologies in the provision of proxy advisory 
                services, based on whether an issuer, or affiliate 
                thereof, subscribes or will subscribe to other services 
                or product of the registered proxy advisory firm or any 
                person associated with such organization.
          ``(2) Rule of construction.--Nothing in paragraph (1), or in 
        any rules or regulations adopted thereunder, may be construed 
        to modify, impair, or supersede the operation of any of the 
        antitrust laws (as defined in the first section of the Clayton 
        Act, except that such term includes section 5 of the Federal 
        Trade Commission Act, to the extent that such section 5 applies 
        to unfair methods of competition).
  ``(k) Statements of Financial Condition.--Each registered proxy 
advisory firm shall, on a confidential basis, file with the Commission, 
at intervals determined by the Commission, such financial statements, 
certified (if required by the rules or regulations of the Commission) 
by an independent public auditor, and information concerning its 
financial condition, as the Commission, by rule, may prescribe as 
necessary or appropriate in the public interest or for the protection 
of investors.
  ``(l) Annual Report.--
          ``(1) In general.--Each registered proxy advisory firm shall, 
        not later than 90 calendar days after the end of each fiscal 
        year, file with the Commission and make publicly available an 
        annual report in such form as the Commission, by rule, may 
        prescribe as necessary or appropriate in the public interest or 
        for the protection of investors.
          ``(2) Contents.--Each annual report required under paragraph 
        (1) shall include, at a minimum, disclosure by the registered 
        proxy advisory firm of the following:
                  ``(A) A list of shareholder proposals the staff of 
                the registered proxy advisory firm reviewed in the 
                prior fiscal year.
                  ``(B) A list of the recommendations made in the prior 
                fiscal year.
                  ``(C) The economic analysis conducted to determine 
                that final recommendations provided in the prior fiscal 
                year (other than recommendations relating to an issuer-
                sponsored proposal or recommendations consistent with 
                that of a board of directors composed of a majority of 
                independent directors) delivered to clients that vote 
                shares held on behalf of shareholders were in the best 
                economic interest of those shareholders.
                  ``(D) The staff who reviewed and made recommendations 
                on such proposals in the prior fiscal year.
                  ``(E) The qualifications of such staff to ensure that 
                each of the recommendations for clients that vote 
                shares held on behalf of shareholders were tied to the 
                best economic interest of those shareholders.
                  ``(F) The recommendations made in the prior fiscal 
                year where the proponent of such recommendation was a 
                client of or received services from the proxy advisory 
                firm.
                  ``(G) A certification by the chief executive officer, 
                chief financial officer, and the primary executive 
                responsible for overseeing the compilation and 
                dissemination of proxy voting advice that the final 
                recommendations (other than recommendations relating to 
                an issuer-sponsored proposal or recommendations 
                consistent with that of a board of directors composed 
                of a majority of independent directors) delivered to 
                clients that vote shares held on behalf of shareholders 
                in the last fiscal year--
                          ``(i) were based on internal controls and 
                        procedures that are designed to ensure accurate 
                        information and that such internal controls and 
                        procedures are effective;
                          ``(ii) do not violate applicable State or 
                        Federal law; and
                          ``(iii) were based on the best economic 
                        interest of those shareholders.
                  ``(H) The economic and other factors that a 
                reasonable investor would expect to influence the 
                recommendations of such proxy advisory firm, including 
                the ownership composition of such proxy advisory firm.
  ``(m) Transparent Policies.--Each registered proxy advisory firm 
shall file with the Commission and make publicly available its 
methodology for the formulation of proxy voting policies and voting 
recommendations to clients that vote shares held on behalf of 
shareholders and how that methodology ensures that the firm's voting 
recommendations are in the best economic interest of those 
shareholders.
  ``(n) Rules of Construction.--Registration under and compliance with 
this section does not constitute a waiver of, or otherwise diminish, 
any right, privilege, or defense that a registered proxy advisory firm 
may otherwise have under any provision of State or Federal law, 
including any rule, regulation, or order thereunder.
  ``(o) Regulations.--
          ``(1) New provisions.--Such rules and regulations as are 
        required by this section or are otherwise necessary to carry 
        out this section, including the application form required under 
        subsection (a)--
                  ``(A) shall be issued by the Commission, not later 
                than 180 days after the date of enactment of this 
                section; and
                  ``(B) shall become effective not later than 1 year 
                after the date of enactment of this section.
          ``(2) Review of existing regulations.--Not later than 270 
        days after the date of enactment of this section, the 
        Commission shall--
                  ``(A) review its existing rules and regulations which 
                affect the operations of proxy advisory firms; and
                  ``(B) amend or revise such rules and regulations in 
                accordance with the purposes of this section, and issue 
                such guidance as the Commission may prescribe as 
                necessary or appropriate in the public interest or for 
                the protection of investors.
  ``(p) Applicability.--This section, other than subsection (n), which 
shall apply on the date of enactment of this section, shall apply on 
the earlier of--
          ``(1) the date on which regulations are issued in final form 
        under subsection (o)(1); or
          ``(2) 270 days after the date of enactment of this section.
  ``(q) Best Economic Interest Defined.--In this section, 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 the 
shareholders are invested.''.
  (b) Conforming Amendment.--Section 17(a)(1) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78q(a)(1)) is amended by inserting 
``proxy advisory firm,'' after ``nationally recognized statistical 
rating organization,''.
  (c) Proxy Advisory Firm Definitions.--Section 3(a) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended--
          (1) by redesignating the second paragraph (80) (relating to 
        funding portal) as paragraph (81); and
          (2) 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.
          ``(83) Person associated with a proxy advisory firm.--With 
        respect to a proxy advisory firm--
                  ``(A) a person is `associated' with the proxy 
                advisory firm if the person is--
                          ``(i) a partner, officer, or director of the 
                        proxy advisory firm (or any person occupying a 
                        similar status or performing similar 
                        functions);
                          ``(ii) a person directly or indirectly 
                        controlling, controlled by, or under common 
                        control with the proxy advisory firm;
                          ``(iii) an employee of the proxy advisory 
                        firm; or
                          ``(iv) a person the Commission determines by 
                        rule is controlled by the proxy advisory firm; 
                        and
                  ``(B) a person is not `associated' with the proxy 
                advisory firm if the person only performs clerical or 
                ministerial functions with respect to a proxy advisory 
                firm.''.

    TITLE VII--LIABILITY FOR CERTAIN FAILURES TO DISCLOSE MATERIAL 
            INFORMATION OR MAKING OF MATERIAL MISSTATEMENTS

SECTION 701. LIABILITY FOR CERTAIN FAILURES TO DISCLOSE MATERIAL 
                    INFORMATION OR MAKING OF MATERIAL MISSTATEMENTS.

  Section 14 of the Securities Exchange Act of 1934 (15 U.S.C. 78n) is 
amended by adding at the end the following:
  ``(l) False or Misleading Statements.--For purposes of section 18, 
the failure to disclose material information (such as a proxy voting 
advice business's methodology, sources of information, or conflicts of 
interest) or the making of a material misstatement regarding proxy 
voting advice that makes a recommendation to a security holder as to 
the security holder's vote, consent, or authorization on a specific 
matter for which security holder approval is solicited, and that is 
furnished by a person that markets the person's expertise as a provider 
of such proxy voting advice separately from other forms of investment 
advice, and sells such proxy voting advice for a fee, shall be 
considered to be false or misleading with respect to a material 
fact.''.

TITLE VIII--DUTIES OF INVESTMENT ADVISORS, ASSET MANAGERS, AND PENSION 
                                 FUNDS

SEC. 801. DUTIES OF INVESTMENT ADVISORS, ASSET MANAGERS, AND PENSION 
                    FUNDS.

  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 assets 
                under management with 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) 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.''.

                TITLE IX--PROTECTING AMERICANS' SAVINGS

SEC. 901. REQUIREMENTS RELATED TO PROXY VOTING.

  Section 14 of the Securities Exchange Act of 1934 (15 U.S.C. 78n), as 
amended by section 701, is further amended by adding at the end the 
following:
  ``(m) Prohibition on Robovoting.--
          ``(1) In general.--The Commission shall issue final rules 
        prohibiting the use of robovoting with respect to votes related 
        to proxy or consent solicitation materials.
          ``(2) Robovoting defined.--In this subsection, the term 
        `robovoting' means the practice of automatically voting in a 
        manner consistent with the recommendations of a proxy advisory 
        firm or pre-populating votes on a proxy advisory firm's 
        electronic voting platform with the proxy advisory firm's 
        recommendations, in either case, without independent review and 
        analysis.
  ``(n) Prohibition on Outsourcing Voting Decisions by Institutional 
Investors.--With respect to votes related to proxy or consent 
solicitation materials, an institutional investor may not outsource 
voting decisions to any person other than an investment adviser or a 
broker or dealer that is registered with the Commission and has a 
fiduciary or best interest duty to the institutional investor.
  ``(o) No Requirement to Vote.--No person may be required to cast 
votes related to proxy or consent solicitation materials.
  ``(p) Proxy Advisory Firm Calculation of Votes.--With respect to 
votes related to proxy or consent solicitation materials with respect 
to an issuer, a proxy advisor firm shall calculate the vote result 
consistent with the law of the State in which the issuer is 
incorporated.''.

                    TITLE X--EMPOWERING SHAREHOLDERS

SEC. 1001. PROXY VOTING OF PASSIVELY MANAGED FUNDS.

  (a) In General.--The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 
et seq.) is amended by inserting after section 208 (15 U.S.C. 80b-8) 
the following:

``SEC. 208A. PROXY VOTING OF PASSIVELY MANAGED FUNDS.

  ``(a) Investment Adviser Proxy Voting.--
          ``(1) In general.--An investment adviser that holds authority 
        to vote a proxy solicited by an issuer pursuant to section 14 
        of the Securities Exchange Act of 1934 (15 U.S.C. 78n) in 
        connection with any vote of covered securities held by a 
        passively managed fund shall--
                  ``(A) vote in accordance with the instructions of the 
                beneficial owner of a voting security of the passively 
                managed fund;
                  ``(B) vote in accordance with the voting 
                recommendations of such issuer; or
                  ``(C) abstain from voting but make reasonable efforts 
                to be considered present for purposes of establishing a 
                quorum.
          ``(2) Exception.--Paragraph (1) shall not apply with respect 
        to a vote on a routine matter.
  ``(b) Safe Harbor.--With respect to a matter that is not a routine 
matter, in the case of a vote described in subsection (a)(1), an 
investment adviser shall not be liable to any person under any law or 
regulation of the United States, any constitution, law, or regulation 
of any State or political subdivision thereof, or under any contract or 
other legally enforceable agreement (including any arbitration 
agreement), for any of the following:
          ``(1) Voting in accordance with the instructions of the 
        beneficial owner of a voting security of the passively managed 
        fund.
          ``(2) Not soliciting voting instructing from any person under 
        subsection (a)(1) with respect to such vote.
          ``(3) Voting in accordance with the voting recommendations of 
        an issuer pursuant to subparagraph (B) of such subsection.
          ``(4) Abstaining from voting in accordance with subparagraph 
        (C) of such subsection.
  ``(c) Foreign Private Issuers Exemption.--Subsection (a) shall not 
apply with respect to a foreign private issuer if the voting policy of 
the investment advisor with respect to such foreign private issuers is 
fully and fairly disclosed to beneficial owners, including the extent 
to which such policy differs from the voting policy for non-exempt 
issuers.
  ``(d) Definitions.--In this section:
          ``(1) Covered security.--The term `covered security'--
                  ``(A) means a voting security, as that term is 
                defined in section 2(a) of the Investment Company Act 
                of 1940 (15 U.S.C. 80a-2(a)), in which a qualified fund 
                is invested; and
                  ``(B) does not include any voting security (as 
                defined in subparagraph (A)) of an issuer registered 
                with the Commission as an investment company under 
                section 8 of the Investment Company Act of 1940 (15 
                U.S.C. 80a-8).
          ``(2) Passively managed fund.--The term `passively managed 
        fund' means a qualified fund that--
                  ``(A) is designed to track, or is derived from, an 
                index of securities or a portion of such an index;
                  ``(B) discloses that the qualified fund is a passive 
                index fund; or
                  ``(C) allocates not less than 60 percent of the total 
                assets of the qualified fund to an investment strategy 
                that is designed to track, or is derived from, an index 
                of securities or a portion of such an index fund.
          ``(3) Qualified fund.--The term `qualified fund' means--
                  ``(A) an investment company, as that term is defined 
                in section 3 of the Investment Company Act of 1940 (15 
                U.S.C. 80a-3);
                  ``(B) a private fund;
                  ``(C) an eligible deferred compensation plan, as that 
                term is defined in section 457(b) of the Internal 
                Revenue Code of 1986;
                  ``(D) a trust, plan, account, or other entity 
                described in section 3(c)(11) of the Investment Company 
                Act of 1940 (15 U.S.C. 80a-3(c)(11));
                  ``(E) a plan maintained by an employer described in 
                clause (i), (ii), or (iii) of section 403(b)(1)(A) of 
                the Internal Revenue Code of 1986 to provide annuity 
                contracts described in section 403(b) of such Code;
                  ``(F) a common trust fund, or similar fund, 
                maintained by a bank;
                  ``(G) any fund established under section 8438(b)(1) 
                of title 5, United States Code; or
                  ``(H) any separate managed account of a client of an 
                investment adviser.
          ``(4) Registrant.--The term `registrant' means an issuer of 
        covered securities.
          ``(5) Routine matter.--The term `routine matter'--
                  ``(A) includes a proposal that relates to--
                          ``(i) an election with respect to the board 
                        of directors of the registrant;
                          ``(ii) the compensation of management or the 
                        board of directors of the registrant;
                          ``(iii) the selection of auditors;
                          ``(iv) a matter where there is a material 
                        conflict of interest between or among the 
                        issuer, members of management, members of the 
                        board of directors, or an affiliate of the 
                        issuer;
                          ``(v) declassification; or
                          ``(vi) transactions that would transform the 
                        structure of the registrant, including--
                                  ``(I) a merger or consolidation; and
                                  ``(II) the sale, lease, or exchange 
                                of all, or substantially all, of the 
                                property and assets of a registrant; 
                                and
                  ``(B) does not include--
                          ``(i) a proposal that is not submitted to a 
                        holder of covered securities by means of a 
                        proxy statement comparable to that described in 
                        section 240.14a-101 of title 17, Code of 
                        Federal Regulations, or any successor 
                        regulation; or
                          ``(ii) a proposal that is--
                                  ``(I) the subject of a counter-
                                solicitation; or
                                  ``(II) part of a proposal made by a 
                                person other than the applicable 
                                registrant.''.
  (b) Effective Date.--The amendment made by this section shall take 
effect on the first August 1 that occurs after the date that is 2 years 
after the date of enactment of this Act.

             TITLE XI--PROTECTING RETAIL INVESTORS' SAVINGS

SEC. 1101. BEST INTEREST BASED ON PECUNIARY FACTORS.

  (a) In General.--Section 211(g) of the Investment Advisers Act of 
1940 (15 U.S.C. 80b-11(g)) is amended by adding at the end the 
following:
          ``(3) Best interest based on pecuniary factors.--
                  ``(A) In general.--For purposes of paragraph (1), the 
                best interest of a customer shall be determined using 
                pecuniary factors, which may not be subordinated to or 
                limited by non-pecuniary factors, unless the customer 
                provides informed consent, in writing, that such non-
                pecuniary factors be considered.
                  ``(B) Disclosure of pecuniary factors.--If a customer 
                provides a broker, dealer, or investment adviser with 
                the informed consent to consider non-pecuniary factors 
                described under subparagraph (A), the broker, dealer, 
                or investment adviser shall--
                          ``(i) disclose the expected pecuniary effects 
                        to the customer over a time period selected by 
                        the customer and not to exceed three years; and
                          ``(ii) at the end of the time period 
                        described in clause (i), disclose, by 
                        comparison to a reasonably comparable index or 
                        basket of securities selected by the customer, 
                        the actual pecuniary effects of that time 
                        period, including all fees, costs, and other 
                        expenses incurred to consider non-pecuniary 
                        factors.
                  ``(C) Pecuniary factor defined.--In this paragraph, 
                the term `pecuniary factor' means a factor that a 
                fiduciary prudently determines is expected to have a 
                material effect on the risk or return of an investment 
                based on appropriate investment horizons.''.
  (b) Rulemaking.--Not later than the end of the 12-month period 
beginning on the date of enactment of this Act, the Securities and 
Exchange Commission shall revise or issue such rules as may be 
necessary to implement the amendment made by subsection (a).
  (c) Applicability.--The amendment made by subsection (a) shall apply 
to actions taken by a broker, dealer, or investment adviser beginning 
on the date that is 12 months after the date of enactment of this Act.

SEC. 1102. STUDY ON CLIMATE CHANGE AND OTHER ENVIRONMENTAL DISCLOSURES 
                    IN MUNICIPAL BOND MARKET.

  (a) In General.--The Securities and Exchange Commission shall--
          (1) conduct a study to determine the extent to which issuers 
        of municipal securities (as such term is defined in section 
        3(a)(29) of the Securities Exchange Act of 1934 (15 U.S.C. 
        78c(a)(29)) make disclosures to investors regarding climate 
        change and other environmental matters; and
          (2) solicit public comment with respect to such study.
  (b) Contents.--The study required under subsection (a) shall consider 
and analyze--
          (1) the frequency with which disclosures described in 
        subsection (a)(1) are made;
          (2) whether such disclosures made by issuers of municipal 
        securities in connection with offerings of securities align 
        with such disclosures made by issuers of municipal securities 
        in other contexts or to audiences other than investors;
          (3) any voluntary or mandatory disclosure standards observed 
        by issuers of municipal securities in the course of making such 
        disclosures;
          (4) the degree to which investors consider such disclosures 
        in connection with making an investment decision; and
          (5) such other information as the Securities and Exchange 
        Commission determines appropriate.
  (c) Report.--Not later than 1 year after the date of the enactment of 
this Act, the Securities and Exchange Commission shall submit to the 
Committee on Banking, Housing, and Urban Affairs of the Senate and the 
Committee on Financial Services of the House of Representatives a 
report that includes--
          (1) the results of the study required under this section;
          (2) a detailed discussion of the financial risks to investors 
        from investments in municipal securities;
          (3) whether such risks are adequately disclosed to investors; 
        and
          (4) recommended regulatory or legislative steps to address 
        any concerns identified in the study.

SEC. 1103. STUDY ON SOLICITATION OF MUNICIPAL SECURITIES BUSINESS.

  (a) In General.--The Securities and Exchange Commission shall--
          (1) conduct a study on the effectiveness of each covered rule 
        in preventing the payment of funds to elected officials or 
        candidates for elected office in exchange for the receipt of 
        government business in connection with the offer or sale of 
        municipal securities; and
          (2) solicit public comment with respect to such study.
  (b) Contents.--The study required under subsection (a) shall consider 
and analyze--
          (1) the effectiveness of each covered rule, including whether 
        each covered rule accomplishes the intended effect of such 
        covered rule and has any unintended adverse effects;
          (2) the frequency and scope of enforcement actions undertaken 
        pursuant to each covered rule;
          (3) the degree to which--
                  (A) persons subject to each covered rule--
                          (i) have in effect policies and procedures 
                        intended to ensure compliance with each such 
                        covered rule; and
                          (ii) are disadvantaged from participating in 
                        the political process generally and in relation 
                        to persons who solicit or receive government 
                        business or government licenses, permits, and 
                        approvals other than in connection with the 
                        offer or sale of municipal securities; and
                  (B) other State and Federal laws and regulations 
                impact the solicitation of municipal securities 
                business; and
          (4) such other information as the Securities and Exchange 
        Commission determines appropriate.
  (c) Report.--Not later than 1 year after the date of the enactment of 
this Act, the Securities and Exchange Commission shall submit to the 
Committee on Banking, Housing, and Urban Affairs of the Senate and the 
Committee on Financial Services of the House of Representatives a 
report that includes--
          (1) the results of the study required under this section;
          (2) an analysis of the extent to which persons affiliated 
        with small businesses, as well as persons affiliated with 
        minority and women opened businesses, have been affected by the 
        covered rules; and
          (3) recommended regulatory or legislative steps to address 
        any concerns identified in the study.
  (d) Definitions.--In this section:
          (1) Covered rule.--The term ``covered rule'' means--
                  (A) Rule G-38 of the Municipal Securities Rulemaking 
                Board; and
                  (B) Rule 206(4)-5 (17 CFR 275.206(4)-5).
          (2) Municipal securities.--The term ``municipal securities'' 
        has the meaning given the term in section 3(a)(29) of the 
        Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(29)).

                          Purpose and Summary

    Introduced on July 20, 2023, by Representative Bryan Steil, 
H.R. 4767, the Protecting Americans' Retirement Savings from 
Politics Act, would enact measures aimed at preserving the 
integrity of the proxy voting process by reducing the impact of 
political activists, proxy advisory firms, and the Securities 
and Exchange Commission (SEC) in introducing political elements 
into proxy voting.

                  Background and Need for Legislation

    H.R. 4767 is a compilation of 11 previously introduced 
bills, including:
    H.R. 4641, the Performance Over Politics Act
    H.R. 4644, the No Expensive, Stifling Governance (No ESG) 
Act
    H.R. 4640, a bill to authorize the exclusion of shareholder 
proposals from proxy or consent solicitation material if the 
subject matter of the shareholder proposal is environmental, 
social, or political
    H.R. 4657, a bill to clarify that an issuer may exclude a 
shareholder proposal pursuant to section 240.14a-8(i) of title 
17, Code of Federal Regulations, without regard to whether such 
proposal relates to a significant social policy issue
    H.R. 4662, the Corporate Governance Examination Act
    H.R. 4589, a bill to amend the Securities Exchange Act of 
1934 to provide for the registration of proxy advisory firms, 
and for other purposes
    H.R. 4590, a bill to amend the Securities Exchange Act of 
1934 to provide for liability for certain failures to disclose 
material information in connection with proxy voting advice, 
and for other purposes
    H.R. 4648, 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
    H.R. 4656, the Protecting Americans' Savings Act
    H.R. 4645, the Empowering Shareholders Act
    H.R. 4600, the Protecting Retail Investors' Savings Act
    The shareholder proxy process has lost its effectiveness in 
efficiently promoting long-term shareholder value. At present, 
unbridled shareholder activism diverts attention and resources 
away from core business matters, ultimately eroding the appeal 
of U.S. markets and discouraging companies from pursuing public 
offerings. The SEC has exacerbated this problem by promulgating 
changes that facilitate the inclusion of politically motivated 
shareholder proposals in annual proxy statements while also 
rolling back crucial reforms to proxy solicitation rules. This 
shift towards advancing environmental, social, and political 
agendas detracts from the primary purpose of public markets, 
which is to enable companies to raise capital and stimulate 
economic growth.
    H.R. 4767 represents a vital step in addressing these 
challenges. It seeks to curb the influence of activists, proxy 
firms, and the SEC in politicizing the proxy process, which 
will enable companies and their shareholders to refocus on the 
fundamental issues that drive growth and long-term value 
creation.

Title I--H.R. 4641, the Performance Over Politics Act, was introduced 
        on July 14, 2023, by Representative Scott Fitzgerald

    Title I of the bill raises the resubmission thresholds for 
shareholder proposals that have faced repeated rejections by a 
substantial majority of shareholders.

                               BACKGROUND

    The costs associated with shareholder proposals are 
significant. Apart from diverting management's attention from 
long-term value creation, immaterial shareholder proposals 
often siphon capital away from crucial initiatives like 
research, development, and corporate strategy. When management 
discussions are inundated with numerous immaterial proposals, 
it detracts from addressing economically significant matters.
    These expenses escalate significantly when ideological or 
political shareholder proposals undergo repeated resubmissions, 
placing added strain on both the company and its shareholders. 
According to the 2020 update to Rule 14a-8(i)(12), companies 
can potentially exclude similar shareholder proposals based on 
the levels of support they receive-less than 5 percent, 15 
percent, or 25 percent-when proposed once, twice, or three or 
more times within the previous five years. Despite this rule, 
the current influence of proxy advisors effectively hinders 
companies from excluding numerous repeat environmental, social 
and governance (ESG) related proposals, regardless of prior 
rejections. Proxy advisor firms' endorsements frequently gather 
25 percent investor support easily, perpetuating the cycle of 
resubmission, even if these proposals don't align with the 
company's long-term interests.
    To address these challenges, Title I aims to adjust the 
thresholds under Rule 14a-8(i)(12) to 10 percent, 20 percent, 
and 40 percent, respectively. This adjustment seeks to strike a 
balance between encouraging shareholder engagement and 
fostering a more efficient and focused decision-making process.

Title II--H.R. 4644, the No Expensive, Stifling Governance Act, was 
        introduced on July 14, 2023, by Representative Erin Houchin

    Title II of the bill prevents the SEC from finalizing or 
implementing the positions contained in a proposed rule called 
``Substantial Implementation, Duplication, and Resubmission of 
Shareholder Proposals under Exchange Act Rule 14a-8'' (87 Fed. 
Reg. 45052).

                               BACKGROUND

    In 2022, the SEC proposed a rule to narrow the exclusion 
criteria available to companies under Rule 14a-8. The SEC's 
proposed rule would make it more difficult for companies to 
exclude shareholder proposals that have already been 
substantially implemented, are duplicative of other proposals 
on a given year's proxy ballot or have been rejected by a large 
percentage of shareholders in previous years. This proposal 
would benefit activists while reducing the power of issuers and 
long-term shareholders.
    Title II of the bill aims to uphold the current exclusion 
criteria, which would strengthen the process for companies to 
manage their proxy ballot by preventing an overflow of 
substantially implemented, duplicative, and resubmitted 
proposals.

Title III--H.R. 4640, a bill to authorize the exclusion of shareholder 
        proposals from proxy or consent solicitation material if the 
        subject matter of the shareholder proposal is environmental, 
        social, or political, was introduced on July 14, 2023, by 
        Representative Byron Donalds

    Title III clarifies that companies may exclude shareholder 
proposals that seek to advance environmental, social, and 
political matters unrelated to their business.

                               BACKGROUND

    The recent rise in ESG-related proposals largely stems from 
SEC decisions that introduced ambiguities in the Rule 14a-8 no-
action letter process. Notably, the SEC's November 2021 
guidance (Staff Legal Bulletin No. 14L or ``SLB 14L'') mandated 
the inclusion of proposals addressing ``broad societal 
impact,'' even if disconnected from a company's operations.
    Maintaining a boardroom focus on robust financial 
management is crucial to prevent it from evolving into a 
platform for partisan politics. Multiple studies have revealed 
a direct link between increased shareholder activism advocating 
social causes and diminished stock returns. Title III ensures 
that the proxy ballot remains dedicated to matters pertinent to 
long-term growth and the creation of shareholder value.

Title IV--H.R. 4657, a bill to clarify that an issuer may exclude a 
        shareholder proposal pursuant to section 240.14a-8(i) of title 
        17, Code of Federal Regulations, without regard to whether such 
        proposal relates to a significant social policy issue, was 
        introduced on July 14, 2023, by Representative John Rose

    Title IV clarifies that Rule 14a-8 exclusions permit a 
company to exclude a shareholder proposal from their proxy 
ballot regardless of whether the SEC deems an issue a 
``significant policy'' matter.

                               BACKGROUND

    In November 2021, SLB 14L rescinded the SEC's content-
neutral guardrails that previously enabled companies and 
investors to take a company-specific approach to evaluating the 
relevance and suitability of shareholder proposals submitted to 
company proxy ballots.
    Instead, SLB 14L declared that the SEC would ``no longer 
focus on determining the nexus between a policy issue and the 
company.'' Instead, it mandated the inclusion of all proposals 
with a ``broad societal impact'' to be included on the proxy 
ballot when they are submitted. Consequently, politically 
motivated proposals surged in annual proxy statements, with a 
51 percent increase in environmental proposals and a 20 percent 
rise in social proposals. Meanwhile, companies are now 25 
percent less likely to seek SEC no-action relief.
    Title IV would overturn this detrimental policy, enabling 
companies to exclude shareholder proposals based on the Rule 
14a-8 exclusion criteria, regardless of whether they pertain to 
a significant social policy issue. SLB 14L has incentivized 
activists to submit proposals entirely unrelated to long-term 
value creation. Reversing this change would signify a return to 
a proxy process focused on fostering business growth and 
enhancing investor value.

Title V--H.R. 4662, the Corporate Governance Examination Act, was 
        introduced on July 14, 2023, by Representative Ann Wagner

    Title V requires the SEC to conduct a comprehensive study 
focused on shareholder proposals, proxy advisors, and the proxy 
process. The study is to be initiated within 180 days of the 
bill's enactment, with subsequent reviews every five years. 
Initially, it will cover the previous 10 years, followed by 
evaluations of the previous 5 years in subsequent studies.

                               BACKGROUND

    The comprehensive study will delve into critical proxy 
issues including the financial incentives and responsibilities 
of involved parties, their impact on the long-term interests of 
retail investors, the influence wielded by proxy advisory 
firms, and the costs companies incur in response to shareholder 
proposals. The study will also evaluate existing submission 
thresholds and explore how the politicization of these matters 
influences a company's decision to go public.

Title VI--H.R. 4589, a bill to amend the Securities Exchange Act of 
        1934 to provide for the registration of proxy advisory firms, 
        and for other purposes, was introduced on July 12, 2023, by 
        Representative Bryan Steil

    Title VI would require proxy advisory firms to register 
with the SEC. It would also establish protocols for managing 
conflicts of interest and mandate the disclosure of certain 
information.

                               BACKGROUND

    The outsized influence of proxy advisory firms, such as 
Institutional Shareholder Services and Glass Lewis, within the 
proxy voting system has sparked concerns regarding bias and 
accountability. These firms dominate 97 percent of the market 
and significantly shape the voting decisions of institutional 
investors, impacting the fairness and transparency of corporate 
governance. Their escalating influence stems from providing 
voting recommendations to time-constrained institutional 
investors and the growing prevalence of passive investing, 
which amplifies their sway over voting choices.
    Investment advisors cannot delegate fiduciary duties to 
proxy advisors without ensuring additional oversight or 
involvement. Moreover, the SEC must actively oversee investment 
advisors to ensure they fulfill their duties. Under this title, 
proxy advisors would be required to provide economic analysis 
when evaluating social and political issues, aligning their 
recommendations with the fiduciary obligations of investment 
advisors.
    This title also bolsters transparency and accountability by 
compelling proxy advisors to share draft reports with issuers, 
disclose methodologies and information sources, and publish 
annual reports summarizing their activities. These measures 
seek to enhance the clarity and responsibility of proxy 
advisory firms in the corporate governance landscape.

Title VII--H.R. 4590, a bill to amend the Securities Exchange Act of 
        1934 to provide for liability for certain failures to disclose 
        material information in connection with proxy voting advice, 
        and for other purposes, was introduced on July 12, 2023, by 
        Representative Bryan Steil

    Title VII amends section 14 of the Securities Exchange Act 
of 1934 to state that any failure to disclose material 
information or the inclusion of material misstatements in proxy 
voting advice would be deemed false or misleading concerning 
material facts under section 18.

                               BACKGROUND

    Proxy advisory firms wield significant influence in shaping 
the voting decisions of institutional investors, who heavily 
rely on their recommendations. Inaccurate or incomplete 
information provided by these firms could lead to ill-informed 
decisions by investors, potentially resulting in adverse 
effects on their investments. Introducing liability for proxy 
advisory firms becomes crucial in safeguarding investors, 
preserving market integrity, fostering transparency, and 
establishing legal recourse for cases involving erroneous or 
misleading proxy voting guidance.
    Holding proxy advisory firms accountable for material 
misstatements or non-disclosures serves as a pivotal measure to 
foster accuracy, objectivity, and independence in their 
recommendations. This title aims to protect the interests of 
shareholders and bolster confidence in the corporate governance 
process.

Title VIII--H.R. 4648, 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, was introduced 
        on July 14, 2023, by Representative Barry Loudermilk

    Title VIII requires that proxy advisor clients furnish 
beneficiaries and customers with annual reports detailing their 
voting behavior on shareholder proposals and whether those 
votes align with the recommendations provided by proxy 
advisors. Additionally, larger entities are required to conduct 
economic analyses for votes contrary to board recommendations, 
which will subsequently be made public.

                               BACKGROUND

    Ensuring transparency and accountability necessitates the 
mandatory publication of detailed annual reports by proxy 
advisory firm clients. These reports should encompass certain 
data, including the percentage of votes cast in accordance with 
proxy advisory recommendations, the percentage of votes 
supporting ESG-related shareholder proposals, and an 
elucidation of how firms reconcile their votes with their 
fiduciary duty to act in the best economic interest of 
shareholders. Such comprehensive reporting empowers investors 
with invaluable insights into the decision-making processes of 
proxy advisory firm clients, enabling them to assess whether 
these firms are meeting their fiduciary obligations 
effectively.
    Similarly, larger asset managers must exhibit their 
commitment to accountability and transparency by publicly 
disclosing the economic analysis underpinning their shareholder 
voting decisions. The ESG Working Group led by Republicans on 
the Committee on Financial Services has highlighted instances 
where the boards of several asset managers recommended voting 
against certain proposals at their annual meetings, while their 
investment arms voted in favor of identical proposals at other 
companies. By sharing the rationale behind their voting 
decisions, including the financial considerations informing 
their opposition to boards of independent directors, asset 
managers should clarify these inconsistencies and empower 
shareholders to comprehend how economic interests are 
prioritized. This elevated level of transparency fosters trust 
and enables investors to evaluate the alignment of voting 
decisions with their individual financial objectives 
effectively.

Title IX--H.R. 4656, the Protecting Americans' Savings Act, was 
        introduced on July 14, 2023, by Representative Zach Nunn

    Title IX prohibits robo-voting, the automated practice of 
casting proxy votes based solely on recommendations from proxy 
advisory firms. Additionally, it clarifies that individuals are 
not obligated to cast votes on proxy materials.

                               BACKGROUND

    Investment advisers bear the ultimate responsibility for 
overseeing the proxy advisory firms they retain. While the 
SEC's Staff Legal Bulletin 20 provides a foundation for this 
responsibility, it's essential to examine whether institutional 
investors genuinely fulfill their fiduciary duties when relying 
on these firms' recommendations. Concern arises when 
institutional investors unquestioningly follow proxy advisory 
recommendations without conducting thorough evaluations. This 
rushed approach not only undermines the quality of decision-
making but also hampers companies' ability to effectively 
challenge the factual accuracy of proxy advisor 
recommendations.
    While proxy advisory firms have a role in the proxy voting 
analysis, they should not wield undue influence over voting 
decisions. Institutional investors hold the responsibility to 
diligently assess recommendations and ensure alignment with 
their clients' best interests. By eliminating the robo-voting 
mechanism, this title will compel institutional investors to 
critically evaluate proxy advisory firm recommendations, 
fostering due diligence and safeguarding the financial 
interests of retail investors.

Title X--H.R. 4645, the Empowering Shareholders Act, was introduced on 
        July 14, 2023, by Representative Bill Huizenga

    Title X requires investment advisers to vote proxies in 
accordance with issuer voting instructions for covered 
securities held by passive index funds, allowing exceptions for 
routine matters or when beneficial owners' voting instructions 
dictate otherwise.

                               BACKGROUND

    The dominant position held by the Big Three asset managers 
in the index fund market gives them unparalleled influence, 
collectively representing about a quarter of the shareholder 
votes in most S&P 500 companies during shareholder meetings. 
However, passive index funds are inherently passive by design. 
Their objective is not to select winners and losers but to 
replicate the underlying index's performance more broadly. 
Consequently, utilizing these funds as a platform to advance 
specific social and political ideologies may deviate from the 
core essence of passive investing and potentially divert 
management attention from maximizing investor returns.
    This discrepancy in the intended nature of passive index 
funds raises concerns regarding the prioritization of political 
ideologies over the financial interests of retail investors by 
proxy advisors. Hence, it is crucial to take steps to preserve 
these funds' integrity and ensure their alignment with true 
passive investment objectives. For instance, when an investment 
adviser has proxy voting authority linked to a passively 
managed fund, deference should be given to board 
recommendations on shareholder proposals associated with social 
or political policy issues.
    Title X aligns with this principle, upholding the essence 
of passive investing. This safeguards the long-term financial 
health of these funds and prevents them from being used as a 
platform to advocate social or political preferences.

Title XI--H.R. 4600, the Protecting Retail Investors' Savings Act, was 
        introduced on July 13, 2023, by Representative Andy Barr

    Title XI amends the Investment Advisers Act of 1940 to 
specify requirements regarding the consideration of pecuniary 
and non-pecuniary factors. It grants investors the option to 
consent to the utilization of non-pecuniary factors in 
decision-making. Additionally, it mandates the SEC to conduct 
comprehensive studies on climate change and other environmental 
disclosures within the municipal bond market, as well as on the 
solicitation of municipal securities business.

                               BACKGROUND

    Investment advisers bear a fiduciary duty to act in the 
best financial interest of their clients. Title XI is designed 
to ensure that investment advisers do not prioritize non-
financial objectives over financial returns without explicit 
consent of their clients. Furthermore, this title mandates the 
provision of information to clients regarding the anticipated 
pecuniary impacts, along with all associated fees, costs, and 
other expenses incurred due to the consideration of non-
pecuniary factors. Such requirements will safeguard investors 
from potential adverse consequences and guarantee that ESG 
investing does not compromise the fiduciary duty of investment 
advisers.
    In addition, this title directs the SEC to conduct studies 
focusing on climate change and other environmental disclosures 
within the municipal bond market. These studies are pivotal in 
evaluating the influence of ESG-related factors on municipal 
bond investments and assessing the accuracy and reliability of 
climate change disclosures for investors.

                                Hearing

    Pursuant to clause 3(c)(6) of rule XIII, the following 
hearing was used to develop H.R. 4767: The Subcommittee on 
Capital Markets of the Committee on Financial Services held a 
hearing on July 13, 2023, titled ``Reforming the Proxy Process 
to Safeguard Investor Interests.''

                        Committee Consideration

    The Committee on Financial Services met in open session on 
July 27, 2023, and ordered H.R. 4767 to be reported favorably 
to the House as amended by a recorded vote of 29 ayes to 21 
nays (Record vote no. FC-91), a quorum being present. Before 
the question was called to order the bill favorably reported, 
the Committee adopted an amendment in the nature of a 
substitute offered by Mr. Steil by voice vote.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the order to report legislation and amendments thereto. H.R. 
4767 was ordered reported favorably to the House as amended by 
a recorded vote of 29 ayes to 21 nays (Record vote no. FC-91), 
a quorum being present.
    An amendment offered by Mr. Vargas, no. 13, was not agreed 
to through an en bloc recorded vote of 20 ayes to 29 nays 
(Record vote no. FC-90).
    An amendment offered by Mr. Casten, no. 14, was not agreed 
to through an en bloc recorded vote of 20 ayes to 29 nays 
(Record vote no. FC-90).
    An amendment offered by Mr. Casten, no. 15, was not agreed 
to through an en bloc recorded vote of 20 ayes to 29 nays 
(Record vote no. FC-90).


                      Committee Oversight Findings

    Pursuant to clause 3(c) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee, based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the goal of H.R. 4767 is to enact 
measures aimed at preserving the integrity of the proxy voting 
process by reducing the impact of political activists, proxy 
advisory firms, and the SEC in introducing political elements 
into proxy voting.

                 Congressional Budget Office Estimates

    The Committee has requested but not received a cost 
estimate from the Director of the Congressional Budget Office. 
However, pursuant to clause 3(d)(1) of House rule XIII, the 
Committee will adopt as its own the cost estimate by the 
Director of the Congressional Budget Office once it has been 
prepared.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    The Committee has requested but not received an estimate 
from the Director of the Congressional Budget Office. However, 
pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives, once an estimate has been prepared by 
the Director of the Congressional Budget Office, as required by 
section 402 of the Congressional Budget Act of 1973, the 
Committee will adopt as its own the estimate of new budget 
authority, entitlement authority, or tax expenditures or 
revenues.

                       Federal Mandates Statement

    The Committee has requested but not received from the 
Director of the Congressional Budget Office an estimate of the 
Federal mandates pursuant to section 423 of the Unfunded 
Mandates Reform Act. The Committee will adopt the estimate once 
it has been prepared by the Director.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of the Public Law 
111-139 or the most recent Catalog of Federal Domestic 
Assistance.

             Section-by-Section Analysis of the Legislation


Section 1. Short title; table of contents

    This section cites H.R. 4767 as the ``Protecting Americans' 
Retirement Savings from Politics Act.'' This section also 
provides the table of contents for the separate bills that make 
up H.R. 4767.

Section 101. Exclusion of certain substantially similar shareholder 
        proposals

    This section mandates the SEC to modify its resubmission 
criteria concerning shareholder proposals within the context of 
proxy or consent solicitations for company shareholder 
meetings. The section grants issuers the authority to omit a 
shareholder proposal from their proxy materials if the proposal 
substantially covers the same subject matter as a prior 
proposal included in the proxy materials for meetings held 
within the preceding five years. The exclusion criteria are 
based on the frequency of voting on the same or similar 
proposals and the level of support received from shareholders 
in those instances. Specifically, if a proposal has been voted 
on once within the five-year period and garnered less than 10 
percent of the votes cast, or if voted on multiple times and 
received less than 20 percent or 40 percent of the votes cast 
based on the number of occurrences, the issuer is permitted to 
exclude a substantially similar proposal from its proxy 
materials for the upcoming shareholder meeting.

Section 201. Exclusion of certain shareholder proposals

    This section formalizes two exclusion criteria utilized by 
the SEC for shareholder proposals. First, it confirms that 
issuers have the right to exclude a shareholder proposal from 
their proxy or consent solicitation materials for shareholder 
meetings if the proposal has been substantially implemented by 
the issuer. This implementation involves adopting policies, 
practices, or procedures that align with the proposal's 
guidelines and address its underlying concerns. Second, it 
grants issuers the ability to exclude a shareholder proposal if 
it substantially duplicates another proposal previously 
submitted to the issuer by a different proponent and slated for 
inclusion in the meeting materials.
    Additionally, the section nullifies the SEC's ability to 
finalize, implement, or issue rules similar to those contained 
in a proposed rule titled ``Substantial Implementation, 
Duplication, and Resubmission of Shareholder Proposals under 
Exchange Act Rule 14a-8'' (87 Fed. Reg. 45052). It restricts 
the SEC from applying or considering substantially similar 
rules, including in cases involving no-action requests or 
interpretations.

Section 301. Exclusion of certain ESG shareholder proposals

    This section permits an issuer to exclude a shareholder 
proposal from its proxy or consent solicitation material for a 
shareholder meeting if the proposal pertains to environmental, 
social, or political subject matter, or a similar category of 
subject matter.

Section 401. Exclusions available regardless of significant social 
        policy issue

    This section enables companies to exclude a shareholder 
proposal based on Rule 14a-8 exclusion criteria, regardless of 
whether the shareholder proposal pertains to a significant 
social policy issue.

Section 501. Study of certain issues with respect to shareholder 
        proposals, proxy advisory firms, and the proxy process

    This section amends the Securities Exchange Act of 1934, 
directing the SEC to conduct comprehensive studies every five 
years on shareholder proposals, proxy advisory firms, and the 
proxy process. They will examine various aspects, such as 
financial incentives, impacts on retail investors, the 
influence of proxy advisors, costs to issuers, thresholds for 
shareholder proponents, effects on operating costs and company 
decisions, potential impacts on the economy, and the regulatory 
oversight of proxy advisors. The section also requires the SEC 
to issue reports to specific congressional committees after 
completing each study.

Section 601. Registration of proxy advisory firms

    This section amends the Securities Exchange Act of 1934, 
mandating the registration of proxy advisory firms with the 
SEC. It outlines the application process, requiring proxy 
advisors to furnish certifications of accuracy, procedures 
ensuring alignment of voting advice with shareholders' best 
economic interest, organizational structure details, 
disclosures regarding conflicts of interest, and staff 
qualifications. The SEC is mandated to review these 
applications within specified timeframes.
    Additionally, registered firms are required to promptly 
update their registration for any materially inaccurate 
information and annually certify its accuracy. Furthermore, 
this section grants the SEC authority to censure, limit 
activities, suspend, or revoke the registration of firms found 
violating regulations, lacking financial resources, or 
possessing conflicts of interest detrimental to investors.
    Moreover, this section mandates proxy advisory firms to 
establish policies for managing and publicly disclosing 
conflicts of interest. The SEC is obligated to issue rules 
specifically addressing such conflicts within a year.
    This section also establishes reliability standards for 
proxy advisory services, including access to issuer 
information, the presence of an ombudsman, and the disclosure 
of unresolved issuer complaints in client reports. 
Additionally, it provides a private right of action concerning 
proxy advisor recommendations violating state or federal law. 
It also requires proxy advisory firms to designate a compliance 
officer, prohibits certain unfair, coercive, or abusive 
conduct, mandates proxy advisors to provide specific statements 
on their financial condition, and publishes an annual report 
summarizing their voting recommendations.

Section 701. Liability for certain failures to disclose material 
        information or making of material misstatements

    This section amends the Securities Exchange Act of 1934 to 
specify that the failure to disclose material information--such 
as a proxy voting advice business's methodology, sources of 
information, or conflicts of interest--or the issuance of a 
material misstatement regarding proxy voting advice directed at 
a security holder's vote, consent, or authorization on a 
specific matter for which approval is sought from security 
holders, will be considered false or misleading concerning a 
material fact.

Section 801. Duties of investment advisors, asset managers, and pension 
        funds

    This section amends the Securities Exchange Act of 1934, 
mandating disclosure requirements for institutional investment 
managers engaging proxy advisory firms and exercising voting 
power concerning equity securities. It mandates these managers 
to file an annual report with the SEC containing detailed 
explanations of their voting practices related to shareholder 
proposals. The report must include information such as the 
alignment of voting with proxy advisory firm recommendations, 
the consideration of these recommendations in voting decisions, 
the reconciliation of votes with shareholders' economic 
interests, and the involvement of investment professionals in 
voting decisions. Additionally, larger institutional investment 
managers meeting specific value criteria are required to 
provide customer clarifications regarding voting obligations, 
conduct economic analyses before voting on shareholder 
proposals, and include these analyses in their annual reports. 
Each report is to be certified by the institution's Chief 
Executive Officer and Chief Financial Officer. The section 
defines ``best economic interest'' as decisions aiming to 
maximize investment returns in alignment with the fund's 
investment objectives and risk profile.

Section 901. Requirements related to proxy voting

    This section amends the Securities Exchange Act of 1934, 
mandating the SEC to issue definitive regulations prohibiting 
the practice of ``robovoting'' concerning proxy or consent 
solicitations. Robovoting is defined as the automatic casting 
of votes in accordance with a proxy advisory firm's 
recommendations or pre-filling votes on a proxy advisory firm's 
electronic platform without independent review and analysis. 
Additionally, this section prohibits institutional investors 
from outsourcing their voting decisions regarding proxy or 
consent solicitation materials. It also establishes that no 
individual can be compelled to cast votes on such materials. 
Furthermore, it specifies that proxy advisory firms must 
calculate vote results for proxy or consent solicitation 
materials concerning an issuer in compliance with the laws of 
the state in which the issuer is incorporated.

Section 1001. Proxy voting of passively managed funds

    This section amends the Investment Advisers Act of 1940 to 
specify how investment advisers must handle proxy voting for 
passively managed funds. It mandates advisers to vote according 
to the beneficial owner's instructions, the issuer's voting 
directions, or abstain, with exceptions for routine matters. 
Additionally, it offers a safe harbor, shielding advisers from 
liabilities related to soliciting voting instructions or voting 
based on issuer guidance on non-routine matters.

Section 1101. Best interest based on pecuniary factors

    This section amends the Investment Advisers Act of 1940 to 
specify criteria for determining a customer's best interest 
based on pecuniary factors. It states that the best interest of 
a customer must primarily consider financial factors and cannot 
be subordinated to or limited by non-financial factors unless 
the customer explicitly consents in writing to consider such 
non-pecuniary factors. If a customer provides this consent, the 
broker, dealer, or investment adviser must disclose the 
expected financial effects of these non-pecuniary factors over 
a period selected by the customer, up to three years. 
Additionally, at the end of this period, they must disclose the 
actual financial effects, including fees, costs, and expenses 
incurred due to considering these non-pecuniary factors, 
compared to a comparable index or basket of securities chosen 
by the customer. The term ``pecuniary factor'' is defined as a 
factor that a fiduciary reasonably determines will materially 
affect an investment's risk or return based on appropriate 
investment timelines. The section directs the SEC to create or 
adjust rules within 12 months of the bill's enactment to 
implement these changes.

Section 1102. Study on climate change and other environmental 
        disclosures in municipal bond market

    This section mandates the SEC to conduct a comprehensive 
study focused on disclosures made by issuers of municipal 
securities regarding climate change and other environmental 
aspects. The SEC is required to examine how frequently these 
disclosures are made, assessing whether they align with 
disclosures made in different contexts or to audiences beyond 
investors. The study will also delve into voluntary or 
mandatory disclosure standards adopted by issuers and analyze 
the extent to which investors take these disclosures into 
account when making investment decisions. Additionally, the SEC 
is empowered to include any other pertinent information they 
deem relevant for this investigation.
    Within a year of the bill's enactment, the SEC must present 
a report to the Senate's Committee on Banking, Housing, and 
Urban Affairs and the House of Representatives' Committee on 
Financial Services. This report will encompass the study's 
findings, a detailed exploration of the financial risks 
associated with investing in municipal securities, an 
assessment of whether these risks are adequately disclosed to 
investors, and recommendations for potential regulatory or 
legislative actions to address any concerns highlighted in the 
study.

Section 1103. Study on solicitation of municipal securities business

    This section directs the SEC to conduct a study assessing 
the effectiveness of specific rules aimed at preventing the 
exchange of funds to elected officials or candidates in return 
for government business related to the offer or sale of 
municipal securities. The SEC is tasked with evaluating the 
impact of these rules, including their intended effects and any 
unintended adverse consequences. The study will investigate the 
enforcement actions taken under these rules, analyze compliance 
policies of entities subject to these rules, and examine how 
these rules affect participation in the political process in 
comparison to those soliciting government business unrelated to 
municipal securities. Additionally, the study will consider the 
influence of other state and federal laws on the solicitation 
of municipal securities business and any other pertinent 
information as determined by the SEC.
    Within a year of the bill's enactment, the SEC is required 
to present a report to the Senate's Committee on Banking, 
Housing, and Urban Affairs and the House of Representatives' 
Committee on Financial Services. This report will contain the 
study's findings, an analysis of the impact of these rules on 
small businesses, including minority and women-owned 
businesses, and recommendations for potential regulatory or 
legislative actions to address any identified concerns.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                    SECURITIES EXCHANGE ACT OF 1934


TITLE I--REGULATION OF SECURITIES EXCHANGES

           *       *       *       *       *       *       *



                  definitions and application of title

  Sec. 3. (a) When used in this title, unless the context 
otherwise requires--
          (1) The term ``exchange'' means any organization, 
        association, or group of persons, whether incorporated 
        or unincorporated, which constitutes, maintains, or 
        provides a market place or facilities for bringing 
        together purchasers and sellers of securities or for 
        otherwise performing with respect to securities the 
        functions commonly performed by a stock exchange as 
        that term is generally understood, and includes the 
        market place and the market facilities maintained by 
        such exchange.
          (2) The term ``facility'' when used with respect to 
        an exchange includes its premises, tangible or 
        intangible property whether on the premises or not, any 
        right to the use of such premises or property or any 
        service thereof for the purpose of effecting or 
        reporting a transaction on an exchange (including, 
        among other things, any system of communication to or 
        from the exchange, by ticker or otherwise, maintained 
        by or with the consent of the exchange), and any right 
        of the exchange to the use of any property or service.
          (3)(A) The term ``member'' when used with respect to 
        a national securities exchange means (i) any natural 
        person permitted to effect transactions on the floor of 
        the exchange without the services of another person 
        acting as broker, (ii) any registered broker or dealer 
        with which such a natural person is associated, (iii) 
        any registered broker or dealer permitted to designate 
        as a representative such a natural person, and (iv) any 
        other registered broker or dealer which agrees to be 
        regulated by such exchange and with respect to which 
        the exchange undertakes to enforce compliance with the 
        provisions of this title, the rules and regulations 
        thereunder, and its own rules. For purposes of sections 
        6(b)(1), 6(b)(4), 6(b)(6), 6(b)(7), 6(d), 17(d), 19(d), 
        19(e), 19(g), 19(h), and 21 of this title, the term 
        ``member'' when used with respect to a national 
        securities exchange also means, to the extent of the 
        rules of the exchange specified by the Commission, any 
        person required by the Commission to comply with such 
        rules pursuant to section 6(f) of this title.
          (B) The term ``member'' when used with respect to a 
        registered securities association means any broker or 
        dealer who agrees to be regulated by such association 
        and with respect to whom the association undertakes to 
        enforce compliance with the provisions of this title, 
        the rules and regulations thereunder, and its own 
        rules.
          (4) Broker.--
                  (A) In general.--The term ``broker'' means 
                any person engaged in the business of effecting 
                transactions in securities for the account of 
                others.
                  (B) Exception for certain bank activities.--A 
                bank shall not be considered to be a broker 
                because the bank engages in any one or more of 
                the following activities under the conditions 
                described:
                          (i) Third party brokerage 
                        arrangements.--The bank enters into a 
                        contractual or other written 
                        arrangement with a broker or dealer 
                        registered under this title under which 
                        the broker or dealer offers brokerage 
                        services on or off the premises of the 
                        bank if--
                                  (I) such broker or dealer is 
                                clearly identified as the 
                                person performing the brokerage 
                                services;
                                  (II) the broker or dealer 
                                performs brokerage services in 
                                an area that is clearly marked 
                                and, to the extent practicable, 
                                physically separate from the 
                                routine deposit-taking 
                                activities of the bank;
                                  (III) any materials used by 
                                the bank to advertise or 
                                promote generally the 
                                availability of brokerage 
                                services under the arrangement 
                                clearly indicate that the 
                                brokerage services are being 
                                provided by the broker or 
                                dealer and not by the bank;
                                  (IV) any materials used by 
                                the bank to advertise or 
                                promote generally the 
                                availability of brokerage 
                                services under the arrangement 
                                are in compliance with the 
                                Federal securities laws before 
                                distribution;
                                  (V) bank employees (other 
                                than associated persons of a 
                                broker or dealer who are 
                                qualified pursuant to the rules 
                                of a self-regulatory 
                                organization) perform only 
                                clerical or ministerial 
                                functions in connection with 
                                brokerage transactions 
                                including scheduling 
                                appointments with the 
                                associated persons of a broker 
                                or dealer, except that bank 
                                employees may forward customer 
                                funds or securities and may 
                                describe in general terms the 
                                types of investment vehicles 
                                available from the bank and the 
                                broker or dealer under the 
                                arrangement;
                                  (VI) bank employees do not 
                                receive incentive compensation 
                                for any brokerage transaction 
                                unless such employees are 
                                associated persons of a broker 
                                or dealer and are qualified 
                                pursuant to the rules of a 
                                self-regulatory organization, 
                                except that the bank employees 
                                may receive compensation for 
                                the referral of any customer if 
                                the compensation is a nominal 
                                one-time cash fee of a fixed 
                                dollar amount and the payment 
                                of the fee is not contingent on 
                                whether the referral results in 
                                a transaction;
                                  (VII) such services are 
                                provided by the broker or 
                                dealer on a basis in which all 
                                customers that receive any 
                                services are fully disclosed to 
                                the broker or dealer;
                                  (VIII) the bank does not 
                                carry a securities account of 
                                the customer except as 
                                permitted under clause (ii) or 
                                (viii) of this subparagraph; 
                                and
                                  (IX) the bank, broker, or 
                                dealer informs each customer 
                                that the brokerage services are 
                                provided by the broker or 
                                dealer and not by the bank and 
                                that the securities are not 
                                deposits or other obligations 
                                of the bank, are not guaranteed 
                                by the bank, and are not 
                                insured by the Federal Deposit 
                                Insurance Corporation.
                          (ii) Trust activities.--The bank 
                        effects transactions in a trustee 
                        capacity, or effects transactions in a 
                        fiduciary capacity in its trust 
                        department or other department that is 
                        regularly examined by bank examiners 
                        for compliance with fiduciary 
                        principles and standards, and--
                                  (I) is chiefly compensated 
                                for such transactions, 
                                consistent with fiduciary 
                                principles and standards, on 
                                the basis of an administration 
                                or annual fee (payable on a 
                                monthly, quarterly, or other 
                                basis), a percentage of assets 
                                under management, or a flat or 
                                capped per order processing fee 
                                equal to not more than the cost 
                                incurred by the bank in 
                                connection with executing 
                                securities transactions for 
                                trustee and fiduciary 
                                customers, or any combination 
                                of such fees; and
                                  (II) does not publicly 
                                solicit brokerage business, 
                                other than by advertising that 
                                it effects transactions in 
                                securities in conjunction with 
                                advertising its other trust 
                                activities.
                          (iii) Permissible securities 
                        transactions.--The bank effects 
                        transactions in--
                                  (I) commercial paper, bankers 
                                acceptances, or commercial 
                                bills;
                                  (II) exempted securities;
                                  (III) qualified Canadian 
                                government obligations as 
                                defined in section 5136 of the 
                                Revised Statutes, in conformity 
                                with section 15C of this title 
                                and the rules and regulations 
                                thereunder, or obligations of 
                                the North American Development 
                                Bank; or
                                  (IV) any standardized, credit 
                                enhanced debt security issued 
                                by a foreign government 
                                pursuant to the March 1989 plan 
                                of then Secretary of the 
                                Treasury Brady, used by such 
                                foreign government to retire 
                                outstanding commercial bank 
                                loans.
                          (iv) Certain stock purchase plans.--
                                  (I) Employee benefit plans.--
                                The bank effects transactions, 
                                as part of its transfer agency 
                                activities, in the securities 
                                of an issuer as part of any 
                                pension, retirement, profit-
                                sharing, bonus, thrift, 
                                savings, incentive, or other 
                                similar benefit plan for the 
                                employees of that issuer or its 
                                affiliates (as defined in 
                                section 2 of the Bank Holding 
                                Company Act of 1956), if the 
                                bank does not solicit 
                                transactions or provide 
                                investment advice with respect 
                                to the purchase or sale of 
                                securities in connection with 
                                the plan.
                                  (II) Dividend reinvestment 
                                plans.--The bank effects 
                                transactions, as part of its 
                                transfer agency activities, in 
                                the securities of an issuer as 
                                part of that issuer's dividend 
                                reinvestment plan, if--
                                          (aa) the bank does 
                                        not solicit 
                                        transactions or provide 
                                        investment advice with 
                                        respect to the purchase 
                                        or sale of securities 
                                        in connection with the 
                                        plan; and
                                          (bb) the bank does 
                                        not net shareholders' 
                                        buy and sell orders, 
                                        other than for programs 
                                        for odd-lot holders or 
                                        plans registered with 
                                        the Commission.
                                  (III) Issuer plans.--The bank 
                                effects transactions, as part 
                                of its transfer agency 
                                activities, in the securities 
                                of an issuer as part of a plan 
                                or program for the purchase or 
                                sale of that issuer's shares, 
                                if--
                                          (aa) the bank does 
                                        not solicit 
                                        transactions or provide 
                                        investment advice with 
                                        respect to the purchase 
                                        or sale of securities 
                                        in connection with the 
                                        plan or program; and
                                          (bb) the bank does 
                                        not net shareholders' 
                                        buy and sell orders, 
                                        other than for programs 
                                        for odd-lot holders or 
                                        plans registered with 
                                        the Commission.
                                  (IV) Permissible delivery of 
                                materials.--The exception to 
                                being considered a broker for a 
                                bank engaged in activities 
                                described in subclauses (I), 
                                (II), and (III) will not be 
                                affected by delivery of written 
                                or electronic plan materials by 
                                a bank to employees of the 
                                issuer, shareholders of the 
                                issuer, or members of affinity 
                                groups of the issuer, so long 
                                as such materials are--
                                          (aa) comparable in 
                                        scope or nature to that 
                                        permitted by the 
                                        Commission as of the 
                                        date of the enactment 
                                        of the Gramm-Leach-
                                        Bliley Act; or
                                          (bb) otherwise 
                                        permitted by the 
                                        Commission.
                          (v) Sweep accounts.--The bank effects 
                        transactions as part of a program for 
                        the investment or reinvestment of 
                        deposit funds into any no-load, open-
                        end management investment company 
                        registered under the Investment Company 
                        Act of 1940 that holds itself out as a 
                        money market fund.
                          (vi) Affiliate transactions.--The 
                        bank effects transactions for the 
                        account of any affiliate of the bank 
                        (as defined in section 2 of the Bank 
                        Holding Company Act of 1956) other 
                        than--
                                  (I) a registered broker or 
                                dealer; or
                                  (II) an affiliate that is 
                                engaged in merchant banking, as 
                                described in section 4(k)(4)(H) 
                                of the Bank Holding Company Act 
                                of 1956.
                          (vii) Private securities offerings.--
                        The bank--
                                  (I) effects sales as part of 
                                a primary offering of 
                                securities not involving a 
                                public offering, pursuant to 
                                section 3(b), 4(2), or 4(5) of 
                                the Securities Act of 1933 or 
                                the rules and regulations 
                                issued thereunder;
                                  (II) at any time after the 
                                date that is 1 year after the 
                                date of the enactment of the 
                                Gramm-Leach-Bliley Act, is not 
                                affiliated with a broker or 
                                dealer that has been registered 
                                for more than 1 year in 
                                accordance with this Act, and 
                                engages in dealing, market 
                                making, or underwriting 
                                activities, other than with 
                                respect to exempted securities; 
                                and
                                  (III) if the bank is not 
                                affiliated with a broker or 
                                dealer, does not effect any 
                                primary offering described in 
                                subclause (I) the aggregate 
                                amount of which exceeds 25 
                                percent of the capital of the 
                                bank, except that the 
                                limitation of this subclause 
                                shall not apply with respect to 
                                any sale of government 
                                securities or municipal 
                                securities.
                          (viii) Safekeeping and custody 
                        activities.--
                                  (I) In general.--The bank, as 
                                part of customary banking 
                                activities--
                                          (aa) provides 
                                        safekeeping or custody 
                                        services with respect 
                                        to securities, 
                                        including the exercise 
                                        of warrants and other 
                                        rights on behalf of 
                                        customers;
                                          (bb) facilitates the 
                                        transfer of funds or 
                                        securities, as a 
                                        custodian or a clearing 
                                        agency, in connection 
                                        with the clearance and 
                                        settlement of its 
                                        customers' transactions 
                                        in securities;
                                          (cc) effects 
                                        securities lending or 
                                        borrowing transactions 
                                        with or on behalf of 
                                        customers as part of 
                                        services provided to 
                                        customers pursuant to 
                                        division (aa) or (bb) 
                                        or invests cash 
                                        collateral pledged in 
                                        connection with such 
                                        transactions;
                                          (dd) holds securities 
                                        pledged by a customer 
                                        to another person or 
                                        securities subject to 
                                        purchase or resale 
                                        agreements involving a 
                                        customer, or 
                                        facilitates the 
                                        pledging or transfer of 
                                        such securities by book 
                                        entry or as otherwise 
                                        provided under 
                                        applicable law, if the 
                                        bank maintains records 
                                        separately identifying 
                                        the securities and the 
                                        customer; or
                                          (ee) serves as a 
                                        custodian or provider 
                                        of other related 
                                        administrative services 
                                        to any individual 
                                        retirement account, 
                                        pension, retirement, 
                                        profit sharing, bonus, 
                                        thrift savings, 
                                        incentive, or other 
                                        similar benefit plan.
                                  (II) Exception for carrying 
                                broker activities.--The 
                                exception to being considered a 
                                broker for a bank engaged in 
                                activities described in 
                                subclause (I) shall not apply 
                                if the bank, in connection with 
                                such activities, acts in the 
                                United States as a carrying 
                                broker (as such term, and 
                                different formulations thereof, 
                                are used in section 15(c)(3) of 
                                this title and the rules and 
                                regulations thereunder) for any 
                                broker or dealer, unless such 
                                carrying broker activities are 
                                engaged in with respect to 
                                government securities (as 
                                defined in paragraph (42) of 
                                this subsection).
                          (ix) Identified banking products.--
                        The bank effects transactions in 
                        identified banking products as defined 
                        in section 206 of the Gramm-Leach-
                        Bliley Act.
                          (x) Municipal securities.--The bank 
                        effects transactions in municipal 
                        securities.
                          (xi) De minimis exception.--The bank 
                        effects, other than in transactions 
                        referred to in clauses (i) through (x), 
                        not more than 500 transactions in 
                        securities in any calendar year, and 
                        such transactions are not effected by 
                        an employee of the bank who is also an 
                        employee of a broker or dealer.
                  (C) Execution by broker or dealer.--The 
                exception to being considered a broker for a 
                bank engaged in activities described in clauses 
                (ii), (iv), and (viii) of subparagraph (B) 
                shall not apply if the activities described in 
                such provisions result in the trade in the 
                United States of any security that is a 
                publicly traded security in the United States, 
                unless--
                          (i) the bank directs such trade to a 
                        registered broker or dealer for 
                        execution;
                          (ii) the trade is a cross trade or 
                        other substantially similar trade of a 
                        security that--
                                  (I) is made by the bank or 
                                between the bank and an 
                                affiliated fiduciary; and
                                  (II) is not in contravention 
                                of fiduciary principles 
                                established under applicable 
                                Federal or State law; or
                          (iii) the trade is conducted in some 
                        other manner permitted under rules, 
                        regulations, or orders as the 
                        Commission may prescribe or issue.
                  (D) Fiduciary capacity.--For purposes of 
                subparagraph (B)(ii), the term ``fiduciary 
                capacity'' means--
                          (i) in the capacity as trustee, 
                        executor, administrator, registrar of 
                        stocks and bonds, transfer agent, 
                        guardian, assignee, receiver, or 
                        custodian under a uniform gift to minor 
                        act, or as an investment adviser if the 
                        bank receives a fee for its investment 
                        advice;
                          (ii) in any capacity in which the 
                        bank possesses investment discretion on 
                        behalf of another; or
                          (iii) in any other similar capacity.
                  (E) Exception for entities subject to section 
                15(e).--The term ``broker'' does not include a 
                bank that--
                          (i) was, on the day before the date 
                        of enactment of the Gramm-Leach-Bliley 
                        Act, subject to section 15(e); and
                          (ii) is subject to such restrictions 
                        and requirements as the Commission 
                        considers appropriate.
                  (F) Joint rulemaking required.--The 
                Commission and the Board of Governors of the 
                Federal Reserve System shall jointly adopt a 
                single set of rules or regulations to implement 
                the exceptions in subparagraph (B).
          (5) Dealer.--
                  (A) In general.--The term ``dealer'' means 
                any person engaged in the business of buying 
                and selling securities (not including security-
                based swaps, other than security-based swaps 
                with or for persons that are not eligible 
                contract participants) for such person's own 
                account through a broker or otherwise.
                  (B) Exception for person not engaged in the 
                business of dealing.--The term ``dealer'' does 
                not include a person that buys or sells 
                securities (not including security-based swaps, 
                other than security-based swaps with or for 
                persons that are not eligible contract 
                participants) for such person's own account, 
                either individually or in a fiduciary capacity, 
                but not as a part of a regular business.
                  (C) Exception for certain bank activities.--A 
                bank shall not be considered to be a dealer 
                because the bank engages in any of the 
                following activities under the conditions 
                described:
                          (i) Permissible securities 
                        transactions.--The bank buys or sells--
                                  (I) commercial paper, bankers 
                                acceptances, or commercial 
                                bills;
                                  (II) exempted securities;
                                  (III) qualified Canadian 
                                government obligations as 
                                defined in section 5136 of the 
                                Revised Statutes of the United 
                                States, in conformity with 
                                section 15C of this title and 
                                the rules and regulations 
                                thereunder, or obligations of 
                                the North American Development 
                                Bank; or
                                  (IV) any standardized, credit 
                                enhanced debt security issued 
                                by a foreign government 
                                pursuant to the March 1989 plan 
                                of then Secretary of the 
                                Treasury Brady, used by such 
                                foreign government to retire 
                                outstanding commercial bank 
                                loans.
                          (ii) Investment, trustee, and 
                        fiduciary transactions.--The bank buys 
                        or sells securities for investment 
                        purposes--
                                  (I) for the bank; or
                                  (II) for accounts for which 
                                the bank acts as a trustee or 
                                fiduciary.
                          (iii) Asset-backed transactions.--The 
                        bank engages in the issuance or sale to 
                        qualified investors, through a grantor 
                        trust or other separate entity, of 
                        securities backed by or representing an 
                        interest in notes, drafts, acceptances, 
                        loans, leases, receivables, other 
                        obligations (other than securities of 
                        which the bank is not the issuer), or 
                        pools of any such obligations 
                        predominantly originated by--
                                  (I) the bank;
                                  (II) an affiliate of any such 
                                bank other than a broker or 
                                dealer; or
                                  (III) a syndicate of banks of 
                                which the bank is a member, if 
                                the obligations or pool of 
                                obligations consists of 
                                mortgage obligations or 
                                consumer-related receivables.
                          (iv) Identified banking products.--
                        The bank buys or sells identified 
                        banking products, as defined in section 
                        206 of the Gramm-Leach-Bliley Act.
          (6) The term ``bank'' means (A) a banking institution 
        organized under the laws of the United States or a 
        Federal savings association, as defined in section 2(5) 
        of the Home Owners' Loan Act, (B) a member bank of the 
        Federal Reserve System, (C) any other banking 
        institution or savings association, as defined in 
        section 2(4) of the Home Owners' Loan Act, whether 
        incorporated or not, doing business under the laws of 
        any State or of the United States, a substantial 
        portion of the business of which consists of receiving 
        deposits or exercising fiduciary powers similar to 
        those permitted to national banks under the authority 
        of the Comptroller of the Currency pursuant to the 
        first section of Public Law 87-722 (12 U.S.C. 92a), and 
        which is supervised and examined by State or Federal 
        authority having supervision over banks or savings 
        associations, and which is not operated for the purpose 
        of evading the provisions of this title, and (D) a 
        receiver, conservator, or other liquidating agent of 
        any institution or firm included in clauses (A), (B), 
        or (C) of this paragraph.
          (7) The term ``director'' means any director of a 
        corporation or any person performing similar functions 
        with respect to any organization, whether incorporated 
        or unincorporated.
          (8) The term ``issuer'' means any person who issues 
        or proposes to issue any security; except that with 
        respect to certificates of deposit for securities, 
        voting-trust certificates, or collateral-trust 
        certificates, or with respect to certificates of 
        interest or shares in an unincorporated investment 
        trust not having a board of directors or of the fixed, 
        restricted management, or unit type, the term 
        ``issuer'' means the person or persons performing the 
        acts and assuming the duties of depositor or manager 
        pursuant to the provisions of the trust or other 
        agreement or instrument under which such securities are 
        issued; and except that with respect to equipment-trust 
        certificates or like securities, the term ``issuer'' 
        means the person by whom the equipment or property is, 
        or is to be, used.
          (9) The term ``person'' means a natural person, 
        company, government, or political subdivision, agency, 
        or instrumentality of a government.
          (10) The term ``security'' means any note, stock, 
        treasury stock, security future, security-based 
        swap,bond, debenture, certificate of interest or 
        participation in any profit-sharing agreement or in any 
        oil, gas, or other mineral royalty or lease, any 
        collateral-trust certificate, preorganization 
        certificate or subscription, transferable share, 
        investment contract, voting-trust certificate, 
        certificate of deposit for a security, any put, call, 
        straddle, option, or privilege on any security, 
        certificate of deposit, or group or index of securities 
        (including any interest therein or based on the value 
        thereof), or any put, call, straddle, option, or 
        privilege entered into on a national securities 
        exchange relating to foreign currency, or in general, 
        any instrument commonly known as a ``security''; or any 
        certificate of interest or participation in, temporary 
        or interim certificate for, receipt for, or warrant or 
        right to subscribe to or purchase, any of the 
        foregoing; but shall not include currency or any note, 
        draft, bill of exchange, or banker's acceptance which 
        has a maturity at the time of issuance of not exceeding 
        nine months, exclusive of days of grace, or any renewal 
        thereof the maturity of which is likewise limited.
          (11) The term ``equity security'' means any stock or 
        similar security; or any security future on any such 
        security; or any security convertible, with or without 
        consideration, into such a security, or carrying any 
        warrant or right to subscribe to or purchase such a 
        security; or any such warrant or right; or any other 
        security which the Commission shall deem to be of 
        similar nature and consider necessary or appropriate, 
        by such rules and regulations as it may prescribe in 
        the public interest or for the protection of investors, 
        to treat as an equity security.
          (12)(A) The term ``exempted security'' or ``exempted 
        securities'' includes--
                  (i) government securities, as defined in 
                paragraph (42) of this subsection;
                  (ii) municipal securities, as defined in 
                paragraph (29) of this subsection;
                  (iii) any interest or participation in any 
                common trust fund or similar fund that is 
                excluded from the definition of the term 
                ``investment company'' under section 3(c)(3) of 
                the Investment Company Act of 1940;
                  (iv) any interest or participation in a 
                single trust fund, or a collective trust fund 
                maintained by a bank, or any security arising 
                out of a contract issued by an insurance 
                company, which interest, participation, or 
                security is issued in connection with a 
                qualified plan as defined in subparagraph (C) 
                of this paragraph;
                  (v) any security issued by or any interest or 
                participation in any pooled income fund, 
                collective trust fund, collective investment 
                fund, or similar fund that is excluded from the 
                definition of an investment company under 
                section 3(c)(10)(B) of the Investment Company 
                Act of 1940;
                  (vi) solely for purposes of sections 12, 13, 
                14, and 16 of this title, any security issued 
                by or any interest or participation in any 
                church plan, company, or account that is 
                excluded from the definition of an investment 
                company under section 3(c)(14) of the 
                Investment Company Act of 1940; and
                  (vii) such other securities (which may 
                include, among others, unregistered securities, 
                the market in which is predominantly 
                intrastate) as the Commission may, by such 
                rules and regulations as it deems consistent 
                with the public interest and the protection of 
                investors, either unconditionally or upon 
                specified terms and conditions or for stated 
                periods, exempt from the operation of any one 
                or more provisions of this title which by their 
                terms do not apply to an ``exempted security'' 
                or to ``exempted securities''.
          (B)(i) Notwithstanding subparagraph (A)(i) of this 
        paragraph, government securities shall not be deemed to 
        be ``exempted securities'' for the purposes of section 
        17A of this title.
          (ii) Notwithstanding subparagraph (A)(ii) of this 
        paragraph, municipal securities shall not be deemed to 
        be ``exempted securities'' for the purposes of sections 
        15 and 17A of this title.
          (C) For purposes of subparagraph (A)(iv) of this 
        paragraph, the term ``qualified plan'' means (i) a 
        stock bonus, pension, or profit-sharing plan which 
        meets the requirements for qualification under section 
        401 of the Internal Revenue Code of 1954, (ii) an 
        annuity plan which meets the requirements for the 
        deduction of the employer's contribution under section 
        404(a)(2) of such Code, (iii) a governmental plan as 
        defined in section 414(d) of such Code which has been 
        established by an employer for the exclusive benefit of 
        its employees or their beneficiaries for the purpose of 
        distributing to such employees or their beneficiaries 
        the corpus and income of the funds accumulated under 
        such plan, if under such plan it is impossible, prior 
        to the satisfaction of all liabilities with respect to 
        such employees and their beneficiaries, for any part of 
        the corpus or income to be used for, or diverted to, 
        purposes other than the exclusive benefit of such 
        employees or their beneficiaries, or (iv) a church 
        plan, company, or account that is excluded from the 
        definition of an investment company under section 
        3(c)(14) of the Investment Company Act of 1940, other 
        than any plan described in clause (i), (ii), or (iii) 
        of this subparagraph which (I) covers employees some or 
        all of whom are employees within the meaning of section 
        401(c) of such Code, or (II) is a plan funded by an 
        annuity contract described in section 403(b) of such 
        Code.
          (13) The terms ``buy'' and ``purchase'' each include 
        any contract to buy, purchase, or otherwise acquire. 
        For security futures products, such term includes any 
        contract, agreement, or transaction for future 
        delivery. For security-based swaps, such terms include 
        the execution, termination (prior to its scheduled 
        maturity date), assignment, exchange, or similar 
        transfer or conveyance of, or extinguishing of rights 
        or obligations under, a security-based swap, as the 
        context may require.
          (14) The terms ``sale'' and ``sell'' each include any 
        contract to sell or otherwise dispose of. For security 
        futures products, such term includes any contract, 
        agreement, or transaction for future delivery. For 
        security-based swaps, such terms include the execution, 
        termination (prior to its scheduled maturity date), 
        assignment, exchange, or similar transfer or conveyance 
        of, or extinguishing of rights or obligations under, a 
        security-based swap, as the context may require.
          (15) The term ``Commission'' means the Securities and 
        Exchange Commission established by section 4 of this 
        title.
          (16) The term ``State'' means any State of the United 
        States, the District of Columbia, Puerto Rico, the 
        Virgin Islands, or any other possession of the United 
        States.
          (17) The term ``interstate commerce'' means trade, 
        commerce, transportation, or communication among the 
        several States, or between any foreign country and any 
        State, or between any State and any place or ship 
        outside thereof. The term also includes intrastate use 
        of (A) any facility of a national securities exchange 
        or of a telephone or other interstate means of 
        communication, or (B) any other interstate 
        instrumentality.
          (18) The term ``person associated with a broker or 
        dealer'' or ``associated person of a broker or dealer'' 
        means any partner, officer, director, or branch manager 
        of such broker or dealer (or any person occupying a 
        similar status or performing similar functions), any 
        person directly or indirectly controlling, controlled 
        by, or under common control with such broker or dealer, 
        or any employee of such broker or dealer, except that 
        any person associated with a broker or dealer whose 
        functions are solely clerical or ministerial shall not 
        be included in the meaning of such term for purposes of 
        section 15(b) of this title (other than paragraph (6) 
        thereof).
          (19) The terms ``investment company,''``affiliated 
        person,''``insurance company,''``separate account,'' 
        and ``company'' have the same meanings as in the 
        Investment Company Act of 1940.
          (20) The terms ``investment adviser'' and 
        ``underwriter'' have the same meanings as in the 
        Investment Advisers Act of 1940.
          (21) The term ``persons associated with a member'' or 
        ``associated person of a member'' when used with 
        respect to a member of a national securities exchange 
        or registered securities association means any partner, 
        officer, director, or branch manager of such member (or 
        any person occupying a similar status or performing 
        similar functions), any person directly or indirectly 
        controlling, controlled by, or under common control 
        with such member, or any employee of such member.
          (22)(A) The term ``securities information processor'' 
        means any person engaged in the business of (i) 
        collecting, processing, or preparing for distribution 
        or publication, or assisting, participating in, or 
        coordinating the distribution or publication of, 
        information with respect to transactions in or 
        quotations for any security (other than an exempted 
        security) or (ii) distributing or publishing (whether 
        by means of a ticker tape, a communications network, a 
        terminal display device, or otherwise) on a current and 
        continuing basis, information with respect to such 
        transactions or quotations. The term ``securities 
        information processor'' does not include any bona fide 
        newspaper, news magazine, or business or financial 
        publication of general and regular circulation, any 
        self-regulatory organization, any bank, broker, dealer, 
        building and loan, savings and loan, or homestead 
        association, or cooperative bank, if such bank, broker, 
        dealer, association, or cooperative bank would be 
        deemed to be a securities information processor solely 
        by reason of functions performed by such institutions 
        as part of customary banking, brokerage, dealing, 
        association, or cooperative bank activities, or any 
        common carrier, as defined in section 3 of the 
        Communications Act of 1934, subject to the jurisdiction 
        of the Federal Communications Commission or a State 
        commission, as defined in section 3 of that Act, unless 
        the Commission determines that such carrier is engaged 
        in the business of collecting, processing, or preparing 
        for distribution or publication, information with 
        respect to transactions in or quotations for any 
        security.
          (B) The term ``exclusive processor'' means any 
        securities information processor or self-regulatory 
        organization which, directly or indirectly, engages on 
        an exclusive basis on behalf of any national securities 
        exchange or registered securities association, or any 
        national securities exchange or registered securities 
        association which engages on an exclusive basis on its 
        own behalf, in collecting, processing, or preparing for 
        distribution or publication any information with 
        respect to (i) transactions or quotations on or 
        effected or made by means of any facility of such 
        exchange or (ii) quotations distributed or published by 
        means of any electronic system operated or controlled 
        by such association.
          (23)(A) The term ``clearing agency'' means any person 
        who acts as an intermediary in making payments or 
        deliveries or both in connection with transactions in 
        securities or who provides facilities for comparison of 
        data respecting the terms of settlement of securities 
        transactions, to reduce the number of settlements of 
        securities transactions, or for the allocation of 
        securities settlement responsibilities. Such term also 
        means any person, such as a securities depository, who 
        (i) acts as a custodian of securities in connection 
        with a system for the central handling of securities 
        whereby all securities of a particular class or series 
        of any issuer deposited within the system are treated 
        as fungible and may be transferred, loaned, or pledged 
        by bookkeeping entry without physical delivery of 
        securities certificates, or (ii) otherwise permits or 
        facilitates the settlement of securities transactions 
        or the hypothecation or lending of securities without 
        physical delivery of securities certificates.
          (B) The term ``clearing agency'' does not include (i) 
        any Federal Reserve bank, Federal home loan bank, or 
        Federal land bank; (ii) any national securities 
        exchange or registered securities association solely by 
        reason of its providing facilities for comparison of 
        data respecting the terms of settlement of securities 
        transactions effected on such exchange or by means of 
        any electronic system operated or controlled by such 
        association; (iii) any bank, broker, dealer, building 
        and loan, savings and loan, or homestead association, 
        or cooperative bank if such bank, broker, dealer, 
        association, or cooperative bank would be deemed to be 
        a clearing agency solely by reason of functions 
        performed by such institution as part of customary 
        banking, brokerage, dealing, association, or 
        cooperative banking activities, or solely by reason of 
        acting on behalf of a clearing agency or a participant 
        therein in connection with the furnishing by the 
        clearing agency of services to its participants or the 
        use of services of the clearing agency by its 
        participants, unless the Commission, by rule, otherwise 
        provides as necessary or appropriate to assure the 
        prompt and accurate clearance and settlement of 
        securities transactions or to prevent evasion of this 
        title; (iv) any life insurance company, its registered 
        separate accounts, or a subsidiary of such insurance 
        company solely by reason of functions commonly 
        performed by such entities in connection with variable 
        annuity contracts or variable life policies issued by 
        such insurance company or its separate accounts; (v) 
        any registered open-end investment company or unit 
        investment trust solely by reason of functions commonly 
        performed by it in connection with shares in such 
        registered open-end investment company or unit 
        investment trust, or (vi) any person solely by reason 
        of its performing functions described in paragraph 
        25(E) of this subsection.
          (24) The term ``participant'' when used with respect 
        to a clearing agency means any person who uses a 
        clearing agency to clear or settle securities 
        transactions or to transfer, pledge, lend, or 
        hypothecate securities. Such term does not include a 
        person whose only use of a clearing agency is (A) 
        through another person who is a participant or (B) as a 
        pledgee of securities.
          (25) The term ``transfer agent'' means any person who 
        engages on behalf of an issuer of securities or on 
        behalf of itself as an issuer of securities in (A) 
        countersigning such securities upon issuance; (B) 
        monitoring the issuance of such securities with a view 
        to preventing unauthorized issuance, a function 
        commonly performed by a person called a registrar; (C) 
        registering the transfer of such securities; (D) 
        exchanging or converting such securities; or (E) 
        transferring record ownership of securities by 
        bookkeeping entry without physical issuance of 
        securities certificates. The term ``transfer agent'' 
        does not include any insurance company or separate 
        account which performs such functions solely with 
        respect to variable annuity contracts or variable life 
        policies which it issues or any registered clearing 
        agency which performs such functions solely with 
        respect to options contracts which it issues.
          (26) The term ``self-regulatory organization'' means 
        any national securities exchange, registered securities 
        association, or registered clearing agency, or (solely 
        for purposes of sections 19(b), 19(c), and 23(b) of 
        this title) the Municipal Securities Rulemaking Board 
        established by section 15B of this title.
          (27) The term ``rules of an exchange'', ``rules of an 
        association'', or ``rules of a clearing agency'' means 
        the constitution, articles of incorporation, bylaws, 
        and rules, or instruments corresponding to the 
        foregoing, of an exchange, association of brokers and 
        dealers, or clearing agency, respectively, and such of 
        the stated policies, practices, and interpretations of 
        such exchange, association, or clearing agency as the 
        Commission, by rule, may determine to be necessary or 
        appropriate in the public interest or for the 
        protection of investors to be deemed to be rules of 
        such exchange, association, or clearing agency.
          (28) The term ``rules of a self-regulatory 
        organization'' means the rules of an exchange which is 
        a national securities exchange, the rules of an 
        association of brokers and dealers which is a 
        registered securities association, the rules of a 
        clearing agency which is a registered clearing agency, 
        or the rules of the Municipal Securities Rulemaking 
        Board.
          (29) The term ``municipal securities'' means 
        securities which are direct obligations of, or 
        obligations guaranteed as to principal or interest by, 
        a State or any political subdivision thereof, or any 
        agency or instrumentality of a State or any political 
        subdivision thereof, or any municipal corporate 
        instrumentality of one or more States, or any security 
        which is an industrial development bond (as defined in 
        section 103(c)(2) of the Internal Revenue Code of 1954) 
        the interest on which is excludable from gross income 
        under section 103(a)(1) of such Code if, by reason of 
        the application of paragraph (4) or (6) of section 
        103(c) of such Code (determined as if paragraphs 
        (4)(A), (5), and (7) were not included in such section 
        103(c)), paragraph (1) of such section 103(c) does not 
        apply to such security.
          (30) The term ``municipal securities dealer'' means 
        any person (including a separately identifiable 
        department or division of a bank) engaged in the 
        business of buying and selling municipal securities for 
        his own account, through a broker or otherwise, but 
        does not include--
                  (A) any person insofar as he buys or sells 
                such securities for his own account, either 
                individually or in some fiduciary capacity, but 
                not as a part of a regular business; or
                  (B) a bank, unless the bank is engaged in the 
                business of buying and selling municipal 
                securities for its own account other than in a 
                fiduciary capacity, through a broker or 
                otherwise; Provided, however, That if the bank 
                is engaged in such business through a 
                separately identifiable department or division 
                (as defined by the Municipal Securities 
                Rulemaking Board in accordance with section 
                15B(b)(2)(H) of this title), the department or 
                division and not the bank itself shall be 
                deemed to be the municipal securities dealer.
          (31) The term ``municipal securities broker'' means a 
        broker engaged in the business of effecting 
        transactions in municipal securities for the account of 
        others.
          (32) The term ``person associated with a municipal 
        securities dealer'' when used with respect to a 
        municipal securities dealer which is a bank or a 
        division or department of a bank means any person 
        directly engaged in the management, direction, 
        supervision, or performance of any of the municipal 
        securities dealer's activities with respect to 
        municipal securities, and any person directly or 
        indirectly controlling such activities or controlled by 
        the municipal securities dealer in connection with such 
        activities.
          (33) The term ``municipal securities investment 
        portfolio'' means all municipal securities held for 
        investment and not for sale as part of a regular 
        business by a municipal securities dealer or by a 
        person, directly or indirectly, controlling, controlled 
        by, or under common control with a municipal securities 
        dealer.
          (34) The term ``appropriate regulatory agency'' 
        means--
                  (A) When used with respect to a municipal 
                securities dealer:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank, a 
                        subsidiary or a department or division 
                        of any such bank, a Federal savings 
                        association (as defined in section 
                        3(b)(2) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(2))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation, or a subsidiary or 
                        department or division of any such 
                        Federal savings association;
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        a State member bank of the Federal 
                        Reserve System, a subsidiary or a 
                        department or division thereof, a bank 
                        holding company, a subsidiary of a bank 
                        holding company which is a bank other 
                        than a bank specified in clause (i), 
                        (iii), or (iv) of this subparagraph, a 
                        subsidiary or a department or division 
                        of such subsidiary, or a savings and 
                        loan holding company;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of a bank 
                        insured by the Federal Deposit 
                        Insurance Corporation (other than a 
                        member of the Federal Reserve System), 
                        a subsidiary or department or division 
                        of any such bank, a State savings 
                        association (as defined in section 
                        3(b)(3) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(3))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation, or a subsidiary or a 
                        department or division of any such 
                        State savings association; and
                          (iv) the Commission in the case of 
                        all other municipal securities dealers.
                  (B) When used with respect to a clearing 
                agency or transfer agent:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank, a 
                        subsidiary of any such bank, a Federal 
                        savings association (as defined in 
                        section 3(b)(2) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(2))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation, or a subsidiary of any 
                        such Federal savings association;
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        a State member bank of the Federal 
                        Reserve System, a subsidiary thereof, a 
                        bank holding company, a subsidiary of a 
                        bank holding company that is a bank 
                        other than a bank specified in clause 
                        (i) or (iii) of this subparagraph, or a 
                        savings and loan holding company;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of a bank 
                        insured by the Federal Deposit 
                        Insurance Corporation (other than a 
                        member of the Federal Reserve System), 
                        a subsidiary of any such bank, a State 
                        savings association (as defined in 
                        section 3(b)(3) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(3))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation, or a subsidiary of any 
                        such State savings association; and
                          (iv) the Commission in the case of 
                        all other clearing agencies and 
                        transfer agents.
                  (C) When used with respect to a participant 
                or applicant to become a participant in a 
                clearing agency or a person requesting or 
                having access to services offered by a clearing 
                agency:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank or a 
                        Federal savings association (as defined 
                        in section 3(b)(2) of the Federal 
                        Deposit Insurance Act (12 U.S.C. 
                        1813(b)(2))), the deposits of which are 
                        insured by the Federal Deposit 
                        Insurance Corporation when the 
                        appropriate regulatory agency for such 
                        clearing agency is not the Commission;
                          (ii) the Board of Governors of the 
                        Federal Reserve System in the case of a 
                        State member bank of the Federal 
                        Reserve System, a bank holding company, 
                        or a subsidiary of a bank holding 
                        company, a subsidiary of a bank holding 
                        company that is a bank other than a 
                        bank specified in clause (i) or (iii) 
                        of this subparagraph, or a savings and 
                        loan holding company when the 
                        appropriate regulatory agency for such 
                        clearing agency is not the Commission;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of a bank 
                        insured by the Federal Deposit 
                        Insurance Corporation (other than a 
                        member of the Federal Reserve System) 
                        or a State savings association (as 
                        defined in section 3(b)(3) of the 
                        Federal Deposit Insurance Act (12 
                        U.S.C. 1813(b)(3))), the deposits of 
                        which are insured by the Federal 
                        Deposit Insurance Corporation; and when 
                        the appropriate regulatory agency for 
                        such clearing agency is not the 
                        Commission;
                          (iv) the Commission in all other 
                        cases.
                  (D) When used with respect to an 
                institutional investment manager which is a 
                bank the deposits of which are insured in 
                accordance with the Federal Deposit Insurance 
                Act:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank or a 
                        Federal savings association (as defined 
                        in section 3(b)(2) of the Federal 
                        Deposit Insurance Act (12 U.S.C. 
                        1813(b)(2))), the deposits of which are 
                        insured by the Federal Deposit 
                        Insurance Corporation;
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        any other member bank of the Federal 
                        Reserve System; and
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of any other 
                        insured bank or a State savings 
                        association (as defined in section 
                        3(b)(3) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(3))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation.
                  (E) When used with respect to a national 
                securities exchange or registered securities 
                association, member thereof, person associated 
                with a member thereof, applicant to become a 
                member thereof or to become associated with a 
                member thereof, or person requesting or having 
                access to services offered by such exchange or 
                association or member thereof, or the Municipal 
                Securities Rulemaking Board, the Commission.
                  (F) When used with respect to a person 
                exercising investment discretion with respect 
                to an account:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank or a 
                        Federal savings association (as defined 
                        in section 3(b)(2) of the Federal 
                        Deposit Insurance Act (12 U.S.C. 
                        1813(b)(2))), the deposits of which are 
                        insured by the Federal Deposit 
                        Insurance Corporation;
                          (ii) the Board of Governors of the 
                        Federal Reserve System in the case of 
                        any other member bank of the Federal 
                        Reserve System;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of any other 
                        bank the deposits of which are insured 
                        in accordance with the Federal Deposit 
                        Insurance Act or a State savings 
                        association (as defined in section 
                        3(b)(3) of the Federal Deposit 
                        Insurance Act (12 U.S.C. 1813(b)(3))), 
                        the deposits of which are insured by 
                        the Federal Deposit Insurance 
                        Corporation; and
                          (iv) the Commission in the case of 
                        all other such persons.
                  (G) When used with respect to a government 
                securities broker or government securities 
                dealer, or person associated with a government 
                securities broker or government securities 
                dealer:
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank, a 
                        Federal savings association (as defined 
                        in section 3(b)(2) of the Federal 
                        Deposit Insurance Act), the deposits of 
                        which are insured by the Federal 
                        Deposit Insurance Corporation, or a 
                        Federal branch or Federal agency of a 
                        foreign bank (as such terms are used in 
                        the International Banking Act of 1978);
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        a State member bank of the Federal 
                        Reserve System, a foreign bank, an 
                        uninsured State branch or State agency 
                        of a foreign bank, a commercial lending 
                        company owned or controlled by a 
                        foreign bank (as such terms are used in 
                        the International Banking Act of 1978), 
                        or a corporation organized or having an 
                        agreement with the Board of Governors 
                        of the Federal Reserve System pursuant 
                        to section 25 or section 25A of the 
                        Federal Reserve Act;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of a bank 
                        insured by the Federal Deposit 
                        Insurance Corporation (other than a 
                        member of the Federal Reserve System or 
                        a Federal savings bank), a State 
                        savings association (as defined in 
                        section 3(b)(3) of the Federal Deposit 
                        Insurance Act), the deposits of which 
                        are insured by the Federal Deposit 
                        Insurance Corporation, or an insured 
                        State branch of a foreign bank (as such 
                        terms are used in the International 
                        Banking Act of 1978); and
                          (iv) the Commission, in the case of 
                        all other government securities brokers 
                        and government securities dealers.
                  (H) When used with respect to an institution 
                described in subparagraph (D), (F), or (G) of 
                section 2(c)(2), or held under section 4(f), of 
                the Bank Holding Company Act of 1956--
                          (i) the Comptroller of the Currency, 
                        in the case of a national bank;
                          (ii) the Board of Governors of the 
                        Federal Reserve System, in the case of 
                        a State member bank of the Federal 
                        Reserve System or any corporation 
                        chartered under section 25A of the 
                        Federal Reserve Act;
                          (iii) the Federal Deposit Insurance 
                        Corporation, in the case of any other 
                        bank the deposits of which are insured 
                        in accordance with the Federal Deposit 
                        Insurance Act; or
                          (iv) the Commission in the case of 
                        all other such institutions.
        As used in this paragraph, the terms ``bank holding 
        company'' and ``subsidiary of a bank holding company'' 
        have the meanings given them in section 2 of the Bank 
        Holding Company Act of 1956. As used in this paragraph, 
        the term ``savings and loan holding company'' has the 
        same meaning as in section 10(a) of the Home Owners' 
        Loan Act (12 U.S.C. 1467a(a)).
          (35) A person exercises ``investment discretion'' 
        with respect to an account if, directly or indirectly, 
        such person (A) is authorized to determine what 
        securities or other property shall be purchased or sold 
        by or for the account, (B) makes decisions as to what 
        securities or other property shall be purchased or sold 
        by or for the account even though some other person may 
        have responsibility for such investment decisions, or 
        (C) otherwise exercises such influence with respect to 
        the purchase and sale of securities or other property 
        by or for the account as the Commission, by rule, 
        determines, in the public interest or for the 
        protection of investors, should be subject to the 
        operation of the provisions of this title and rules and 
        regulations thereunder.
          (36) A class of persons or markets is subject to 
        ``equal regulation'' if no member of the class has a 
        competitive advantage over any other member thereof 
        resulting from a disparity in their regulation under 
        this title which the Commission determines is unfair 
        and not necessary or appropriate in furtherance of the 
        purposes of this title.
          (37) The term ``records'' means accounts, 
        correspondence, memorandums, tapes, discs, papers, 
        books, and other documents or transcribed information 
        of any type, whether expressed in ordinary or machine 
        language.
          (38) The term ``market maker'' means any specialist 
        permitted to act as a dealer, any dealer acting in the 
        capacity of block positioner, and any dealer who, with 
        respect to a security, holds himself out (by entering 
        quotations in an inter-dealer communications system or 
        otherwise) as being willing to buy and sell such 
        security for his own account on a regular or continuous 
        basis.
          (39) A person is subject to a ``statutory 
        disqualification'' with respect to membership or 
        participation in, or association with a member of, a 
        self-regulatory organization, if such person--
                  (A) has been and is expelled or suspended 
                from membership or participation in, or barred 
                or suspended from being associated with a 
                member of, any self-regulatory organization, 
                foreign equivalent of a self-regulatory 
                organization, foreign or international 
                securities exchange, contract market designated 
                pursuant to section 5 of the Commodity Exchange 
                Act (7 U.S.C. 7), or any substantially 
                equivalent foreign statute or regulation, or 
                futures association registered under section 17 
                of such Act (7 U.S.C. 21), or any substantially 
                equivalent foreign statute or regulation, or 
                has been and is denied trading privileges on 
                any such contract market or foreign equivalent;
          (B) is subject to--
                  (i) an order of the Commission, other 
                appropriate regulatory agency, or foreign 
                financial regulatory authority--
                          (I) denying, suspending for a period 
                        not exceeding 12 months, or revoking 
                        his registration as a broker, dealer, 
                        municipal securities dealer, government 
                        securities broker, government 
                        securities dealer, security-based swap 
                        dealer, or major security-based swap 
                        participant or limiting his activities 
                        as a foreign person performing a 
                        function substantially equivalent to 
                        any of the above; or
                          (II) barring or suspending for a 
                        period not exceeding 12 months his 
                        being associated with a broker, dealer, 
                        municipal securities dealer, government 
                        securities broker, government 
                        securities dealer, security-based swap 
                        dealer, major security-based swap 
                        participant, or foreign person 
                        performing a function substantially 
                        equivalent to any of the above;
                  (ii) an order of the Commodity Futures 
                Trading Commission denying, suspending, or 
                revoking his registration under the Commodity 
                Exchange Act (7 U.S.C. 1 et seq.); or
                  (iii) an order by a foreign financial 
                regulatory authority denying, suspending, or 
                revoking the person's authority to engage in 
                transactions in contracts of sale of a 
                commodity for future delivery or other 
                instruments traded on or subject to the rules 
                of a contract market, board of trade, or 
                foreign equivalent thereof;
                  (C) by his conduct while associated with a 
                broker, dealer, municipal securities dealer, 
                government securities broker, government 
                securities dealer, security-based swap dealer, 
                or major security-based swap participant, or 
                while associated with an entity or person 
                required to be registered under the Commodity 
                Exchange Act, has been found to be a cause of 
                any effective suspension, expulsion, or order 
                of the character described in subparagraph (A) 
                or (B) of this paragraph, and in entering such 
                a suspension, expulsion, or order, the 
                Commission, an appropriate regulatory agency, 
                or any such self-regulatory organization shall 
                have jurisdiction to find whether or not any 
                person was a cause thereof;
                  (D) by his conduct while associated with any 
                broker, dealer, municipal securities dealer, 
                government securities broker, government 
                securities dealer, security-based swap dealer, 
                major security-based swap participant, or any 
                other entity engaged in transactions in 
                securities, or while associated with an entity 
                engaged in transactions in contracts of sale of 
                a commodity for future delivery or other 
                instruments traded on or subject to the rules 
                of a contract market, board of trade, or 
                foreign equivalent thereof, has been found to 
                be a cause of any effective suspension, 
                expulsion, or order by a foreign or 
                international securities exchange or foreign 
                financial regulatory authority empowered by a 
                foreign government to administer or enforce its 
                laws relating to financial transactions as 
                described in subparagraph (A) or (B) of this 
                paragraph;
                  (E) has associated with him any person who is 
                known, or in the exercise of reasonable care 
                should be known, to him to be a person 
                described by subparagraph (A), (B), (C), or (D) 
                of this paragraph; or
                  (F) has committed or omitted any act, or is 
                subject to an order or finding, enumerated in 
                subparagraph (D), (E), (H), or (G) of paragraph 
                (4) of section 15(b) of this title, has been 
                convicted of any offense specified in 
                subparagraph (B) of such paragraph (4) or any 
                other felony within ten years of the date of 
                the filing of an application for membership or 
                participation in, or to become associated with 
                a member of, such self-regulatory organization, 
                is enjoined from any action, conduct, or 
                practice specified in subparagraph (C) of such 
                paragraph (4), has willfully made or caused to 
                be made in any application for membership or 
                participation in, or to become associated with 
                a member of, a self-regulatory organization, 
                report required to be filed with a self-
                regulatory organization, or proceeding before a 
                self-regulatory organization, any statement 
                which was at the time, and in the light of the 
                circumstances under which it was made, false or 
                misleading with respect to any material fact, 
                or has omitted to state in any such 
                application, report, or proceeding any material 
                fact which is required to be stated therein.
          (40) The term ``financial responsibility rules'' 
        means the rules and regulations of the Commission or 
        the rules and regulations prescribed by any self-
        regulatory organization relating to financial 
        responsibility and related practices which are 
        designated by the Commission, by rule or regulation, to 
        be financial responsibility rules.
          (41) The term ``mortgage related security'' means a 
        security that meets standards of credit-worthiness as 
        established by the Commission, and either:
                  (A) represents ownership of one or more 
                promissory notes or certificates of interest or 
                participation in such notes (including any 
                rights designed to assure servicing of, or the 
                receipt or timeliness of receipt by the holders 
                of such notes, certificates, or participations 
                of amounts payable under, such notes, 
                certificates, or participations), which notes:
                          (i) are directly secured by a first 
                        lien on a single parcel of real estate, 
                        including stock allocated to a dwelling 
                        unit in a residential cooperative 
                        housing corporation, upon which is 
                        located a dwelling or mixed residential 
                        and commercial structure, on a 
                        residential manufactured home as 
                        defined in section 603(6) of the 
                        National Manufactured Housing 
                        Construction and Safety Standards Act 
                        of 1974, whether such manufactured home 
                        is considered real or personal property 
                        under the laws of the State in which it 
                        is to be located, or on one or more 
                        parcels of real estate upon which is 
                        located one or more commercial 
                        structures; and
                          (ii) were originated by a savings and 
                        loan association, savings bank, 
                        commercial bank, credit union, 
                        insurance company, or similar 
                        institution which is supervised and 
                        examined by a Federal or State 
                        authority, or by a mortgage approved by 
                        the Secretary of Housing and Urban 
                        Development pursuant to sections 203 
                        and 211 of the National Housing Act, 
                        or, where such notes involve a lien on 
                        the manufactured home, by any such 
                        institution or by any financial 
                        institution approved for insurance by 
                        the Secretary of Housing and Urban 
                        Development pursuant to section 2 of 
                        the National Housing Act; or
                  (B) is secured by one or more promissory 
                notes or certificates of interest or 
                participations in such notes (with or without 
                recourse to the issuer thereof) and, by its 
                terms, provides for payments of principal in 
                relation to payments, or reasonable projections 
                of payments, on notes meeting the requirements 
                of subparagraphs (A) (i) and (ii) or 
                certificates of interest or participations in 
                promissory notes meeting such requirements.
        For the purpose of this paragraph, the term 
        ``promissory note'', when used in connection with a 
        manufactured home, shall also include a loan, advance, 
        or credit sale as evidence by a retail installment 
        sales contract or other instrument.
          (42) The term ``government securities'' means--
                  (A) securities which are direct obligations 
                of, or obligations guaranteed as to principal 
                or interest by, the United States;
                  (B) securities which are issued or guaranteed 
                by the Tennessee Valley Authority or by 
                corporations in which the United States has a 
                direct or indirect interest and which are 
                designated by the Secretary of the Treasury for 
                exemption as necessary or appropriate in the 
                public interest or for the protection of 
                investors;
                  (C) securities issued or guaranteed as to 
                principal or interest by any corporation the 
                securities of which are designated, by statute 
                specifically naming such corporation, to 
                constitute exempt securities within the meaning 
                of the laws administered by the Commission;
                  (D) for purposes of sections 15C and 17A, any 
                put, call, straddle, option, or privilege on a 
                security described in subparagraph (A), (B), or 
                (C) other than a put, call, straddle, option, 
                or privilege--
                          (i) that is traded on one or more 
                        national securities exchanges; or
                          (ii) for which quotations are 
                        disseminated through an automated 
                        quotation system operated by a 
                        registered securities association; or
                  (E) for purposes of sections 15, 15C, and 17A 
                as applied to a bank, a qualified Canadian 
                government obligation as defined in section 
                5136 of the Revised Statutes of the United 
                States.
          (43) The term ``government securities broker'' means 
        any person regularly engaged in the business of 
        effecting transactions in government securities for the 
        account of others, but does not include--
                  (A) any corporation the securities of which 
                are government securities under subparagraph 
                (B) or (C) of paragraph (42) of this 
                subsection; or
                  (B) any person registered with the Commodity 
                Futures Trading Commission, any contract market 
                designated by the Commodity Futures Trading 
                Commission, such contract market's affiliated 
                clearing organization, or any floor trader on 
                such contract market, solely because such 
                person effects transactions in government 
                securities that the Commission, after 
                consultation with the Commodity Futures Trading 
                Commission, has determined by rule or order to 
                be incidental to such person's futures-related 
                business.
          (44) The term ``government securities dealer'' means 
        any person engaged in the business of buying and 
        selling government securities for his own account, 
        through a broker or otherwise, but does not include--
                  (A) any person insofar as he buys or sells 
                such securities for his own account, either 
                individually or in some fiduciary capacity, but 
                not as a part of a regular business;
                  (B) any corporation the securities of which 
                are government securities under subparagraph 
                (B) or (C) of paragraph (42) of this 
                subsection;
                  (C) any bank, unless the bank is engaged in 
                the business of buying and selling government 
                securities for its own account other than in a 
                fiduciary capacity, through a broker or 
                otherwise; or
                  (D) any person registered with the Commodity 
                Futures Trading Commission, any contract market 
                designated by the Commodity Futures Trading 
                Commission, such contract market's affiliated 
                clearing organization, or any floor trader on 
                such contract market, solely because such 
                person effects transactions in government 
                securities that the Commission, after 
                consultation with the Commodity Futures Trading 
                Commission, has determined by rule or order to 
                be incidental to such person's futures-related 
                business.
          (45) The term ``person associated with a government 
        securities broker or government securities dealer'' 
        means any partner, officer, director, or branch manager 
        of such government securities broker or government 
        securities dealer (or any person occupying a similar 
        status or performing similar functions), and any other 
        employee of such government securities broker or 
        government securities dealer who is engaged in the 
        management, direction, supervision, or performance of 
        any activities relating to government securities, and 
        any person directly or indirectly controlling, 
        controlled by, or under common control with such 
        government securities broker or government securities 
        dealer.
          (46) The term ``financial institution'' means--
                  (A) a bank (as defined in paragraph (6) of 
                this subsection);
                  (B) a foreign bank (as such term is used in 
                the International Banking Act of 1978); and
                  (C) a savings association (as defined in 
                section 3(b) of the Federal Deposit Insurance 
                Act) the deposits of which are insured by the 
                Federal Deposit Insurance Corporation.
          (47) The term ``securities laws'' means the 
        Securities Act of 1933 (15 U.S.C. 77a et seq.), the 
        Securities Exchange Act of 1934 (15 U.S.C. 78a et 
        seq.), the Sarbanes-Oxley Act of 2002, the Trust 
        Indenture Act of 1939 (15 U.S.C. 77aaa et seq.), the 
        Investment Company Act of 1940 (15 U.S.C. 80a-1 et 
        seq.), the Investment Advisers Act of 1940 (15 U.S.C. 
        80b et seq.), and the Securities Investor Protection 
        Act of 1970 (15 U.S.C. 78aaa et seq.).
          (48) The term ``registered broker or dealer'' means a 
        broker or dealer registered or required to register 
        pursuant to section 15 or 15B of this title, except 
        that in paragraph (3) of this subsection and sections 6 
        and 15A the term means such a broker or dealer and a 
        government securities broker or government securities 
        dealer registered or required to register pursuant to 
        section 15C(a)(1)(A) of this title.
          (49) The terms ``person associated with a transfer 
        agent'' and ``associated person of a transfer agent'' 
        mean any person (except an employee whose functions are 
        solely clerical or ministerial) directly engaged in the 
        management, direction, supervision, or performance of 
        any of the transfer agent's activities with respect to 
        transfer agent functions, and any person directly or 
        indirectly controlling such activities or controlled by 
        the transfer agent in connection with such activities.
          (50) The term ``foreign securities authority'' means 
        any foreign government, or any governmental body or 
        regulatory organization empowered by a foreign 
        government to administer or enforce its laws as they 
        relate to securities matters.
          (51)(A) The term ``penny stock'' means any equity 
        security other than a security that is--
                  (i) registered or approved for registration 
                and traded on a national securities exchange 
                that meets such criteria as the Commission 
                shall prescribe by rule or regulation for 
                purposes of this paragraph;
                  (ii) authorized for quotation on an automated 
                quotation system sponsored by a registered 
                securities association, if such system (I) was 
                established and in operation before January 1, 
                1990, and (II) meets such criteria as the 
                Commission shall prescribe by rule or 
                regulation for purposes of this paragraph;
                  (iii) issued by an investment company 
                registered under the Investment Company Act of 
                1940;
                  (iv) excluded, on the basis of exceeding a 
                minimum price, net tangible assets of the 
                issuer, or other relevant criteria, from the 
                definition of such term by rule or regulation 
                which the Commission shall prescribe for 
                purposes of this paragraph; or
                  (v) exempted, in whole or in part, 
                conditionally or unconditionally, from the 
                definition of such term by rule, regulation, or 
                order prescribed by the Commission.
          (B) The Commission may, by rule, regulation, or 
        order, designate any equity security or class of equity 
        securities described in clause (i) or (ii) of 
        subparagraph (A) as within the meaning of the term 
        ``penny stock'' if such security or class of securities 
        is traded other than on a national securities exchange 
        or through an automated quotation system described in 
        clause (ii) of subparagraph (A).
          (C) In exercising its authority under this paragraph 
        to prescribe rules, regulations, and orders, the 
        Commission shall determine that such rule, regulation, 
        or order is consistent with the public interest and the 
        protection of investors.
          (52) The term ``foreign financial regulatory 
        authority'' means any (A) foreign securities authority, 
        (B) other governmental body or foreign equivalent of a 
        self-regulatory organization empowered by a foreign 
        government to administer or enforce its laws relating 
        to the regulation of fiduciaries, trusts, commercial 
        lending, insurance, trading in contracts of sale of a 
        commodity for future delivery, or other instruments 
        traded on or subject to the rules of a contract market, 
        board of trade, or foreign equivalent, or other 
        financial activities, or (C) membership organization a 
        function of which is to regulate participation of its 
        members in activities listed above.
          (53)(A) The term ``small business related security'' 
        means a security that meets standards of credit-
        worthiness as established by the Commission, and 
        either--
                  (i) represents an interest in 1 or more 
                promissory notes or leases of personal property 
                evidencing the obligation of a small business 
                concern and originated by an insured depository 
                institution, insured credit union, insurance 
                company, or similar institution which is 
                supervised and examined by a Federal or State 
                authority, or a finance company or leasing 
                company; or
                  (ii) is secured by an interest in 1 or more 
                promissory notes or leases of personal property 
                (with or without recourse to the issuer or 
                lessee) and provides for payments of principal 
                in relation to payments, or reasonable 
                projections of payments, on notes or leases 
                described in clause (i).
          (B) For purposes of this paragraph--
                  (i) an ``interest in a promissory note or a 
                lease of personal property'' includes ownership 
                rights, certificates of interest or 
                participation in such notes or leases, and 
                rights designed to assure servicing of such 
                notes or leases, or the receipt or timely 
                receipt of amounts payable under such notes or 
                leases;
                  (ii) the term ``small business concern'' 
                means a business that meets the criteria for a 
                small business concern established by the Small 
                Business Administration under section 3(a) of 
                the Small Business Act;
                  (iii) the term ``insured depository 
                institution'' has the same meaning as in 
                section 3 of the Federal Deposit Insurance Act; 
                and
                  (iv) the term ``insured credit union'' has 
                the same meaning as in section 101 of the 
                Federal Credit Union Act.
          (54) Qualified investor.--
                  (A) Definition.--Except as provided in 
                subparagraph (B), for purposes of this title, 
                the term ``qualified investor'' means--
                          (i) any investment company registered 
                        with the Commission under section 8 of 
                        the Investment Company Act of 1940;
                          (ii) any issuer eligible for an 
                        exclusion from the definition of 
                        investment company pursuant to section 
                        3(c)(7) of the Investment Company Act 
                        of 1940;
                          (iii) any bank (as defined in 
                        paragraph (6) of this subsection), 
                        savings association (as defined in 
                        section 3(b) of the Federal Deposit 
                        Insurance Act), broker, dealer, 
                        insurance company (as defined in 
                        section 2(a)(13) of the Securities Act 
                        of 1933), or business development 
                        company (as defined in section 2(a)(48) 
                        of the Investment Company Act of 1940);
                          (iv) any small business investment 
                        company licensed by the United States 
                        Small Business Administration under 
                        section 301 (c) or (d) of the Small 
                        Business Investment Act of 1958;
                          (v) any State sponsored employee 
                        benefit plan, or any other employee 
                        benefit plan, within the meaning of the 
                        Employee Retirement Income Security Act 
                        of 1974, other than an individual 
                        retirement account, if the investment 
                        decisions are made by a plan fiduciary, 
                        as defined in section 3(21) of that 
                        Act, which is either a bank, savings 
                        and loan association, insurance 
                        company, or registered investment 
                        adviser;
                          (vi) any trust whose purchases of 
                        securities are directed by a person 
                        described in clauses (i) through (v) of 
                        this subparagraph;
                          (vii) any market intermediary exempt 
                        under section 3(c)(2) of the Investment 
                        Company Act of 1940;
                          (viii) any associated person of a 
                        broker or dealer other than a natural 
                        person;
                          (ix) any foreign bank (as defined in 
                        section 1(b)(7) of the International 
                        Banking Act of 1978);
                          (x) the government of any foreign 
                        country;
                          (xi) any corporation, company, or 
                        partnership that owns and invests on a 
                        discretionary basis, not less than 
                        $25,000,000 in investments;
                          (xii) any natural person who owns and 
                        invests on a discretionary basis, not 
                        less than $25,000,000 in investments;
                          (xiii) any government or political 
                        subdivision, agency, or instrumentality 
                        of a government who owns and invests on 
                        a discretionary basis not less than 
                        $50,000,000 in investments; or
                          (xiv) any multinational or 
                        supranational entity or any agency or 
                        instrumentality thereof.
                  (B) Altered thresholds for asset-backed 
                securities and loan participations.--For 
                purposes of section 3(a)(5)(C)(iii) of this 
                title and section 206(a)(5) of the Gramm-Leach-
                Bliley Act, the term ``qualified investor'' has 
                the meaning given such term by subparagraph (A) 
                of this paragraph except that clauses (xi) and 
                (xii) shall be applied by substituting 
                ``$10,000,000'' for ``$25,000,000''.
                  (C) Additional authority.--The Commission 
                may, by rule or order, define a ``qualified 
                investor'' as any other person, taking into 
                consideration such factors as the financial 
                sophistication of the person, net worth, and 
                knowledge and experience in financial matters.
          (55)(A) The term ``security future'' means a contract 
        of sale for future delivery of a single security or of 
        a narrow-based security index, including any interest 
        therein or based on the value thereof, except an 
        exempted security under section 3(a)(12) of this title 
        as in effect on the date of the enactment of the 
        Futures Trading Act of 1982 (other than any municipal 
        security as defined in section 3(a)(29) as in effect on 
        the date of the enactment of the Futures Trading Act of 
        1982). The term ``security future'' does not include 
        any agreement, contract, or transaction excluded from 
        the Commodity Exchange Act under section 2(c), 2(d), 
        2(f), or 2(g) of the Commodity Exchange Act (as in 
        effect on the date of the enactment of the Commodity 
        Futures Modernization Act of 2000) or title IV of the 
        Commodity Futures Modernization Act of 2000.
          (B) The term ``narrow-based security index'' means an 
        index--
                  (i) that has 9 or fewer component securities;
                  (ii) in which a component security comprises 
                more than 30 percent of the index's weighting;
                  (iii) in which the five highest weighted 
                component securities in the aggregate comprise 
                more than 60 percent of the index's weighting; 
                or
                  (iv) in which the lowest weighted component 
                securities comprising, in the aggregate, 25 
                percent of the index's weighting have an 
                aggregate dollar value of average daily trading 
                volume of less than $50,000,000 (or in the case 
                of an index with 15 or more component 
                securities, $30,000,000), except that if there 
                are two or more securities with equal weighting 
                that could be included in the calculation of 
                the lowest weighted component securities 
                comprising, in the aggregate, 25 percent of the 
                index's weighting, such securities shall be 
                ranked from lowest to highest dollar value of 
                average daily trading volume and shall be 
                included in the calculation based on their 
                ranking starting with the lowest ranked 
                security.
          (C) Notwithstanding subparagraph (B), an index is not 
        a narrow-based security index if--
                  (i)(I) it has at least nine component 
                securities;
                  (II) no component security comprises more 
                than 30 percent of the index's weighting; and
                  (III) each component security is--
                          (aa) registered pursuant to section 
                        12 of the Securities Exchange Act of 
                        1934;
                          (bb) one of 750 securities with the 
                        largest market capitalization; and
                          (cc) one of 675 securities with the 
                        largest dollar value of average daily 
                        trading volume;
                  (ii) a board of trade was designated as a 
                contract market by the Commodity Futures 
                Trading Commission with respect to a contract 
                of sale for future delivery on the index, 
                before the date of the enactment of the 
                Commodity Futures Modernization Act of 2000;
                  (iii)(I) a contract of sale for future 
                delivery on the index traded on a designated 
                contract market or registered derivatives 
                transaction execution facility for at least 30 
                days as a contract of sale for future delivery 
                on an index that was not a narrow-based 
                security index; and
                  (II) it has been a narrow-based security 
                index for no more than 45 business days over 3 
                consecutive calendar months;
                  (iv) a contract of sale for future delivery 
                on the index is traded on or subject to the 
                rules of a foreign board of trade and meets 
                such requirements as are jointly established by 
                rule or regulation by the Commission and the 
                Commodity Futures Trading Commission;
                  (v) no more than 18 months have passed since 
                the date of the enactment of the Commodity 
                Futures Modernization Act of 2000 and--
                          (I) it is traded on or subject to the 
                        rules of a foreign board of trade;
                          (II) the offer and sale in the United 
                        States of a contract of sale for future 
                        delivery on the index was authorized 
                        before the date of the enactment of the 
                        Commodity Futures Modernization Act of 
                        2000; and
                          (III) the conditions of such 
                        authorization continue to be met; or
                  (vi) a contract of sale for future delivery 
                on the index is traded on or subject to the 
                rules of a board of trade and meets such 
                requirements as are jointly established by 
                rule, regulation, or order by the Commission 
                and the Commodity Futures Trading Commission.
          (D) Within 1 year after the enactment of the 
        Commodity Futures Modernization Act of 2000, the 
        Commission and the Commodity Futures Trading Commission 
        jointly shall adopt rules or regulations that set forth 
        the requirements under clause (iv) of subparagraph (C).
          (E) An index that is a narrow-based security index 
        solely because it was a narrow-based security index for 
        more than 45 business days over 3 consecutive calendar 
        months pursuant to clause (iii) of subparagraph (C) 
        shall not be a narrow-based security index for the 3 
        following calendar months.
          (F) For purposes of subparagraphs (B) and (C) of this 
        paragraph--
                  (i) the dollar value of average daily trading 
                volume and the market capitalization shall be 
                calculated as of the preceding 6 full calendar 
                months; and
                  (ii) the Commission and the Commodity Futures 
                Trading Commission shall, by rule or 
                regulation, jointly specify the method to be 
                used to determine market capitalization and 
                dollar value of average daily trading volume.
          (56) The term ``security futures product'' means a 
        security future or any put, call, straddle, option, or 
        privilege on any security future.
          (57)(A) The term ``margin'', when used with respect 
        to a security futures product, means the amount, type, 
        and form of collateral required to secure any extension 
        or maintenance of credit, or the amount, type, and form 
        of collateral required as a performance bond related to 
        the purchase, sale, or carrying of a security futures 
        product.
          (B) The terms ``margin level'' and ``level of 
        margin'', when used with respect to a security futures 
        product, mean the amount of margin required to secure 
        any extension or maintenance of credit, or the amount 
        of margin required as a performance bond related to the 
        purchase, sale, or carrying of a security futures 
        product.
          (C) The terms ``higher margin level'' and ``higher 
        level of margin'', when used with respect to a security 
        futures product, mean a margin level established by a 
        national securities exchange registered pursuant to 
        section 6(g) that is higher than the minimum amount 
        established and in effect pursuant to section 
        7(c)(2)(B).
          (58) Audit committee.--The term ``audit committee'' 
        means--
                  (A) a committee (or equivalent body) 
                established by and amongst the board of 
                directors of an issuer for the purpose of 
                overseeing the accounting and financial 
                reporting processes of the issuer and audits of 
                the financial statements of the issuer; and
                  (B) if no such committee exists with respect 
                to an issuer, the entire board of directors of 
                the issuer.
          (59) Registered public accounting firm.--The term 
        ``registered public accounting firm'' has the same 
        meaning as in section 2 of the Sarbanes-Oxley Act of 
        2002.
          (60) Credit rating.--The term ``credit rating'' means 
        an assessment of the creditworthiness of an obligor as 
        an entity or with respect to specific securities or 
        money market instruments.
          (61) Credit rating agency.--The term ``credit rating 
        agency'' means any person--
                  (A) engaged in the business of issuing credit 
                ratings on the Internet or through another 
                readily accessible means, for free or for a 
                reasonable fee, but does not include a 
                commercial credit reporting company;
                  (B) employing either a quantitative or 
                qualitative model, or both, to determine credit 
                ratings; and
                  (C) receiving fees from either issuers, 
                investors, or other market participants, or a 
                combination thereof.
          (62) Nationally recognized statistical rating 
        organization.--The term ``nationally recognized 
        statistical rating organization'' means a credit rating 
        agency that--
                  (A) issues credit ratings certified by 
                qualified institutional buyers, in accordance 
                with section 15E(a)(1)(B)(ix), with respect 
                to--
                          (i) financial institutions, brokers, 
                        or dealers;
                          (ii) insurance companies;
                          (iii) corporate issuers;
                          (iv) issuers of asset-backed 
                        securities (as that term is defined in 
                        section 1101(c) of part 229 of title 
                        17, Code of Federal Regulations, as in 
                        effect on the date of enactment of this 
                        paragraph);
                          (v) issuers of government securities, 
                        municipal securities, or securities 
                        issued by a foreign government; or
                          (vi) a combination of one or more 
                        categories of obligors described in any 
                        of clauses (i) through (v); and
                  (B) is registered under section 15E.
          (63) Person associated with a nationally recognized 
        statistical rating organization.--The term ``person 
        associated with'' a nationally recognized statistical 
        rating organization means any partner, officer, 
        director, or branch manager of a nationally recognized 
        statistical rating organization (or any person 
        occupying a similar status or performing similar 
        functions), any person directly or indirectly 
        controlling, controlled by, or under common control 
        with a nationally recognized statistical rating 
        organization, or any employee of a nationally 
        recognized statistical rating organization.
          (64) Qualified institutional buyer.--The term 
        ``qualified institutional buyer'' has the meaning given 
        such term in section 230.144A(a) of title 17, Code of 
        Federal Regulations, or any successor thereto.
           (79) Asset-backed security.--The term ``asset-backed 
        security''--
                  (A) means a fixed-income or other security 
                collateralized by any type of self-liquidating 
                financial asset (including a loan, a lease, a 
                mortgage, or a secured or unsecured receivable) 
                that allows the holder of the security to 
                receive payments that depend primarily on cash 
                flow from the asset, including--
                          (i) a collateralized mortgage 
                        obligation;
                          (ii) a collateralized debt 
                        obligation;
                          (iii) a collateralized bond 
                        obligation;
                          (iv) a collateralized debt obligation 
                        of asset-backed securities;
                          (v) a collateralized debt obligation 
                        of collateralized debt obligations; and
                          (vi) a security that the Commission, 
                        by rule, determines to be an asset-
                        backed security for purposes of this 
                        section; and
                  (B) does not include a security issued by a 
                finance subsidiary held by the parent company 
                or a company controlled by the parent company, 
                if none of the securities issued by the finance 
                subsidiary are held by an entity that is not 
                controlled by the parent company.
          (65) Eligible contract participant.--The term 
        ``eligible contract participant'' has the same meaning 
        as in section 1a of the Commodity Exchange Act (7 
        U.S.C. 1a).
          (66) Major swap participant.--The term ``major swap 
        participant'' has the same meaning as in section 1a of 
        the Commodity Exchange Act (7 U.S.C. 1a).
          (67) Major security-based swap participant.--
                  (A) In general.--The term ``major security-
                based swap participant'' means any person--
                          (i) who is not a security-based swap 
                        dealer; and
                          (ii)(I) who maintains a substantial 
                        position in security-based swaps for 
                        any of the major security-based swap 
                        categories, as such categories are 
                        determined by the Commission, excluding 
                        both positions held for hedging or 
                        mitigating commercial risk and 
                        positions maintained by any employee 
                        benefit plan (or any contract held by 
                        such a plan) as defined in paragraphs 
                        (3) and (32) of section 3 of the 
                        Employee Retirement Income Security Act 
                        of 1974 (29 U.S.C. 1002) for the 
                        primary purpose of hedging or 
                        mitigating any risk directly associated 
                        with the operation of the plan;
                          (II) whose outstanding security-based 
                        swaps create substantial counterparty 
                        exposure that could have serious 
                        adverse effects on the financial 
                        stability of the United States banking 
                        system or financial markets; or
                          (III) that is a financial entity 
                        that--
                                  (aa) is highly leveraged 
                                relative to the amount of 
                                capital such entity holds and 
                                that is not subject to capital 
                                requirements established by an 
                                appropriate Federal banking 
                                agency; and
                                  (bb) maintains a substantial 
                                position in outstanding 
                                security-based swaps in any 
                                major security-based swap 
                                category, as such categories 
                                are determined by the 
                                Commission.
                  (B) Definition of substantial position.--For 
                purposes of subparagraph (A), the Commission 
                shall define, by rule or regulation, the term 
                ``substantial position'' at the threshold that 
                the Commission determines to be prudent for the 
                effective monitoring, management, and oversight 
                of entities that are systemically important or 
                can significantly impact the financial system 
                of the United States. In setting the definition 
                under this subparagraph, the Commission shall 
                consider the person's relative position in 
                uncleared as opposed to cleared security-based 
                swaps and may take into consideration the value 
                and quality of collateral held against 
                counterparty exposures.
                  (C) Scope of designation.--For purposes of 
                subparagraph (A), a person may be designated as 
                a major security-based swap participant for 1 
                or more categories of security-based swaps 
                without being classified as a major security-
                based swap participant for all classes of 
                security-based swaps.
          (68) Security-based swap.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the term ``security-based 
                swap'' means any agreement, contract, or 
                transaction that--
                          (i) is a swap, as that term is 
                        defined under section 1a of the 
                        Commodity Exchange Act (without regard 
                        to paragraph (47)(B)(x) of such 
                        section); and
                          (ii) is based on--
                                  (I) an index that is a 
                                narrow-based security index, 
                                including any interest therein 
                                or on the value thereof;
                                  (II) a single security or 
                                loan, including any interest 
                                therein or on the value 
                                thereof; or
                                  (III) the occurrence, 
                                nonoccurrence, or extent of the 
                                occurrence of an event relating 
                                to a single issuer of a 
                                security or the issuers of 
                                securities in a narrow-based 
                                security index, provided that 
                                such event directly affects the 
                                financial statements, financial 
                                condition, or financial 
                                obligations of the issuer.
                  (B) Rule of construction regarding master 
                agreements.--The term ``security-based swap'' 
                shall be construed to include a master 
                agreement that provides for an agreement, 
                contract, or transaction that is a security-
                based swap pursuant to subparagraph (A), 
                together with all supplements to any such 
                master agreement, without regard to whether the 
                master agreement contains an agreement, 
                contract, or transaction that is not a 
                security-based swap pursuant to subparagraph 
                (A), except that the master agreement shall be 
                considered to be a security-based swap only 
                with respect to each agreement, contract, or 
                transaction under the master agreement that is 
                a security-based swap pursuant to subparagraph 
                (A).
                  (C) Exclusions.--The term ``security-based 
                swap'' does not include any agreement, 
                contract, or transaction that meets the 
                definition of a security-based swap only 
                because such agreement, contract, or 
                transaction references, is based upon, or 
                settles through the transfer, delivery, or 
                receipt of an exempted security under paragraph 
                (12), as in effect on the date of enactment of 
                the Futures Trading Act of 1982 (other than any 
                municipal security as defined in paragraph (29) 
                as in effect on the date of enactment of the 
                Futures Trading Act of 1982), unless such 
                agreement, contract, or transaction is of the 
                character of, or is commonly known in the trade 
                as, a put, call, or other option.
                  (D) Mixed swap.--The term ``security-based 
                swap'' includes any agreement, contract, or 
                transaction that is as described in 
                subparagraph (A) and also is based on the value 
                of 1 or more interest or other rates, 
                currencies, commodities, instruments of 
                indebtedness, indices, quantitative measures, 
                other financial or economic interest or 
                property of any kind (other than a single 
                security or a narrow-based security index), or 
                the occurrence, non-occurrence, or the extent 
                of the occurrence of an event or contingency 
                associated with a potential financial, 
                economic, or commercial consequence (other than 
                an event described in subparagraph 
                (A)(ii)(III)).
                  (E) Rule of construction regarding use of the 
                term index.--The term ``index'' means an index 
                or group of securities, including any interest 
                therein or based on the value thereof.
          (69) Swap.--The term ``swap'' has the same meaning as 
        in section 1a of the Commodity Exchange Act (7 U.S.C. 
        1a).
          (70) Person associated with a security-based swap 
        dealer or major security-based swap participant.--
                  (A) In general.--The term ``person associated 
                with a security-based swap dealer or major 
                security-based swap participant'' or 
                ``associated person of a security-based swap 
                dealer or major security-based swap 
                participant'' means--
                          (i) any partner, officer, director, 
                        or branch manager of such security-
                        based swap dealer or major security-
                        based swap participant (or any person 
                        occupying a similar status or 
                        performing similar functions);
                          (ii) any person directly or 
                        indirectly controlling, controlled by, 
                        or under common control with such 
                        security-based swap dealer or major 
                        security-based swap participant; or
                          (iii) any employee of such security-
                        based swap dealer or major security-
                        based swap participant.
                  (B) Exclusion.--Other than for purposes of 
                section 15F(l)(2), the term ``person associated 
                with a security-based swap dealer or major 
                security-based swap participant'' or 
                ``associated person of a security-based swap 
                dealer or major security-based swap 
                participant'' does not include any person 
                associated with a security-based swap dealer or 
                major security-based swap participant whose 
                functions are solely clerical or ministerial.
          (71) Security-based swap dealer.--
                  (A) In general.--The term ``security-based 
                swap dealer'' means any person who--
                          (i) holds themself out as a dealer in 
                        security-based swaps;
                          (ii) makes a market in security-based 
                        swaps;
                          (iii) regularly enters into security-
                        based swaps with counterparties as an 
                        ordinary course of business for its own 
                        account; or
                          (iv) engages in any activity causing 
                        it to be commonly known in the trade as 
                        a dealer or market maker in security-
                        based swaps.
                  (B) Designation by type or class.--A person 
                may be designated as a security-based swap 
                dealer for a single type or single class or 
                category of security-based swap or activities 
                and considered not to be a security-based swap 
                dealer for other types, classes, or categories 
                of security-based swaps or activities.
                  (C) Exception.--The term ``security-based 
                swap dealer'' does not include a person that 
                enters into security-based swaps for such 
                person's own account, either individually or in 
                a fiduciary capacity, but not as a part of 
                regular business.
                  (D) De minimis exception.--The Commission 
                shall exempt from designation as a security-
                based swap dealer an entity that engages in a 
                de minimis quantity of security-based swap 
                dealing in connection with transactions with or 
                on behalf of its customers. The Commission 
                shall promulgate regulations to establish 
                factors with respect to the making of any 
                determination to exempt.
          (72) Appropriate federal banking agency.--The term 
        ``appropriate Federal banking agency'' has the same 
        meaning as in section 3(q) of the Federal Deposit 
        Insurance Act (12 U.S.C. 1813(q)).
          (73) Board.--The term ``Board'' means the Board of 
        Governors of the Federal Reserve System.
          (74) Prudential regulator.--The term ``prudential 
        regulator'' has the same meaning as in section 1a of 
        the Commodity Exchange Act (7 U.S.C. 1a).
          (75) Security-based swap data repository.--The term 
        ``security-based swap data repository'' means any 
        person that collects and maintains information or 
        records with respect to transactions or positions in, 
        or the terms and conditions of, security-based swaps 
        entered into by third parties for the purpose of 
        providing a centralized recordkeeping facility for 
        security-based swaps.
          (76) Swap dealer.--The term ``swap dealer'' has the 
        same meaning as in section 1a of the Commodity Exchange 
        Act (7 U.S.C. 1a).
          (77) Security-based swap execution facility.--The 
        term ``security-based swap execution facility'' means a 
        trading system or platform in which multiple 
        participants have the ability to execute or trade 
        security-based swaps by accepting bids and offers made 
        by multiple participants in the facility or system, 
        through any means of interstate commerce, including any 
        trading facility, that--
                  (A) facilitates the execution of security-
                based swaps between persons; and
                  (B) is not a national securities exchange.
          (78) Security-based swap agreement.--
                  (A) In general.--For purposes of sections 9, 
                10, 16, 20, and 21A of this Act, and section 17 
                of the Securities Act of 1933 (15 U.S.C. 77q), 
                the term ``security-based swap agreement'' 
                means a swap agreement as defined in section 
                206A of the Gramm-Leach-Bliley Act (15 U.S.C. 
                78c note) of which a material term is based on 
                the price, yield, value, or volatility of any 
                security or any group or index of securities, 
                or any interest therein.
                  (B) Exclusions.--The term ``security-based 
                swap agreement'' does not include any security-
                based swap.
          (80) Emerging growth company.--The term ``emerging 
        growth company'' means an issuer that had total annual 
        gross revenues of less than $1,000,000,000 (as such 
        amount is indexed for inflation every 5 years by the 
        Commission to reflect the change in the Consumer Price 
        Index for All Urban Consumers published by the Bureau 
        of Labor Statistics, setting the threshold to the 
        nearest 1,000,000) during its most recently completed 
        fiscal year. An issuer that is an emerging growth 
        company as of the first day of that fiscal year shall 
        continue to be deemed an emerging growth company until 
        the earliest of--
                  (A) the last day of the fiscal year of the 
                issuer during which it had total annual gross 
                revenues of $1,000,000,000 (as such amount is 
                indexed for inflation every 5 years by the 
                Commission to reflect the change in the 
                Consumer Price Index for All Urban Consumers 
                published by the Bureau of Labor Statistics, 
                setting the threshold to the nearest 1,000,000) 
                or more;
                  (B) the last day of the fiscal year of the 
                issuer following the fifth anniversary of the 
                date of the first sale of common equity 
                securities of the issuer pursuant to an 
                effective registration statement under the 
                Securities Act of 1933;
                  (C) the date on which such issuer has, during 
                the previous 3-year period, issued more than 
                $1,000,000,000 in non-convertible debt; or
                  (D) the date on which such issuer is deemed 
                to be a ``large accelerated filer'', as defined 
                in section 240.12b-2 of title 17, Code of 
                Federal Regulations, or any successor thereto.
          [(80)] (81) Funding portal.--The term ``funding 
        portal'' means any person acting as an intermediary in 
        a transaction involving the offer or sale of securities 
        for the account of others, solely pursuant to section 
        4(6) of the Securities Act of 1933 (15 U.S.C. 77d(6)), 
        that does not--
                  (A) offer investment advice or 
                recommendations;
                  (B) solicit purchases, sales, or offers to 
                buy the securities offered or displayed on its 
                website or portal;
                  (C) compensate employees, agents, or other 
                persons for such solicitation or based on the 
                sale of securities displayed or referenced on 
                its website or portal;
                  (D) hold, manage, possess, or otherwise 
                handle investor funds or securities; or
                  (E) engage in such other activities as the 
                Commission, by rule, determines appropriate.
          (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.
          (83) Person associated with a proxy advisory firm.--
        With respect to a proxy advisory firm--
                  (A) a person is ``associated'' with the proxy 
                advisory firm if the person is--
                          (i) a partner, officer, or director 
                        of the proxy advisory firm (or any 
                        person occupying a similar status or 
                        performing similar functions);
                          (ii) a person directly or indirectly 
                        controlling, controlled by, or under 
                        common control with the proxy advisory 
                        firm;
                          (iii) an employee of the proxy 
                        advisory firm; or
                          (iv) a person the Commission 
                        determines by rule is controlled by the 
                        proxy advisory firm; and
                  (B) a person is not ``associated'' with the 
                proxy advisory firm if the person only performs 
                clerical or ministerial functions with respect 
                to a proxy advisory firm.
  (b) The Commission and the Board of Governors of the Federal 
Reserve System, as to matters within their respective 
jurisdictions, shall have power by rules and regulations to 
define technical, trade, accounting, and other terms used in 
this title, consistently with the provisions and purposes of 
this title.
  (c) No provision of this title shall apply to, or be deemed 
to include, any executive department or independent 
establishment of the United States, or any lending agency which 
is wholly owned, directly or indirectly, by the United States, 
or any officer, agent, or employee of any such department, 
establishment, or agency, acting in the course of his official 
duty as such, unless such provision makes specific reference to 
such department, establishment, or agency.
  (d) No issuer of municipal securities or officer or employee 
thereof acting in the course of his official duties as such 
shall be deemed to be a ``broker'', ``dealer'', or ``municipal 
securities dealer'' solely by reason of buying, selling, or 
effecting transactions in the issuer's securities.
  (e) Charitable Organizations.--
          (1) Exemption.--Notwithstanding any other provision 
        of this title, but subject to paragraph (2) of this 
        subsection, a charitable organization, as defined in 
        section 3(c)(10)(D) of the Investment Company Act of 
        1940, or any trustee, director, officer, employee, or 
        volunteer of such a charitable organization acting 
        within the scope of such person's employment or duties 
        with such organization, shall not be deemed to be a 
        ``broker'', ``dealer'', ``municipal securities 
        broker'', ``municipal securities dealer'', ``government 
        securities broker'', or ``government securities 
        dealer'' for purposes of this title solely because such 
        organization or person buys, holds, sells, or trades in 
        securities for its own account in its capacity as 
        trustee or administrator of, or otherwise on behalf of 
        or for the account of--
                  (A) such a charitable organization;
                  (B) a fund that is excluded from the 
                definition of an investment company under 
                section 3(c)(10)(B) of the Investment Company 
                Act of 1940; or
                  (C) a trust or other donative instrument 
                described in section 3(c)(10)(B) of the 
                Investment Company Act of 1940, or the settlors 
                (or potential settlors) or beneficiaries of any 
                such trust or other instrument.
          (2) Limitation on compensation.--The exemption 
        provided under paragraph (1) shall not be available to 
        any charitable organization, or any trustee, director, 
        officer, employee, or volunteer of such a charitable 
        organization, unless each person who, on or after 90 
        days after the date of enactment of this subsection, 
        solicits donations on behalf of such charitable 
        organization from any donor to a fund that is excluded 
        from the definition of an investment company under 
        section 3(c)(10)(B) of the Investment Company Act of 
        1940, is either a volunteer or is engaged in the 
        overall fund raising activities of a charitable 
        organization and receives no commission or other 
        special compensation based on the number or the value 
        of donations collected for the fund.
  (f) Consideration of Promotion of Efficiency, Competition, 
and Capital Formation.--Whenever pursuant to this title the 
Commission is engaged in rulemaking, or in the review of a rule 
of a self-regulatory organization, and is required to consider 
or determine whether an action is necessary or appropriate in 
the public interest, the Commission shall also consider, in 
addition to the protection of investors, whether the action 
will promote efficiency, competition, and capital formation.
  (g) Church Plans.--No church plan described in section 414(e) 
of the Internal Revenue Code of 1986, no person or entity 
eligible to establish and maintain such a plan under the 
Internal Revenue Code of 1986, no company or account that is 
excluded from the definition of an investment company under 
section 3(c)(14) of the Investment Company Act of 1940, and no 
trustee, director, officer or employee of or volunteer for such 
plan, company, account, person, or entity, acting within the 
scope of that person's employment or activities with respect to 
such plan, shall be deemed to be a ``broker'', ``dealer'', 
``municipal securities broker'', ``municipal securities 
dealer'', ``government securities broker'', ``government 
securities dealer'', ``clearing agency'', or ``transfer agent'' 
for purposes of this title--
          (1) solely because such plan, company, person, or 
        entity buys, holds, sells, trades in, or transfers 
        securities or acts as an intermediary in making 
        payments in connection with transactions in securities 
        for its own account in its capacity as trustee or 
        administrator of, or otherwise on behalf of, or for the 
        account of, any church plan, company, or account that 
        is excluded from the definition of an investment 
        company under section 3(c)(14) of the Investment 
        Company Act of 1940; and
          (2) if no such person or entity receives a commission 
        or other transaction-related sales compensation in 
        connection with any activities conducted in reliance on 
        the exemption provided by this subsection.
  (h) Limited Exemption for Funding Portals.--
          (1) In general.--The Commission shall, by rule, 
        exempt, conditionally or unconditionally, a registered 
        funding portal from the requirement to register as a 
        broker or dealer under section 15(a)(1), provided that 
        such funding portal--
                  (A) remains subject to the examination, 
                enforcement, and other rulemaking authority of 
                the Commission;
                  (B) is a member of a national securities 
                association registered under section 15A; and
                  (C) is subject to such other requirements 
                under this title as the Commission determines 
                appropriate under such rule.
          (2) National securities association membership.--For 
        purposes of sections 15(b)(8) and 15A, the term 
        ``broker or dealer'' includes a funding portal and the 
        term ``registered broker or dealer'' includes a 
        registered funding portal, except to the extent that 
        the Commission, by rule, determines otherwise, provided 
        that a national securities association shall only 
        examine for and enforce against a registered funding 
        portal rules of such national securities association 
        written specifically for registered funding portals.

           *       *       *       *       *       *       *


                   securities and exchange commission

  Sec. 4. (a) There is hereby established a Securities and 
Exchange Commission (hereinafter referred to as the 
``Commission'') to be composed of five commissioners to be 
appointed by the President by and with the advice and consent 
of the Senate. Not more than three of such commissioners shall 
be members of the same political party, and in making 
appointments members of different political parties shall be 
appointed alternately as nearly as may be practicable. No 
commissioner shall engage in any other business, vocation, or 
employment than that of serving as commissioner, nor shall any 
commissioner participate, directly or indirectly, in any stock-
market operations or transactions of a character subject to 
regulation by the Commission pursuant to this title. Each 
commissioner shall hold office for a term of five years and 
until his successor is appointed and has qualified, except that 
he shall not so continue to serve beyond the expiration of the 
next session of Congress subsequent to the expiration of said 
fixed term of office, and except (1) any commissioner appointed 
to fill a vacancy occurring prior to the expiration of the term 
for which his predecessor was appointed shall be appointed for 
the remainder of such term, and (2) the terms of office of the 
commissioners first taking office after the enactment of this 
title shall expire as designated by the President at the time 
of nomination, one at the end of one year, one at the end of 
two years, one at the end of three years, one at the end of 
four years, and one at the end of five years, after the date of 
the enactment of this title.
  (b) Appointment and Compensation of Staff and Leasing 
Authority.--
          (1) Appointment and compensation.--The Commission 
        shall appoint and compensate officers, attorneys, 
        economists, examiners, and other employees in 
        accordance with section 4802 of title 5, United States 
        Code.
          (2) Reporting of information.--In establishing and 
        adjusting schedules of compensation and benefits for 
        officers, attorneys, economists, examiners, and other 
        employees of the Commission under applicable provisions 
        of law, the Commission shall inform the heads of the 
        agencies referred to under section 1206 of the 
        Financial Institutions Reform, Recovery, and 
        Enforcement Act of 1989 (12 U.S.C. 1833b) and Congress 
        of such compensation and benefits and shall seek to 
        maintain comparability with such agencies regarding 
        compensation and benefits.
          (3) Leasing authority.--Nothwithstanding any other 
        provision of law, the Commission is authorized to enter 
        directly into leases for real property for office, 
        meeting, storage, and such other space as is necessary 
        to carry out its functions, and shall be exempt from 
        any General Services Administration space management 
        regulations or directives.
  (c) Notwithstanding any other provision of law, in accordance 
with regulations which the Commission shall prescribe to 
prevent conflicts of interest, the Commission may accept 
payment and reimbursement, in cash or in kind, from non-Federal 
agencies, organizations, and individuals for travel, 
subsistence, and other necessary expenses incurred by 
Commission members and employees in attending meetings and 
conferences concerning the functions or activities of the 
Commission. Any payment or reimbursement accepted shall be 
credited to the appropriated funds of the Commission. The 
amount of travel, subsistence, and other necessary expenses for 
members and employees paid or reimbursed under this subsection 
may exceed per diem amounts established in official travel 
regulations, but the Commission may include in its regulations 
under this subsection a limitation on such amounts.
  (d) Notwithstanding any other provision of law, former 
employers of participants in the Commission's professional 
fellows programs may pay such participants their actual 
expenses for relocation to Washington, District of Columbia, to 
facilitate their participation in such programs, and program 
participants may accept such payments.
  (e) Notwithstanding any other provision of law, whenever any 
fee is required to be paid to the Commission pursuant to any 
provision of the securities laws or any other law, the 
Commission may provide by rule that such fee shall be paid in a 
manner other than in cash and the Commission may also specify 
the time that such fee shall be determined and paid relative to 
the filing of any statement or document with the Commission.
  (f) Reimbursement of Expenses for Assisting Foreign 
Securities Authorities.--Notwithstanding any other provision of 
law, the Commission may accept payment and reimbursement, in 
cash or in kind, from a foreign securities authority, or made 
on behalf of such authority, for necessary expenses incurred by 
the Commission, its members, and employees in carrying out any 
investigation pursuant to section 21(a)(2) of this title or in 
providing any other assistance to a foreign securities 
authority. Any payment or reimbursement accepted shall be 
considered a reimbursement to the appropriated funds of the 
Commission.
  (g) Office of the Investor Advocate.--
          (1) Office established.--There is established within 
        the Commission the Office of the Investor Advocate (in 
        this subsection referred to as the ``Office'').
          (2) Investor advocate.--
                  (A) In general.--The head of the Office shall 
                be the Investor Advocate, who shall--
                          (i) report directly to the Chairman; 
                        and
                          (ii) be appointed by the Chairman, in 
                        consultation with the Commission, from 
                        among individuals having experience in 
                        advocating for the interests of 
                        investors in securities and investor 
                        protection issues, from the perspective 
                        of investors.
                  (B) Compensation.--The annual rate of pay for 
                the Investor Advocate shall be equal to the 
                highest rate of annual pay for other senior 
                executives who report to the Chairman of the 
                Commission.
                  (C) Limitation on service.--An individual who 
                serves as the Investor Advocate may not be 
                employed by the Commission--
                          (i) during the 2-year period ending 
                        on the date of appointment as Investor 
                        Advocate; or
                          (ii) during the 5-year period 
                        beginning on the date on which the 
                        person ceases to serve as the Investor 
                        Advocate.
          (3) Staff of office.--The Investor Advocate, after 
        consultation with the Chairman of the Commission, may 
        retain or employ independent counsel, research staff, 
        and service staff, as the Investor Advocate deems 
        necessary to carry out the functions, powers, and 
        duties of the Office.
          (4) Functions of the investor advocate.--The Investor 
        Advocate shall--
                  (A) assist retail investors in resolving 
                significant problems such investors may have 
                with the Commission or with self-regulatory 
                organizations;
                  (B) identify areas in which investors would 
                benefit from changes in the regulations of the 
                Commission or the rules of self-regulatory 
                organizations;
                  (C) identify problems that investors have 
                with financial service providers and investment 
                products;
                  (D) analyze the potential impact on investors 
                of--
                          (i) proposed regulations of the 
                        Commission; and
                          (ii) proposed rules of self-
                        regulatory organizations registered 
                        under this title; and
                  (E) to the extent practicable, propose to the 
                Commission changes in the regulations or orders 
                of the Commission and to Congress any 
                legislative, administrative, or personnel 
                changes that may be appropriate to mitigate 
                problems identified under this paragraph and to 
                promote the interests of investors.
          (5) Access to documents.--The Commission shall ensure 
        that the Investor Advocate has full access to the 
        documents of the Commission and any self-regulatory 
        organization, as necessary to carry out the functions 
        of the Office.
          (6) Annual reports.--
                  (A) Report on objectives.--
                          (i) In general.--Not later than June 
                        30 of each year after 2010, the 
                        Investor Advocate shall submit to the 
                        Committee on Banking, Housing, and 
                        Urban Affairs of the Senate and the 
                        Committee on Financial Services of the 
                        House of Representatives a report on 
                        the objectives of the Investor Advocate 
                        for the following fiscal year.
                          (ii) Contents.--Each report required 
                        under clause (i) shall contain full and 
                        substantive analysis and explanation.
                  (B) Report on activities.--
                          (i) In general.--Not later than 
                        December 31 of each year after 2010, 
                        the Investor Advocate shall submit to 
                        the Committee on Banking, Housing, and 
                        Urban Affairs of the Senate and the 
                        Committee on Financial Services of the 
                        House of Representatives a report on 
                        the activities of the Investor Advocate 
                        during the immediately preceding fiscal 
                        year.
                          (ii) Contents.--Each report required 
                        under clause (i) shall include--
                                  (I) appropriate statistical 
                                information and full and 
                                substantive analysis;
                                  (II) information on steps 
                                that the Investor Advocate has 
                                taken during the reporting 
                                period to improve investor 
                                services and the responsiveness 
                                of the Commission and self-
                                regulatory organizations to 
                                investor concerns;
                                  (III) a summary of the most 
                                serious problems encountered by 
                                investors during the reporting 
                                period;
                                  (IV) an inventory of the 
                                items described in subclause 
                                (III) that includes--
                                          (aa) identification 
                                        of any action taken by 
                                        the Commission or the 
                                        self-regulatory 
                                        organization and the 
                                        result of such action;
                                          (bb) the length of 
                                        time that each item has 
                                        remained on such 
                                        inventory; and
                                          (cc) for items on 
                                        which no action has 
                                        been taken, the reasons 
                                        for inaction, and an 
                                        identification of any 
                                        official who is 
                                        responsible for such 
                                        action;
                                  (V) recommendations for such 
                                administrative and legislative 
                                actions as may be appropriate 
                                to resolve problems encountered 
                                by investors; and
                                  (VI) any other information, 
                                as determined appropriate by 
                                the Investor Advocate.
                          (iii) Independence.--Each report 
                        required under this paragraph shall be 
                        provided directly to the Committees 
                        listed in clause (i) without any prior 
                        review or comment from the Commission, 
                        any commissioner, any other officer or 
                        employee of the Commission, or the 
                        Office of Management and Budget.
                          (iv) Confidentiality.--No report 
                        required under clause (i) may contain 
                        confidential information.
          (7) Regulations.--The Commission shall, by 
        regulation, establish procedures requiring a formal 
        response to all recommendations submitted to the 
        Commission by the Investor Advocate, not later than 3 
        months after the date of such submission.
          (8) Ombudsman.--
                  (A) Appointment.--Not later than 180 days 
                after the date on which the first Investor 
                Advocate is appointed under paragraph 
                (2)(A)(i), the Investor Advocate shall appoint 
                an Ombudsman, who shall report directly to the 
                Investor Advocate.
                  (B) Duties.--The Ombudsman appointed under 
                subparagraph (A) shall--
                          (i) act as a liaison between the 
                        Commission and any retail investor in 
                        resolving problems that retail 
                        investors may have with the Commission 
                        or with self-regulatory organizations;
                          (ii) review and make recommendations 
                        regarding policies and procedures to 
                        encourage persons to present questions 
                        to the Investor Advocate regarding 
                        compliance with the securities laws; 
                        and
                          (iii) establish safeguards to 
                        maintain the confidentiality of 
                        communications between the persons 
                        described in clause (ii) and the 
                        Ombudsman.
                  (C) Limitation.--In carrying out the duties 
                of the Ombudsman under subparagraph (B), the 
                Ombudsman shall utilize personnel of the 
                Commission to the extent practicable. Nothing 
                in this paragraph shall be construed as 
                replacing, altering, or diminishing the 
                activities of any ombudsman or similar office 
                of any other agency.
                  (D) Report.--The Ombudsman shall submit a 
                semiannual report to the Investor Advocate that 
                describes the activities and evaluates the 
                effectiveness of the Ombudsman during the 
                preceding year. The Investor Advocate shall 
                include the reports required under this section 
                in the reports required to be submitted by the 
                Inspector Advocate under paragraph (6).
  (h) Examiners.--
          (1) Division of trading and markets.--The Division of 
        Trading and Markets of the Commission, or any successor 
        organizational unit, shall have a staff of examiners 
        who shall--
                  (A) perform compliance inspections and 
                examinations of entities under the jurisdiction 
                of that Division; and
                  (B) report to the Director of that Division.
          (2) Division of investment management.--The Division 
        of Investment Management of the Commission, or any 
        successor organizational unit, shall have a staff of 
        examiners who shall--
                  (A) perform compliance inspections and 
                examinations of entities under the jurisdiction 
                of that Division; and
                  (B) report to the Director of that Division.
  (i) Securities and Exchange Commission Reserve Fund.--
          (1) Reserve fund established.--There is established 
        in the Treasury of the United States a separate fund, 
        to be known as the ``Securities and Exchange Commission 
        Reserve Fund'' (referred to in this subsection as the 
        ``Reserve Fund'').
          (2) Reserve fund amounts.--
                  (A) In general.--Except as provided in 
                subparagraph (B), any registration fees 
                collected by the Commission under section 6(b) 
                of the Securities Act of 1933 (15 U.S.C. 
                77f(b)) or section 24(f) of the Investment 
                Company Act of 1940 (15 U.S.C. 80a-24(f)) shall 
                be deposited into the Reserve Fund.
                  (B) Limitations.--For any 1 fiscal year--
                          (i) the amount deposited in the Fund 
                        may not exceed $50,000,000; and
                          (ii) the balance in the Fund may not 
                        exceed $100,000,000.
                  (C) Excess fees.--Any amounts in excess of 
                the limitations described in subparagraph (B) 
                that the Commission collects from registration 
                fees under section 6(b) of the Securities Act 
                of 1933 (15 U.S.C. 77f(b)) or section 24(f) of 
                the Investment Company Act of 1940 (15 U.S.C. 
                80a-24(f)) shall be deposited in the General 
                Fund of the Treasury of the United States and 
                shall not be available for obligation by the 
                Commission.
          (3) Use of amounts in reserve fund.--The Commission 
        may obligate amounts in the Reserve Fund, not to exceed 
        a total of $100,000,000 in any 1 fiscal year, as the 
        Commission determines is necessary to carry out the 
        functions of the Commission. Any amounts in the reserve 
        fund shall remain available until expended. Not later 
        than 10 days after the date on which the Commission 
        obligates amounts under this paragraph, the Commission 
        shall notify Congress of the date, amount, and purpose 
        of the obligation.
          (4) Rule of construction.--Amounts collected and 
        deposited in the Reserve Fund shall not be construed to 
        be Government funds or appropriated monies and shall 
        not be subject to apportionment for the purpose of 
        chapter 15 of title 31, United States Code, or under 
        any other authority.
  (j) Office of the Advocate for Small Business Capital 
Formation.--
          (1) Office established.--There is established within 
        the Commission the Office of the Advocate for Small 
        Business Capital Formation (hereafter in this 
        subsection referred to as the ``Office'').
          (2) Advocate for small business capital formation.--
                  (A) In general.--The head of the Office shall 
                be the Advocate for Small Business Capital 
                Formation, who shall--
                          (i) report directly to the 
                        Commission; and
                          (ii) be appointed by the Commission, 
                        from among individuals having 
                        experience in advocating for the 
                        interests of small businesses and 
                        encouraging small business capital 
                        formation.
                  (B) Compensation.--The annual rate of pay for 
                the Advocate for Small Business Capital 
                Formation shall be equal to the highest rate of 
                annual pay for other senior executives who 
                report directly to the Commission.
                  (C) No current employee of the commission.--
                An individual may not be appointed as the 
                Advocate for Small Business Capital Formation 
                if the individual is currently employed by the 
                Commission.
          (3) Staff of office.--The Advocate for Small Business 
        Capital Formation, after consultation with the 
        Commission, may retain or employ independent counsel, 
        research staff, and service staff, as the Advocate for 
        Small Business Capital Formation determines to be 
        necessary to carry out the functions of the Office.
          (4) Functions of the advocate for small business 
        capital formation.--The Advocate for Small Business 
        Capital Formation shall--
                  (A) assist small businesses and small 
                business investors in resolving significant 
                problems such businesses and investors may have 
                with the Commission or with self-regulatory 
                organizations;
                  (B) identify areas in which small businesses 
                and small business investors would benefit from 
                changes in the regulations of the Commission or 
                the rules of self-regulatory organizations;
                  (C) identify problems that small businesses 
                have with securing access to capital, including 
                any unique challenges to minority-owned small 
                businesses, women-owned small businesses, and 
                small businesses affected by hurricanes or 
                other natural disasters;
                  (D) analyze the potential impact on small 
                businesses and small business investors of--
                          (i) proposed regulations of the 
                        Commission that are likely to have a 
                        significant economic impact on small 
                        businesses and small business capital 
                        formation; and
                          (ii) proposed rules that are likely 
                        to have a significant economic impact 
                        on small businesses and small business 
                        capital formation of self-regulatory 
                        organizations registered under this 
                        title;
                  (E) conduct outreach to small businesses and 
                small business investors, including through 
                regional roundtables, in order to solicit views 
                on relevant capital formation issues;
                  (F) to the extent practicable, propose to the 
                Commission changes in the regulations or orders 
                of the Commission and to Congress any 
                legislative, administrative, or personnel 
                changes that may be appropriate to mitigate 
                problems identified under this paragraph and to 
                promote the interests of small businesses and 
                small business investors;
                  (G) consult with the Investor Advocate on 
                proposed recommendations made under 
                subparagraph (F); and
                  (H) advise the Investor Advocate on issues 
                related to small businesses and small business 
                investors.
          (5) Access to documents.--The Commission shall ensure 
        that the Advocate for Small Business Capital Formation 
        has full access to the documents and information of the 
        Commission and any self-regulatory organization, as 
        necessary to carry out the functions of the Office.
          (6) Annual report on activities.--
                  (A) In general.--Not later than December 31 
                of each year after 2015, the Advocate for Small 
                Business Capital Formation shall submit to the 
                Committee on Banking, Housing, and Urban 
                Affairs of the Senate and the Committee on 
                Financial Services of the House of 
                Representatives a report on the activities of 
                the Advocate for Small Business Capital 
                Formation during the immediately preceding 
                fiscal year.
                  (B) Contents.--Each report required under 
                subparagraph (A) shall include--
                          (i) appropriate statistical 
                        information and full and substantive 
                        analysis;
                          (ii) information on steps that the 
                        Advocate for Small Business Capital 
                        Formation has taken during the 
                        reporting period to improve small 
                        business services and the 
                        responsiveness of the Commission and 
                        self-regulatory organizations to small 
                        business and small business investor 
                        concerns;
                          (iii) a summary of the most serious 
                        issues encountered by small businesses 
                        and small business investors, including 
                        any unique issues encountered by 
                        minority-owned small businesses, women-
                        owned small businesses, and small 
                        businesses affected by hurricanes or 
                        other natural disasters and their 
                        investors, during the reporting period;
                          (iv) an inventory of the items 
                        summarized under clause (iii) 
                        (including items summarized under such 
                        clause for any prior reporting period 
                        on which no action has been taken or 
                        that have not been resolved to the 
                        satisfaction of the Advocate for Small 
                        Business Capital Formation as of the 
                        beginning of the reporting period 
                        covered by the report) that includes--
                                  (I) identification of any 
                                action taken by the Commission 
                                or the self-regulatory 
                                organization and the result of 
                                such action;
                                  (II) the length of time that 
                                each item has remained on such 
                                inventory; and
                                  (III) for items on which no 
                                action has been taken, the 
                                reasons for inaction, and an 
                                identification of any official 
                                who is responsible for such 
                                action;
                          (v) recommendations for such changes 
                        to the regulations, guidance and orders 
                        of the Commission and such legislative 
                        actions as may be appropriate to 
                        resolve problems with the Commission 
                        and self-regulatory organizations 
                        encountered by small businesses and 
                        small business investors and to 
                        encourage small business capital 
                        formation; and
                          (vi) any other information, as 
                        determined appropriate by the Advocate 
                        for Small Business Capital Formation.
                  (C) Confidentiality.--No report required by 
                subparagraph (A) may contain confidential 
                information.
                  (D) Independence.--Each report required under 
                subparagraph (A) shall be provided directly to 
                the committees of Congress listed in such 
                subparagraph without any prior review or 
                comment from the Commission, any commissioner, 
                any other officer or employee of the 
                Commission, or the Office of Management and 
                Budget.
          (7) Regulations.--The Commission shall establish 
        procedures requiring a formal response to all 
        recommendations submitted to the Commission by the 
        Advocate for Small Business Capital Formation, not 
        later than 3 months after the date of such submission.
          (8) Government-business forum on small business 
        capital formation.--The Advocate for Small Business 
        Capital Formation shall be responsible for planning, 
        organizing, and executing the annual Government-
        Business Forum on Small Business Capital Formation 
        described in section 503 of the Small Business 
        Investment Incentive Act of 1980 (15 U.S.C. 80c-1).
          (9) Rule of construction.--Nothing in this subsection 
        may be construed as replacing or reducing the 
        responsibilities of the Investor Advocate with respect 
        to small business investors.
          (10) Study of certain issues with respect to 
        shareholder proposals, proxy advisory firms, and the 
        proxy process.--
                  (A) In general.--Not later than 180 days 
                after the date of the enactment of this 
                paragraph, and every 5 years thereafter, the 
                Commission shall conduct a comprehensive study 
                on shareholder proposals, proxy advisory firms, 
                and the proxy process.
                  (B) Scope of study.--The studies required 
                under subparagraph (A) shall cover--
                          (i) the previous 10 years, with 
                        respect to the initial study; and
                          (ii) the previous 5 years, with 
                        respect to each other study.
                  (C) Contents.--Each study required under 
                subparagraph (A) shall address the following 
                issues:
                          (i) The financial and other 
                        incentives and obligations of all 
                        groups involved in the proxy process.
                          (ii) A consideration of whether 
                        financial and other incentives have 
                        created a process that no longer serves 
                        the economic interests of long-term 
                        retail investors.
                          (iii) An analysis of whether 
                        regulations and financial incentives 
                        have created and protected the outsized 
                        influence of proxy advisors or a 
                        duopoly in proxy advice, and if so, 
                        what are the benefits and costs of that 
                        outsized influence or duopoly.
                          (iv) The costs incurred by issuers in 
                        responding to politically-, 
                        environmentally-, or socially-motivated 
                        shareholder proposals.
                          (v) An assessment, including a cost-
                        benefit analysis, of the adequacy of 
                        the current submission thresholds in 
                        Rule 14a-8 (17 CFR 240.14a-8) to ensure 
                        that shareholder proponents have 
                        demonstrated a meaningful economic 
                        stake in a company, which is 
                        appropriate to effectively serve 
                        markets and shareholders at large.
                          (vi) An examination of the extent to 
                        which the politicization of the 
                        shareholder proposal process is 
                        increasing the operating costs of 
                        public companies.
                          (vii) An analysis of the impact that 
                        shareholder proposals have on 
                        discouraging private companies from 
                        going public.
                          (viii) An evaluation of the risk that 
                        shareholder proposals may contribute to 
                        the balkanization of the U.S. economy 
                        over time.
                          (ix) A thorough assessment of the 
                        economic analysis, if any, conducted by 
                        proxy advisory firms and institutional 
                        shareholders when recommending or 
                        voting in favor of shareholder 
                        proposals.
                          (x) A review of the extent to which 
                        institutional investors, who owe 
                        fiduciary duties, rely on proxy 
                        advisory firm recommendations.
                          (xi) An assessment of whether, in 
                        light of their significant influence on 
                        corporate actions and vote outcomes, 
                        proxy advisors are subject to 
                        sufficient and effective regulation to 
                        ensure that their policies and 
                        recommendations are accurate, free of 
                        conflicts, and benefit the economic 
                        best interest of shareholders at large.
                  (D) Report.--At the completion of each study 
                required under subparagraph (A) the Commission 
                shall issue a report to the Committee on 
                Banking, Housing, and Urban Affairs of the 
                Senate and the Committee on Financial Services 
                of the House of Representatives that includes 
                the results of the study.
  (k) Open Data Publication.--All public data assets published 
by the Commission under the securities laws and the Dodd-Frank 
Wall Street Reform and Consumer Protection Act (Public Law 111-
203; 124 Stat. 1376) shall be--
          (1) made available as an open Government data asset 
        (as defined in section 3502 of title 44, United States 
        Code);
          (2) freely available for download;
          (3) rendered in a human-readable format; and
          (4) accessible via application programming interface 
        where appropriate.

           *       *       *       *       *       *       *


                      periodical and other reports

  Sec. 13. (a) Every issuer of a security registered pursuant 
to section 12 of this title shall file with the Commission, in 
accordance with such rules and regulations as the Commission 
may prescribe as necessary or appropriate for the proper 
protection of investors and to insure fair dealing in the 
security--
          (1) such information and documents (and such copies 
        thereof) as the Commission shall require to keep 
        reasonably current the information and documents 
        required to be included in or filed with an application 
        or registration statement filed pursuant to section 12, 
        except that the Commission may not require the filing 
        of any material contract wholly executed before July 1, 
        1962.
          (2) such annual reports (and such copies thereof), 
        certified if required by the rules and regulations of 
        the Commission by independent public accountants, and 
        such quarterly reports (and such copies thereof), as 
        the Commission may prescribe.
Every issuer of a security registered on a national securities 
exchange shall also file a duplicate original of such 
information, documents, and reports with the exchange. In any 
registration statement, periodic report, or other reports to be 
filed with the Commission, an emerging growth company need not 
present selected financial data in accordance with section 
229.301 of title 17, Code of Federal Regulations, for any 
period prior to the earliest audited period presented in 
connection with its first registration statement that became 
effective under this Act or the Securities Act of 1933 and, 
with respect to any such statement or reports, an emerging 
growth company may not be required to comply with any new or 
revised financial accounting standard until such date that a 
company that is not an issuer (as defined under section 2(a) of 
the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(a))) is required 
to comply with such new or revised accounting standard, if such 
standard applies to companies that are not issuers.
  (b)(1) The Commission may prescribe, in regard to reports 
made pursuant to this title, the form or forms in which the 
required information shall be set forth, the items or details 
to be shown in the balance sheet and the earnings statement, 
and the methods to be followed in the preparation of reports, 
in the appraisal or valuation of assets and liabilities, in the 
determination of depreciation and depletion, in the 
differentiation of recurring and nonrecurring income, in the 
differentiation of investment and operating income, and in the 
preparation, where the Commission deems it necessary or 
desirable, of separate and/or consolidated balance sheets or 
income accounts of any person directly or indirectly 
controlling or controlled by the issuer, or any person under 
direct or indirect common control with the issuer; but in the 
case of the reports of any person whose methods of accounting 
are prescribed under the provisions of any law of the United 
States, or any rule or regulation thereunder, the rules and 
regulations of the Commission with respect to reports shall not 
be inconsistent with the requirements imposed by such law or 
rule or regulation in respect of the same subject matter 
(except that such rules and regulations of the Commission may 
be inconsistent with such requirements to the extent that the 
Commission determines that the public interest or the 
protection of investors so requires).
  (2) Every issuer which has a class of securities registered 
pursuant to section 12 of this title and every issuer which is 
required to file reports pursuant to section 15(d) of this 
title shall--
          (A) make and keep books, records, and accounts, 
        which, in reasonable detail, accurately and fairly 
        reflect the transactions and dispositions of the assets 
        of the issuer;
          (B) devise and maintain a system of internal 
        accounting controls sufficient to provide reasonable 
        assurances that--
                  (i) transactions are executed in accordance 
                with management's general or specific 
                authorization;
                  (ii) transactions are recorded as necessary 
                (I) to permit preparation of financial 
                statements in conformity with generally 
                accepted accounting principles or any other 
                criteria applicable to such statements, and 
                (II) to maintain accountability for assets;
                  (iii) access to assets is permitted only in 
                accordance with management's general or 
                specific authorization; and
                  (iv) the recorded accountability for assets 
                is compared with the existing assets at 
                reasonable intervals and appropriate action is 
                taken with respect to any differences; and
          (C) notwithstanding any other provision of law, pay 
        the allocable share of such issuer of a reasonable 
        annual accounting support fee or fees, determined in 
        accordance with section 109 of the Sarbanes-Oxley Act 
        of 2002.
  (3)(A) With respect to matters concerning the national 
security of the United States, no duty or liability under 
paragraph (2) of this subsection shall be imposed upon any 
person acting in cooperation with the head of any Federal 
department or agency responsible for such matters if such act 
in cooperation with such head of a department or agency was 
done upon the specific, written directive of the head of such 
department or agency pursuant to Presidential authority to 
issue such directives. Each directive issued under this 
paragraph shall set forth the specific facts and circumstances 
with respect to which the provisions of this paragraph are to 
be invoked. Each such directive shall, unless renewed in 
writing, expire one year after the date of issuance.
  (B) Each head of a Federal department or agency of the United 
States who issues a directive pursuant to this paragraph shall 
maintain a complete file of all such directives and shall, on 
October 1 of each year, transmit a summary of matters covered 
by such directives in force at any time during the previous 
year to the Permanent Select Committee on Intelligence of the 
House of Representatives and the Select Committee on 
Intelligence of the Senate.
  (4) No criminal liability shall be imposed for failing to 
comply with the requirements of paragraph (2) of this 
subsection except as provided in paragraph (5) of this 
subsection.
  (5) No person shall knowingly circumvent or knowingly fail to 
implement a system of internal accounting controls or knowingly 
falsify any book, record, or account described in paragraph 
(2).
  (6) Where an issuer which has a class of securities 
registered pursuant to section 12 of this title or an issuer 
which is required to file reports pursuant to section 15(d) of 
this title holds 50 per centum or less of the voting power with 
respect to a domestic or foreign firm, the provisions of 
paragraph (2) require only that the issuer proceed in good 
faith to use its influence, to the extent reasonable under the 
issuer's circumstances, to cause such domestic or foreign firm 
to devise and maintain a system of internal accounting controls 
consistent with paragraph (2). Such circumstances include the 
relative degree of the issuer's ownership of the domestic or 
foreign firm and the laws and practices governing the business 
operations of the country in which such firm is located. An 
issuer which demonstrates good faith efforts to use such 
influence shall be conclusively presumed to have complied with 
the requirements of paragraph (2).
  (7) For the purpose of paragraph (2) of this subsection, the 
terms ``reasonable assurances'' and ``reasonable detail'' mean 
such level of detail and degree of assurance as would satisfy 
prudent officials in the conduct of their own affairs.
  (c) If in the judgment of the Commission any report required 
under subsection (a) is inapplicable to any specified class or 
classes of issuers, the Commission shall require in lieu 
thereof the submission of such reports of comparable character 
as it may deem applicable to such class or classes of issuers.
  (d)(1) Any person who, after acquiring directly or indirectly 
the beneficial ownership of any equity security of a class 
which is registered pursuant to section 12 of this title, or 
any equity security of an insurance company which would have 
been required to be so registered except for the exemption 
contained in section 12(g)(2)(G) of this title, or any equity 
security issued by a closed-end investment company registered 
under the Investment Company Act of 1940 or any equity security 
issued by a Native Corporation pursuant to section 37(d)(6) of 
the Alaska Native Claims Settlement Act, or otherwise becomes 
or is deemed to become a beneficial owner of any of the 
foregoing upon the purchase or sale of a security-based swap 
that the Commission may define by rule, and is directly or 
indirectly the beneficial owner of more than 5 per centum of 
such class shall, within ten days after such acquisition or 
within such shorter time as the Commission may establish by 
rule, file with the Commission, a statement containing such of 
the following information, and such additional information, as 
the Commission may by rules and regulations, prescribe as 
necessary or appropriate in the public interest or for the 
protection of investors--
          (A) the background, and identity, residence, and 
        citizenship of, and the nature of such beneficial 
        ownership by, such person and all other persons by whom 
        or on whose behalf the purchases have been or are to be 
        effected;
          (B) the source and amount of the funds or other 
        consideration used or to be used in making the 
        purchases, and if any part of the purchase price is 
        represented or is to be represented by funds or other 
        consideration borrowed or otherwise obtained for the 
        purpose of acquiring, holding, or trading such 
        security, a description of the transaction and the 
        names of the parties thereto, except that where a 
        source of funds is a loan made in the ordinary course 
        of business by a bank, as defined in section 3(a)(6) of 
        this title, if the person filing such statement so 
        requests, the name of the bank shall not be made 
        available to the public;
          (C) if the purpose of the purchases or prospective 
        purchases is to acquire control of the business of the 
        issuer of the securities any plans or proposals which 
        such persons may have to liquidate such issuer, to sell 
        its assets to or merge it with any other persons, or to 
        make any other major change in its business or 
        corporate structure;
          (D) the number of shares of such security which are 
        beneficially owned, and the number of shares concerning 
        which there is a right to acquire, directly or 
        indirectly, by (i) such person, and (ii) by each 
        associate of such person, giving the background, 
        identity, residence, and citizenship of each such 
        associate; and
          (E) information as to any contracts, arrangements, or 
        understandings with any person with respect to any 
        securities of the issuer, including but not limited to 
        transfer of any of the securities, joint ventures, loan 
        or option arrangements, puts or calls, guaranties of 
        loans, guaranties against loss or guaranties of 
        profits, division of losses or profits, or the giving 
        or withholding of proxies, naming the persons with whom 
        such contracts, arrangements, or understandings have 
        been entered into, and giving the details thereof.
  (2) If any material change occurs in the facts set forth in 
the statement filed with the Commission, an amendment shall be 
filed with the Commission, in accordance with such rules and 
regulations as the Commission may prescribe as necessary or 
appropriate in the public interest or for the protection of 
investors.
  (3) When two or more persons act as a partnership, limited 
partnership, syndicate, or other group for the purpose of 
acquiring, holding, or disposing of securities of an issuer, 
such syndicate or group shall be deemed a ``person'' for the 
purposes of this subsection.
  (4) In determining, for purposes of this subsection, any 
percentage of a class of any security, such class shall be 
deemed to consist of the amount of the outstanding securities 
of such class, exclusive of any securities of such class held 
by or for the account of the issuer or a subsidiary of the 
issuer.
  (5) The Commission, by rule or regulation or by order, may 
permit any person to file in lieu of the statement required by 
paragraph (1) of this subsection or the rules and regulations 
thereunder, a notice stating the name of such person, the 
number of shares of any equity securities subject to paragraph 
(1) which are owned by him, the date of their acquisition and 
such other information as the Commission may specify, if it 
appears to the Commission that such securities were acquired by 
such person in the ordinary course of his business and were not 
acquired for the purpose of and do not have the effect of 
changing or influencing the control of the issuer nor in 
connection with or as a participant in any transaction having 
such purpose or effect.
  (6) The provisions of this subsection shall not apply to--
          (A) any acquisition or offer to acquire securities 
        made or proposed to be made by means of a registration 
        statement under the Securities Act of 1933;
          (B) any acquisition of the beneficial ownership of a 
        security which, together with all other acquisitions by 
        the same person of securities of the same class during 
        the preceding twelve months, does not exceed 2 per 
        centum of that class;
          (C) any acquisition of an equity security by the 
        issuer of such security;
          (D) any acquisition or proposed acquisition of a 
        security which the Commission, by rules or regulations 
        or by order, shall exempt from the provisions of this 
        subsection as not entered into for the purpose of, and 
        not having the effect of, changing or influencing the 
        control of the issuer or otherwise as not comprehended 
        within the purposes of this subsection.
  (e)(1) It shall be unlawful for an issuer which has a class 
of equity securities registered pursuant to section 12 of this 
title, or which is a closed-end investment company registered 
under the Investment Company Act of 1940, to purchase any 
equity security issued by it if such purchase is in 
contravention of such rules and regulations as the Commission, 
in the public interest or for the protection of investors, may 
adopt (A) to define acts and practices which are fraudulent, 
deceptive, or manipulative, and (B) to prescribe means 
reasonably designed to prevent such acts and practices. Such 
rules and regulations may require such issuer to provide 
holders of equity securities of such class with such 
information relating to the reasons for such purchase, the 
source of funds, the number of shares to be purchased, the 
price to be paid for such securities, the method of purchase, 
and such additional information, as the Commission deems 
necessary or appropriate in the public interest or for the 
protection of investors, or which the Commission deems to be 
material to a determination whether such security should be 
sold.
  (2) For the purpose of this subsection, a purchase by or for 
the issuer or any person controlling, controlled by, or under 
common control with the issuer, or a purchase subject to 
control of the issuer or any such person, shall be deemed to be 
a purchase by the issuer. The Commission shall have power to 
make rules and regulations implementing this paragraph in the 
public interest and for the protection of investors, including 
exemptive rules and regulations covering situations in which 
the Commission deems it unnecessary or inappropriate that a 
purchase of the type described in this paragraph shall be 
deemed to be a purchase by the issuer for purposes of some or 
all of the provisions of paragraph (1) of this subsection.
  (3) At the time of filing such statement as the Commission 
may require by rule pursuant to paragraph (1) of this 
subsection, the person making the filing shall pay to the 
Commission a fee at a rate that, subject to paragraph (4), is 
equal to $92 per $1,000,000 of the value of securities proposed 
to be purchased. The fee shall be reduced with respect to 
securities in an amount equal to any fee paid with respect to 
any securities issued in connection with the proposed 
transaction under section 6(b) of the Securities Act of 1933, 
or the fee paid under that section shall be reduced in an 
amount equal to the fee paid to the Commission in connection 
with such transaction under this paragraph.
          (4) Annual adjustment.--For each fiscal year, the 
        Commission shall by order adjust the rate required by 
        paragraph (3) for such fiscal year to a rate that is 
        equal to the rate (expressed in dollars per million) 
        that is applicable under section 6(b) of the Securities 
        Act of 1933 for such fiscal year.
          (5) Fee collections.--Fees collected pursuant to this 
        subsection for fiscal year 2012 and each fiscal year 
        thereafter shall be deposited and credited as general 
        revenue of the Treasury and shall not be available for 
        obligation.
          (6) Effective date; publication.--In exercising its 
        authority under this subsection, the Commission shall 
        not be required to comply with the provisions of 
        section 553 of title 5, United States Code. An adjusted 
        rate prescribed under paragraph (4) shall be published 
        and take effect in accordance with section 6(b) of the 
        Securities Act of 1933 (15 U.S.C. 77f(b)).
          (7) Pro rata application.--The rates per $1,000,000 
        required by this subsection shall be applied pro rata 
        to amounts and balances of less than $1,000,000.
  (f)(1) 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 and which exercises investment discretion with respect 
to accounts holding equity securities of a class described in 
section 13(d)(1) of this title having an aggregate fair market 
value on the last trading day in any of the preceding twelve 
months of at least $100,000,000 or such lesser amount (but in 
no case less than $10,000,000) as the Commission, by rule, may 
determine, shall file reports with the Commission in such form, 
for such periods, and at such times after the end of such 
periods as the Commission, by rule, may prescribe, but in no 
event shall such reports be filed for periods longer than one 
year or shorter than one quarter. Such reports shall include 
for each such equity security held on the last day of the 
reporting period by accounts (in aggregate or by type as the 
Commission, by rule, may prescribe) with respect to which the 
institutional investment manager exercises investment 
discretion (other than securities held in amounts which the 
Commission, by rule, determines to be insignificant for 
purposes of this subsection), the name of the issuer and the 
title, class, CUSIP number, number of shares or principal 
amount, and aggregate fair market value of each such security. 
Such reports may also include for accounts (in aggregate or by 
type) with respect to which the institutional investment 
manager exercises investment discretion such of the following 
information as the Commission, by rule, prescribes--
          (A) the name of the issuer and the title, class, 
        CUSIP number, number of shares or principal amount, and 
        aggregate fair market value or cost or amortized cost 
        of each other security (other than an exempted 
        security) held on the last day of the reporting period 
        by such accounts;
          (B) the aggregate fair market value or cost or 
        amortized cost of exempted securities (in aggregate or 
        by class) held on the last day of the reporting period 
        by such accounts;
          (C) the number of shares of each equity security of a 
        class described in section 13(d)(1) of this title held 
        on the last day of the reporting period by such 
        accounts with respect to which the institutional 
        investment manager possesses sole or shared authority 
        to exercise the voting rights evidenced by such 
        securities;
          (D) the aggregate purchases and aggregate sales 
        during the reporting period of each security (other 
        than an exempted security) effected by or for such 
        accounts; and
          (E) with respect to any transaction or series of 
        transactions having a market value of at least $500,000 
        or such other amount as the Commission, by rule, may 
        determine, effected during the reporting period by or 
        for such accounts in any equity security of a class 
        described in section 13(d)(1) of this title--
                  (i) the name of the issuer and the title, 
                class, and CUSIP number of the security;
                  (ii) the number of shares or principal amount 
                of the security involved in the transaction;
                  (iii) whether the transaction was a purchase 
                or sale;
                  (iv) the per share price or prices at which 
                the transaction was effected;
                  (v) the date or dates of the transaction;
                  (vi) the date or dates of the settlement of 
                the transaction;
                  (vii) the broker or dealer through whom the 
                transaction was effected;
                  (viii) the market or markets in which the 
                transaction was effected; and
                  (ix) such other related information as the 
                Commission, by rule, may prescribe.
          (2) The Commission shall prescribe rules providing 
        for the public disclosure of the name of the issuer and 
        the title, class, CUSIP number, aggregate amount of the 
        number of short sales of each security, and any 
        additional information determined by the Commission 
        following the end of the reporting period. At a 
        minimum, such public disclosure shall occur every 
        month.
  (3) The Commission, by rule or order, may exempt, 
conditionally or unconditionally, any institutional investment 
manager or security or any class of institutional investment 
managers or securities from any or all of the provisions of 
this subsection or the rules thereunder.
  (4) The Commission shall make available to the public for a 
reasonable fee a list of all equity securities of a class 
described in section 13(d)(1) of this title, updated no less 
frequently than reports are required to be filed pursuant to 
paragraph (1) of this subsection. The Commission shall tabulate 
the information contained in any report filed pursuant to this 
subsection in a manner which will, in the view of the 
Commission, maximize the usefulness of the information to other 
Federal and State authorities and the public. Promptly after 
the filing of any such report, the Commission shall make the 
information contained therein conveniently available to the 
public for a reasonable fee in such form as the Commission, by 
rule, may prescribe, except that the Commission, as it 
determines to be necessary or appropriate in the public 
interest or for the protection of investors, may delay or 
prevent public disclosure of any such information in accordance 
with section 552 of title 5, United States Code. 
Notwithstanding the preceding sentence, any such information 
identifying the securities held by the account of a natural 
person or an estate or trust (other than a business trust or 
investment company) shall not be disclosed to the public.
  (5) In exercising its authority under this subsection, the 
Commission shall determine (and so state) that its action is 
necessary or appropriate in the public interest and for the 
protection of investors or to maintain fair and orderly markets 
or, in granting an exemption, that its action is consistent 
with the protection of investors and the purposes of this 
subsection. In exercising such authority the Commission shall 
take such steps as are within its power, including consulting 
with the Comptroller General of the United States, the Director 
of the Office of Management and Budget, the appropriate 
regulatory agencies, Federal and State authorities which, 
directly or indirectly, require reports from institutional 
investment managers of information substantially similar to 
that called for by this subsection, national securities 
exchanges, and registered securities associations, (A) to 
achieve uniform, centralized reporting of information 
concerning the securities holdings of and transactions by or 
for accounts with respect to which institutional investment 
managers exercise investment discretion, and (B) consistently 
with the objective set forth in the preceding subparagraph, to 
avoid unnecessarily duplicative reporting by, and minimize the 
compliance burden on, institutional investment managers. 
Federal authorities which, directly or indirectly, require 
reports from institutional investment managers of information 
substantially similar to that called for by this subsection 
shall cooperate with the Commission in the performance of its 
responsibilities under the preceding sentence. An institutional 
investment manager which is a bank, the deposits of which are 
insured in accordance with the Federal Deposit Insurance Act, 
shall file with the appropriate regulatory agency a copy of 
every report filed with the Commission pursuant to this 
subsection.
  (6)(A) For purposes of this subsection the term 
``institutional investment manager'' includes any person, other 
than a natural person, investing in or buying and selling 
securities for its own account, and any person exercising 
investment discretion with respect to the account of any other 
person.
  (B) The Commission shall adopt such rules as it deems 
necessary or appropriate to prevent duplicative reporting 
pursuant to this subsection by two or more institutional 
investment managers exercising investment discretion with 
respect to the same amount.
          (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 assets under management with 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) 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.
  (g)(1) Any person who is directly or indirectly the 
beneficial owner of more than 5 per centum of any security of a 
class described in subsection (d)(1) of this section 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 ruleshall file with the Commission a statement 
setting forth, in such form and at such time as the Commission 
may, by rule, prescribe--
          (A) such person's identity, residence, and 
        citizenship; and
          (B) the number and description of the shares in which 
        such person has an interest and the nature of such 
        interest.
  (2) If any material change occurs in the facts set forth in 
the statement filed with the Commission, an amendment shall be 
filed with the Commission, in accordance with such rules and 
regulations as the Commission may prescribe as necessary or 
appropriate in the public interest or for the protection of 
investors.
  (3) When two or more persons act as a partnership, limited 
partnership, syndicate, or other group for the purpose of 
acquiring, holding, or disposing of securities of an issuer, 
such syndicate or group shall be deemed a ``person'' for the 
purposes of this subsection.
  (4) In determining, for purposes of this subsection, any 
percentage of a class of any security, such class shall be 
deemed to consist of the amount of the outstanding securities 
of such class, exclusive of any securities of such class held 
by or for the account of the issuer or a subsidiary of the 
issuer.
  (5) In exercising its authority under this subsection, the 
Commission shall take such steps as it deems necessary or 
appropriate in the public interest or for the protection of 
investors (A) to achieve centralized reporting of information 
regarding ownership, (B) to avoid unnecessarily duplicative 
reporting by and minimize the compliance burden on persons 
required to report, and (C) to tabulate and promptly make 
available the information contained in any report filed 
pursuant to this subsection in a manner which will, in the view 
of the Commission, maximize the usefulness of the information 
to other Federal and State agencies and the public.
  (6) The Commission may, by rule or order, exempt, in whole or 
in part, any person or class of persons from any or all of the 
reporting requirements of this subsection as it deems necessary 
or appropriate in the public interest or for the protection of 
investors.
  (h) Large Trader Reporting.--
          (1) Identification requirements for large traders.--
        For the purpose of monitoring the impact on the 
        securities markets of securities transactions involving 
        a substantial volume or a large fair market value or 
        exercise value and for the purpose of otherwise 
        assisting the Commission in the enforcement of this 
        title, each large trader shall--
                  (A) provide such information to the 
                Commission as the Commission may by rule or 
                regulation prescribe as necessary or 
                appropriate, identifying such large trader and 
                all accounts in or through which such large 
                trader effects such transactions; and
                  (B) identify, in accordance with such rules 
                or regulations as the Commission may prescribe 
                as necessary or appropriate, to any registered 
                broker or dealer by or through whom such large 
                trader directly or indirectly effects 
                securities transactions, such large trader and 
                all accounts directly or indirectly maintained 
                with such broker or dealer by such large trader 
                in or through which such transactions are 
                effected.
          (2) Recordkeeping and reporting requirements for 
        brokers and dealers.--Every registered broker or dealer 
        shall make and keep for prescribed periods such records 
        as the Commission by rule or regulation prescribes as 
        necessary or appropriate in the public interest, for 
        the protection of investors, or otherwise in 
        furtherance of the purposes of this title, with respect 
        to securities transactions that equal or exceed the 
        reporting activity level effected directly or 
        indirectly by or through such registered broker or 
        dealer of or for any person that such broker or dealer 
        knows is a large trader, or any person that such broker 
        or dealer has reason to know is a large trader on the 
        basis of transactions in securities effected by or 
        through such broker or dealer. Such records shall be 
        available for reporting to the Commission, or any self-
        regulatory organization that the Commission shall 
        designate to receive such reports, on the morning of 
        the day following the day the transactions were 
        effected, and shall be reported to the Commission or a 
        self-regulatory organization designated by the 
        Commission immediately upon request by the Commission 
        or such a self-regulatory organization. Such records 
        and reports shall be in a format and transmitted in a 
        manner prescribed by the Commission (including, but not 
        limited to, machine readable form).
          (3) Aggregation rules.--The Commission may prescribe 
        rules or regulations governing the manner in which 
        transactions and accounts shall be aggregated for the 
        purpose of this subsection, including aggregation on 
        the basis of common ownership or control.
          (4) Examination of broker and dealer records.--All 
        records required to be made and kept by registered 
        brokers and dealers pursuant to this subsection with 
        respect to transactions effected by large traders are 
        subject at any time, or from time to time, to such 
        reasonable periodic, special, or other examinations by 
        representatives of the Commission as the Commission 
        deems necessary or appropriate in the public interest, 
        for the protection of investors, or otherwise in 
        furtherance of the purposes of this title.
          (5) Factors to be considered in commission actions.--
        In exercising its authority under this subsection, the 
        Commission shall take into account--
                  (A) existing reporting systems;
                  (B) the costs associated with maintaining 
                information with respect to transactions 
                effected by large traders and reporting such 
                information to the Commission or self-
                regulatory organizations; and
                  (C) the relationship between the United 
                States and international securities markets.
          (6) Exemptions.--The Commission, by rule, regulation, 
        or order, consistent with the purposes of this title, 
        may exempt any person or class of persons or any 
        transaction or class of transactions, either 
        conditionally or upon specified terms and conditions or 
        for stated periods, from the operation of this 
        subsection, and the rules and regulations thereunder.
          (7) Authority of commission to limit disclosure of 
        information.--Notwithstanding any other provision of 
        law, the Commission shall not be compelled to disclose 
        any information required to be kept or reported under 
        this subsection. Nothing in this subsection shall 
        authorize the Commission to withhold information from 
        Congress, or prevent the Commission from complying with 
        a request for information from any other Federal 
        department or agency requesting information for 
        purposes within the scope of its jurisdiction, or 
        complying with an order of a court of the United States 
        in an action brought by the United States or the 
        Commission. For purposes of section 552 of title 5, 
        United States Code, this subsection shall be considered 
        a statute described in subsection (b)(3)(B) of such 
        section 552.
          (8) Definitions.--For purposes of this subsection--
                  (A) the term ``large trader'' means every 
                person who, for his own account or an account 
                for which he exercises investment discretion, 
                effects transactions for the purchase or sale 
                of any publicly traded security or securities 
                by use of any means or instrumentality of 
                interstate commerce or of the mails, or of any 
                facility of a national securities exchange, 
                directly or indirectly by or through a 
                registered broker or dealer in an aggregate 
                amount equal to or in excess of the identifying 
                activity level;
                  (B) the term ``publicly traded security'' 
                means any equity security (including an option 
                on individual equity securities, and an option 
                on a group or index of such securities) listed, 
                or admitted to unlisted trading privileges, on 
                a national securities exchange, or quoted in an 
                automated interdealer quotation system;
                  (C) the term ``identifying activity level'' 
                means transactions in publicly traded 
                securities at or above a level of volume, fair 
                market value, or exercise value as shall be 
                fixed from time to time by the Commission by 
                rule or regulation, specifying the time 
                interval during which such transactions shall 
                be aggregated;
                  (D) the term ``reporting activity level'' 
                means transactions in publicly traded 
                securities at or above a level of volume, fair 
                market value, or exercise value as shall be 
                fixed from time to time by the Commission by 
                rule, regulation, or order, specifying the time 
                interval during which such transactions shall 
                be aggregated; and
                  (E) the term ``person'' has the meaning given 
                in section 3(a)(9) of this title and also 
                includes two or more persons acting as a 
                partnership, limited partnership, syndicate, or 
                other group, but does not include a foreign 
                central bank.
  (i) Accuracy of Financial Reports.--Each financial report 
that contains financial statements, and that is required to be 
prepared in accordance with (or reconciled to) generally 
accepted accounting principles under this title and filed with 
the Commission shall reflect all material correcting 
adjustments that have been identified by a registered public 
accounting firm in accordance with generally accepted 
accounting principles and the rules and regulations of the 
Commission.
  (j) Off-Balance Sheet Transactions.--Not later than 180 days 
after the date of enactment of the Sarbanes-Oxley Act of 2002, 
the Commission shall issue final rules providing that each 
annual and quarterly financial report required to be filed with 
the Commission shall disclose all material off-balance sheet 
transactions, arrangements, obligations (including contingent 
obligations), and other relationships of the issuer with 
unconsolidated entities or other persons, that may have a 
material current or future effect on financial condition, 
changes in financial condition, results of operations, 
liquidity, capital expenditures, capital resources, or 
significant components of revenues or expenses.
  (k) Prohibition on Personal Loans to Executives.--
          (1) In general.--It shall be unlawful for any issuer 
        (as defined in section 2 of the Sarbanes-Oxley Act of 
        2002), directly or indirectly, including through any 
        subsidiary, to extend or maintain credit, to arrange 
        for the extension of credit, or to renew an extension 
        of credit, in the form of a personal loan to or for any 
        director or executive officer (or equivalent thereof) 
        of that issuer. An extension of credit maintained by 
        the issuer on the date of enactment of this subsection 
        shall not be subject to the provisions of this 
        subsection, provided that there is no material 
        modification to any term of any such extension of 
        credit or any renewal of any such extension of credit 
        on or after that date of enactment.
          (2) Limitation.--Paragraph (1) does not preclude any 
        home improvement and manufactured home loans (as that 
        term is defined in section 5 of the Home Owners' Loan 
        Act (12 U.S.C. 1464)), consumer credit (as defined in 
        section 103 of the Truth in Lending Act (15 U.S.C. 
        1602)), or any extension of credit under an open end 
        credit plan (as defined in section 103 of the Truth in 
        Lending Act (15 U.S.C. 1602)), or a charge card (as 
        defined in section 127(c)(4)(e) of the Truth in Lending 
        Act (15 U.S.C. 1637(c)(4)(e)), or any extension of 
        credit by a broker or dealer registered under section 
        15 of this title to an employee of that broker or 
        dealer to buy, trade, or carry securities, that is 
        permitted under rules or regulations of the Board of 
        Governors of the Federal Reserve System pursuant to 
        section 7 of this title (other than an extension of 
        credit that would be used to purchase the stock of that 
        issuer), that is--
                  (A) made or provided in the ordinary course 
                of the consumer credit business of such issuer;
                  (B) of a type that is generally made 
                available by such issuer to the public; and
                  (C) made by such issuer on market terms, or 
                terms that are no more favorable than those 
                offered by the issuer to the general public for 
                such extensions of credit.
          (3) Rule of construction for certain loans.--
        Paragraph (1) does not apply to any loan made or 
        maintained by an insured depository institution (as 
        defined in section 3 of the Federal Deposit Insurance 
        Act (12 U.S.C. 1813)), if the loan is subject to the 
        insider lending restrictions of section 22(h) of the 
        Federal Reserve Act (12 U.S.C. 375b).
  (l) Real Time Issuer Disclosures.--Each issuer reporting 
under section 13(a) or 15(d) shall disclose to the public on a 
rapid and current basis such additional information concerning 
material changes in the financial condition or operations of 
the issuer, in plain English, which may include trend and 
qualitative information and graphic presentations, as the 
Commission determines, by rule, is necessary or useful for the 
protection of investors and in the public interest.
  (m) Public Availability of Security-based Swap Transaction 
Data.--
          (1) In general.--
                  (A) Definition of real-time public 
                reporting.--In this paragraph, the term ``real-
                time public reporting'' means to report data 
                relating to a security-based swap transaction, 
                including price and volume, as soon as 
                technologically practicable after the time at 
                which the security-based swap transaction has 
                been executed.
                  (B) Purpose.--The purpose of this subsection 
                is to authorize the Commission to make 
                security-based swap transaction and pricing 
                data available to the public in such form and 
                at such times as the Commission determines 
                appropriate to enhance price discovery.
                  (C) General rule.--The Commission is 
                authorized to provide by rule for the public 
                availability of security-based swap 
                transaction, volume, and pricing data as 
                follows:
                          (i) With respect to those security-
                        based swaps that are subject to the 
                        mandatory clearing requirement 
                        described in section 3C(a)(1) 
                        (including those security-based swaps 
                        that are excepted from the requirement 
                        pursuant to section 3C(g)), the 
                        Commission shall require real-time 
                        public reporting for such transactions.
                          (ii) With respect to those security-
                        based swaps that are not subject to the 
                        mandatory clearing requirement 
                        described in section 3C(a)(1), but are 
                        cleared at a registered clearing 
                        agency, the Commission shall require 
                        real-time public reporting for such 
                        transactions.
                          (iii) With respect to security-based 
                        swaps that are not cleared at a 
                        registered clearing agency and which 
                        are reported to a security-based swap 
                        data repository or the Commission under 
                        section 3C(a)(6), the Commission shall 
                        require real-time public reporting for 
                        such transactions, in a manner that 
                        does not disclose the business 
                        transactions and market positions of 
                        any person.
                          (iv) With respect to security-based 
                        swaps that are determined to be 
                        required to be cleared under section 
                        3C(b) but are not cleared, the 
                        Commission shall require real-time 
                        public reporting for such transactions.
                  (D) Registered entities and public 
                reporting.--The Commission may require 
                registered entities to publicly disseminate the 
                security-based swap transaction and pricing 
                data required to be reported under this 
                paragraph.
                  (E) Rulemaking required.--With respect to the 
                rule providing for the public availability of 
                transaction and pricing data for security-based 
                swaps described in clauses (i) and (ii) of 
                subparagraph (C), the rule promulgated by the 
                Commission shall contain provisions--
                          (i) to ensure such information does 
                        not identify the participants;
                          (ii) to specify the criteria for 
                        determining what constitutes a large 
                        notional security-based swap 
                        transaction (block trade) for 
                        particular markets and contracts;
                          (iii) to specify the appropriate time 
                        delay for reporting large notional 
                        security-based swap transactions (block 
                        trades) to the public; and
                          (iv) that take into account whether 
                        the public disclosure will materially 
                        reduce market liquidity.
                  (F) Timeliness of reporting.--Parties to a 
                security-based swap (including agents of the 
                parties to a security-based swap) shall be 
                responsible for reporting security-based swap 
                transaction information to the appropriate 
                registered entity in a timely manner as may be 
                prescribed by the Commission.
                  (G) Reporting of swaps to registered 
                security-based swap data repositories.--Each 
                security-based swap (whether cleared or 
                uncleared) shall be reported to a registered 
                security-based swap data repository.
                  (H) Registration of clearing agencies.--A 
                clearing agency may register as a security-
                based swap data repository.
          (2) Semiannual and annual public reporting of 
        aggregate security-based swap data.--
                  (A) In general.--In accordance with 
                subparagraph (B), the Commission shall issue a 
                written report on a semiannual and annual basis 
                to make available to the public information 
                relating to--
                          (i) the trading and clearing in the 
                        major security-based swap categories; 
                        and
                          (ii) the market participants and 
                        developments in new products.
                  (B) Use; consultation.--In preparing a report 
                under subparagraph (A), the Commission shall--
                          (i) use information from security-
                        based swap data repositories and 
                        clearing agencies; and
                          (ii) consult with the Office of the 
                        Comptroller of the Currency, the Bank 
                        for International Settlements, and such 
                        other regulatory bodies as may be 
                        necessary.
                  (C) Authority of commission.--The Commission 
                may, by rule, regulation, or order, delegate 
                the public reporting responsibilities of the 
                Commission under this paragraph in accordance 
                with such terms and conditions as the 
                Commission determines to be appropriate and in 
                the public interest.
  (n) Security-based Swap Data Repositories.--
          (1) Registration requirement.--It shall be unlawful 
        for any person, unless registered with the Commission, 
        directly or indirectly, to make use of the mails or any 
        means or instrumentality of interstate commerce to 
        perform the functions of a security-based swap data 
        repository.
          (2) Inspection and examination.--Each registered 
        security-based swap data repository shall be subject to 
        inspection and examination by any representative of the 
        Commission.
          (3) Compliance with core principles.--
                  (A) In general.--To be registered, and 
                maintain registration, as a security-based swap 
                data repository, the security-based swap data 
                repository shall comply with--
                          (i) the requirements and core 
                        principles described in this 
                        subsection; and
                          (ii) any requirement that the 
                        Commission may impose by rule or 
                        regulation.
                  (B) Reasonable discretion of security-based 
                swap data repository.--Unless otherwise 
                determined by the Commission, by rule or 
                regulation, a security-based swap data 
                repository described in subparagraph (A) shall 
                have reasonable discretion in establishing the 
                manner in which the security-based swap data 
                repository complies with the core principles 
                described in this subsection.
          (4) Standard setting.--
                  (A) Data identification.--
                          (i) In general.--In accordance with 
                        clause (ii), the Commission shall 
                        prescribe standards that specify the 
                        data elements for each security-based 
                        swap that shall be collected and 
                        maintained by each registered security-
                        based swap data repository.
                          (ii) Requirement.--In carrying out 
                        clause (i), the Commission shall 
                        prescribe consistent data element 
                        standards applicable to registered 
                        entities and reporting counterparties.
                  (B) Data collection and maintenance.--The 
                Commission shall prescribe data collection and 
                data maintenance standards for security-based 
                swap data repositories.
                  (C) Comparability.--The standards prescribed 
                by the Commission under this subsection shall 
                be comparable to the data standards imposed by 
                the Commission on clearing agencies in 
                connection with their clearing of security-
                based swaps.
          (5) Duties.--A security-based swap data repository 
        shall--
                  (A) accept data prescribed by the Commission 
                for each security-based swap under subsection 
                (b);
                  (B) confirm with both counterparties to the 
                security-based swap the accuracy of the data 
                that was submitted;
                  (C) maintain the data described in 
                subparagraph (A) in such form, in such manner, 
                and for such period as may be required by the 
                Commission;
                  (D)(i) provide direct electronic access to 
                the Commission (or any designee of the 
                Commission, including another registered 
                entity); and
                  (ii) provide the information described in 
                subparagraph (A) in such form and at such 
                frequency as the Commission may require to 
                comply with the public reporting requirements 
                set forth in subsection (m);
                  (E) at the direction of the Commission, 
                establish automated systems for monitoring, 
                screening, and analyzing security-based swap 
                data;
                  (F) maintain the privacy of any and all 
                security-based swap transaction information 
                that the security-based swap data repository 
                receives from a security-based swap dealer, 
                counterparty, or any other registered entity; 
                and
                  (G) on a confidential basis pursuant to 
                section 24, upon request, and after notifying 
                the Commission of the request, make available 
                security-based swap data obtained by the 
                security-based swap data repository, including 
                individual counterparty trade and position 
                data, to--
                          (i) each appropriate prudential 
                        regulator;
                          (ii) the Financial Stability 
                        Oversight Council;
                          (iii) the Commodity Futures Trading 
                        Commission;
                          (iv) the Department of Justice; and
                          (v) any other person that the 
                        Commission determines to be 
                        appropriate, including--
                                  (I) foreign financial 
                                supervisors (including foreign 
                                futures authorities);
                                  (II) foreign central banks;
                                  (III) foreign ministries; and
                                  (IV) other foreign 
                                authorities.
                  (H) Confidentiality agreement.--Before the 
                security-based swap data repository may share 
                information with any entity described in 
                subparagraph (G), the security-based swap data 
                repository shall receive a written agreement 
                from each entity stating that the entity shall 
                abide by the confidentiality requirements 
                described in section 24 relating to the 
                information on security-based swap transactions 
                that is provided.
          (6) Designation of chief compliance officer.--
                  (A) In general.--Each security-based swap 
                data repository shall designate an individual 
                to serve as a chief compliance officer.
                  (B) Duties.--The chief compliance officer 
                shall--
                          (i) report directly to the board or 
                        to the senior officer of the security-
                        based swap data repository;
                          (ii) review the compliance of the 
                        security-based swap data repository 
                        with respect to the requirements and 
                        core principles described in this 
                        subsection;
                          (iii) in consultation with the board 
                        of the security-based swap data 
                        repository, a body performing a 
                        function similar to the board of the 
                        security-based swap data repository, or 
                        the senior officer of the security-
                        based swap data repository, resolve any 
                        conflicts of interest that may arise;
                          (iv) be responsible for administering 
                        each policy and procedure that is 
                        required to be established pursuant to 
                        this section;
                          (v) ensure compliance with this title 
                        (including regulations) relating to 
                        agreements, contracts, or transactions, 
                        including each rule prescribed by the 
                        Commission under this section;
                          (vi) establish procedures for the 
                        remediation of noncompliance issues 
                        identified by the chief compliance 
                        officer through any--
                                  (I) compliance office review;
                                  (II) look-back;
                                  (III) internal or external 
                                audit finding;
                                  (IV) self-reported error; or
                                  (V) validated complaint; and
                          (vii) establish and follow 
                        appropriate procedures for the 
                        handling, management response, 
                        remediation, retesting, and closing of 
                        noncompliance issues.
                  (C) Annual reports.--
                          (i) In general.--In accordance with 
                        rules prescribed by the Commission, the 
                        chief compliance officer shall annually 
                        prepare and sign a report that contains 
                        a description of--
                                  (I) the compliance of the 
                                security-based swap data 
                                repository of the chief 
                                compliance officer with respect 
                                to this title (including 
                                regulations); and
                                  (II) each policy and 
                                procedure of the security-based 
                                swap data repository of the 
                                chief compliance officer 
                                (including the code of ethics 
                                and conflict of interest 
                                policies of the security-based 
                                swap data repository).
                          (ii) Requirements.--A compliance 
                        report under clause (i) shall--
                                  (I) accompany each 
                                appropriate financial report of 
                                the security-based swap data 
                                repository that is required to 
                                be furnished to the Commission 
                                pursuant to this section; and
                                  (II) include a certification 
                                that, under penalty of law, the 
                                compliance report is accurate 
                                and complete.
          (7) Core principles applicable to security-based swap 
        data repositories.--
                  (A) Antitrust considerations.--Unless 
                necessary or appropriate to achieve the 
                purposes of this title, the swap data 
                repository shall not--
                          (i) adopt any rule or take any action 
                        that results in any unreasonable 
                        restraint of trade; or
                          (ii) impose any material 
                        anticompetitive burden on the trading, 
                        clearing, or reporting of transactions.
                  (B) Governance arrangements.--Each security-
                based swap data repository shall establish 
                governance arrangements that are transparent--
                          (i) to fulfill public interest 
                        requirements; and
                          (ii) to support the objectives of the 
                        Federal Government, owners, and 
                        participants.
                  (C) Conflicts of interest.--Each security-
                based swap data repository shall--
                          (i) establish and enforce rules to 
                        minimize conflicts of interest in the 
                        decision-making process of the 
                        security-based swap data repository; 
                        and
                          (ii) establish a process for 
                        resolving any conflicts of interest 
                        described in clause (i).
                  (D) Additional duties developed by 
                commission.--
                          (i) In general.--The Commission may 
                        develop 1 or more additional duties 
                        applicable to security-based swap data 
                        repositories.
                          (ii) Consideration of evolving 
                        standards.--In developing additional 
                        duties under subparagraph (A), the 
                        Commission may take into consideration 
                        any evolving standard of the United 
                        States or the international community.
                          (iii) Additional duties for 
                        commission designees.--The Commission 
                        shall establish additional duties for 
                        any registrant described in section 
                        13(m)(2)(C) in order to minimize 
                        conflicts of interest, protect data, 
                        ensure compliance, and guarantee the 
                        safety and security of the security-
                        based swap data repository.
          (8) Required registration for security-based swap 
        data repositories.--Any person that is required to be 
        registered as a security-based swap data repository 
        under this subsection shall register with the 
        Commission, regardless of whether that person is also 
        licensed under the Commodity Exchange Act as a swap 
        data repository.
          (9) Rules.--The Commission shall adopt rules 
        governing persons that are registered under this 
        subsection.
  (o) Beneficial ownership.--For purposes ofthis section and 
section 16, a person shall be deemed to acquire 
beneficialownership of an equity security based on the purchase 
or sale of asecurity-based swap, only to the extent that the 
Commission, by rule,determines after consultation with the 
prudential regulators and the Secretaryof the Treasury, that 
the purchase or sale of the security-based swap, or classof 
security-based swap, provides incidents of ownership comparable 
to directownership of the equity security, and that it is 
necessary to achieve thepurposes of this section that the 
purchase or sale of the security-based swaps,or class of 
security-based swap, be deemed the acquisition of 
beneficialownership of the equitysecurity.
  (p) Disclosures Relating to Conflict Minerals Originating in 
the Democratic Republic of the Congo.--
          (1) Regulations.--
                  (A) In general.--Not later than 270 days 
                after the date of the enactment of this 
                subsection, the Commission shall promulgate 
                regulations requiring any person described in 
                paragraph (2) to disclose annually, beginning 
                with the person's first full fiscal year that 
                begins after the date of promulgation of such 
                regulations, whether conflict minerals that are 
                necessary as described in paragraph (2)(B), in 
                the year for which such reporting is required, 
                did originate in the Democratic Republic of the 
                Congo or an adjoining country and, in cases in 
                which such conflict minerals did originate in 
                any such country, submit to the Commission a 
                report that includes, with respect to the 
                period covered by the report--
                          (i) a description of the measures 
                        taken by the person to exercise due 
                        diligence on the source and chain of 
                        custody of such minerals, which 
                        measures shall include an independent 
                        private sector audit of such report 
                        submitted through the Commission that 
                        is conducted in accordance with 
                        standards established by the 
                        Comptroller General of the United 
                        States, in accordance with rules 
                        promulgated by the Commission, in 
                        consultation with the Secretary of 
                        State; and
                          (ii) a description of the products 
                        manufactured or contracted to be 
                        manufactured that are not DRC conflict 
                        free (``DRC conflict free'' is defined 
                        to mean the products that do not 
                        contain minerals that directly or 
                        indirectly finance or benefit armed 
                        groups in the Democratic Republic of 
                        the Congo or an adjoining country), the 
                        entity that conducted the independent 
                        private sector audit in accordance with 
                        clause (i), the facilities used to 
                        process the conflict minerals, the 
                        country of origin of the conflict 
                        minerals, and the efforts to determine 
                        the mine or location of origin with the 
                        greatest possible specificity.
                  (B) Certification.--The person submitting a 
                report under subparagraph (A) shall certify the 
                audit described in clause (i) of such 
                subparagraph that is included in such report. 
                Such a certified audit shall constitute a 
                critical component of due diligence in 
                establishing the source and chain of custody of 
                such minerals.
                  (C) Unreliable determination.--If a report 
                required to be submitted by a person under 
                subparagraph (A) relies on a determination of 
                an independent private sector audit, as 
                described under subparagraph (A)(i), or other 
                due diligence processes previously determined 
                by the Commission to be unreliable, the report 
                shall not satisfy the requirements of the 
                regulations promulgated under subparagraph 
                (A)(i).
                  (D) DRC conflict free.--For purposes of this 
                paragraph, a product may be labeled as ``DRC 
                conflict free'' if the product does not contain 
                conflict minerals that directly or indirectly 
                finance or benefit armed groups in the 
                Democratic Republic of the Congo or an 
                adjoining country.
                  (E) Information available to the public.--
                Each person described under paragraph (2) shall 
                make available to the public on the Internet 
                website of such person the information 
                disclosed by such person under subparagraph 
                (A).
          (2) Person described.--A person is described in this 
        paragraph if--
                  (A) the person is required to file reports 
                with the Commission pursuant to paragraph 
                (1)(A); and
                  (B) conflict minerals are necessary to the 
                functionality or production of a product 
                manufactured by such person.
          (3) Revisions and waivers.--The Commission shall 
        revise or temporarily waive the requirements described 
        in paragraph (1) if the President transmits to the 
        Commission a determination that--
                  (A) such revision or waiver is in the 
                national security interest of the United States 
                and the President includes the reasons 
                therefor; and
                  (B) establishes a date, not later than 2 
                years after the initial publication of such 
                exemption, on which such exemption shall 
                expire.
          (4) Termination of disclosure requirements.--The 
        requirements of paragraph (1) shall terminate on the 
        date on which the President determines and certifies to 
        the appropriate congressional committees, but in no 
        case earlier than the date that is one day after the 
        end of the 5-year period beginning on the date of the 
        enactment of this subsection, that no armed groups 
        continue to be directly involved and benefitting from 
        commercial activity involving conflict minerals.
          (5) Definitions.--For purposes of this subsection, 
        the terms ``adjoining country'', ``appropriate 
        congressional committees'', ``armed group'', and 
        ``conflict mineral'' have the meaning given those terms 
        under section 1502 of the Dodd-Frank Wall Street Reform 
        and Consumer Protection Act.
  (q) Disclosure of Payments by Resource Extraction Issuers.--
          (1) Definitions.--In this subsection--
                  (A) the term ``commercial development of oil, 
                natural gas, or minerals'' includes 
                exploration, extraction, processing, export, 
                and other significant actions relating to oil, 
                natural gas, or minerals, or the acquisition of 
                a license for any such activity, as determined 
                by the Commission;
                  (B) the term ``foreign government'' means a 
                foreign government, a department, agency, or 
                instrumentality of a foreign government, or a 
                company owned by a foreign government, as 
                determined by the Commission;
                  (C) the term ``payment''--
                          (i) means a payment that is--
                                  (I) made to further the 
                                commercial development of oil, 
                                natural gas, or minerals; and
                                  (II) not de minimis; and
                          (ii) includes taxes, royalties, fees 
                        (including license fees), production 
                        entitlements, bonuses, and other 
                        material benefits, that the Commission, 
                        consistent with the guidelines of the 
                        Extractive Industries Transparency 
                        Initiative (to the extent practicable), 
                        determines are part of the commonly 
                        recognized revenue stream for the 
                        commercial development of oil, natural 
                        gas, or minerals;
                  (D) the term ``resource extraction issuer'' 
                means an issuer that--
                          (i) is required to file an annual 
                        report with the Commission; and
                          (ii) engages in the commercial 
                        development of oil, natural gas, or 
                        minerals;
                  (E) the term ``interactive data format'' 
                means an electronic data format in which pieces 
                of information are identified using an 
                interactive data standard; and
                  (F) the term ``interactive data standard'' 
                means standardized list of electronic tags that 
                mark information included in the annual report 
                of a resource extraction issuer.
          (2) Disclosure.--
                  (A) Information required.--Not later than 270 
                days after the date of enactment of the Dodd-
                Frank Wall Street Reform and Consumer 
                Protection Act, the Commission shall issue 
                final rules that require each resource 
                extraction issuer to include in an annual 
                report of the resource extraction issuer 
                information relating to any payment made by the 
                resource extraction issuer, a subsidiary of the 
                resource extraction issuer, or an entity under 
                the control of the resource extraction issuer 
                to a foreign government or the Federal 
                Government for the purpose of the commercial 
                development of oil, natural gas, or minerals, 
                including--
                          (i) the type and total amount of such 
                        payments made for each project of the 
                        resource extraction issuer relating to 
                        the commercial development of oil, 
                        natural gas, or minerals; and
                          (ii) the type and total amount of 
                        such payments made to each government.
                  (B) Consultation in rulemaking.--In issuing 
                rules under subparagraph (A), the Commission 
                may consult with any agency or entity that the 
                Commission determines is relevant.
                  (C) Interactive data format.--The rules 
                issued under subparagraph (A) shall require 
                that the information included in the annual 
                report of a resource extraction issuer be 
                submitted in an interactive data format.
                  (D) Interactive data standard.--
                          (i) In general.--The rules issued 
                        under subparagraph (A) shall establish 
                        an interactive data standard for the 
                        information included in the annual 
                        report of a resource extraction issuer.
                          (ii) Electronic tags.--The 
                        interactive data standard shall include 
                        electronic tags that identify, for any 
                        payments made by a resource extraction 
                        issuer to a foreign government or the 
                        Federal Government--
                                  (I) the total amounts of the 
                                payments, by category;
                                  (II) the currency used to 
                                make the payments;
                                  (III) the financial period in 
                                which the payments were made;
                                  (IV) the business segment of 
                                the resource extraction issuer 
                                that made the payments;
                                  (V) the government that 
                                received the payments, and the 
                                country in which the government 
                                is located;
                                  (VI) the project of the 
                                resource extraction issuer to 
                                which the payments relate; and
                                  (VII) such other information 
                                as the Commission may determine 
                                is necessary or appropriate in 
                                the public interest or for the 
                                protection of investors.
                  (E) International transparency efforts.--To 
                the extent practicable, the rules issued under 
                subparagraph (A) shall support the commitment 
                of the Federal Government to international 
                transparency promotion efforts relating to the 
                commercial development of oil, natural gas, or 
                minerals.
                  (F) Effective date.--With respect to each 
                resource extraction issuer, the final rules 
                issued under subparagraph (A) shall take effect 
                on the date on which the resource extraction 
                issuer is required to submit an annual report 
                relating to the fiscal year of the resource 
                extraction issuer that ends not earlier than 1 
                year after the date on which the Commission 
                issues final rules under subparagraph (A).
          (3) Public availability of information.--
                  (A) In general.--To the extent practicable, 
                the Commission shall make available online, to 
                the public, a compilation of the information 
                required to be submitted under the rules issued 
                under paragraph (2)(A).
                  (B) Other information.--Nothing in this 
                paragraph shall require the Commission to make 
                available online information other than the 
                information required to be submitted under the 
                rules issued under paragraph (2)(A).
          (4) Authorization of appropriations.--There are 
        authorized to be appropriated to the Commission such 
        sums as may be necessary to carry out this subsection.
  (r) Disclosure of Certain Activities Relating to Iran.--
          (1) In general.--Each issuer required to file an 
        annual or quarterly report under subsection (a) shall 
        disclose in that report the information required by 
        paragraph (2) if, during the period covered by the 
        report, the issuer or any affiliate of the issuer--
                  (A) knowingly engaged in an activity 
                described in subsection (a) or (b) of section 5 
                of the Iran Sanctions Act of 1996 (Public Law 
                104-172; 50 U.S.C. 1701 note);
                  (B) knowingly engaged in an activity 
                described in subsection (c)(2) of section 104 
                of the Comprehensive Iran Sanctions, 
                Accountability, and Divestment Act of 2010 (22 
                U.S.C. 8513) or a transaction described in 
                subsection (d)(1) of that section;
                  (C) knowingly engaged in an activity 
                described in section 105A(b)(2) of that Act; or
                  (D) knowingly conducted any transaction or 
                dealing with--
                          (i) any person the property and 
                        interests in property of which are 
                        blocked pursuant to Executive Order No. 
                        13224 (66 Fed. Reg. 49079; relating to 
                        blocking property and prohibiting 
                        transactions with persons who commit, 
                        threaten to commit, or support 
                        terrorism);
                          (ii) any person the property and 
                        interests in property of which are 
                        blocked pursuant to Executive Order No. 
                        13382 (70 Fed. Reg. 38567; relating to 
                        blocking of property of weapons of mass 
                        destruction proliferators and their 
                        supporters); or
                          (iii) any person or entity identified 
                        under section 560.304 of title 31, Code 
                        of Federal Regulations (relating to the 
                        definition of the Government of Iran) 
                        without the specific authorization of a 
                        Federal department or agency.
          (2) Information required.--If an issuer or an 
        affiliate of the issuer has engaged in any activity 
        described in paragraph (1), the issuer shall disclose a 
        detailed description of each such activity, including--
                  (A) the nature and extent of the activity;
                  (B) the gross revenues and net profits, if 
                any, attributable to the activity; and
                  (C) whether the issuer or the affiliate of 
                the issuer (as the case may be) intends to 
                continue the activity.
          (3) Notice of disclosures.--If an issuer reports 
        under paragraph (1) that the issuer or an affiliate of 
        the issuer has knowingly engaged in any activity 
        described in that paragraph, the issuer shall 
        separately file with the Commission, concurrently with 
        the annual or quarterly report under subsection (a), a 
        notice that the disclosure of that activity has been 
        included in that annual or quarterly report that 
        identifies the issuer and contains the information 
        required by paragraph (2).
          (4) Public disclosure of information.--Upon receiving 
        a notice under paragraph (3) that an annual or 
        quarterly report includes a disclosure of an activity 
        described in paragraph (1), the Commission shall 
        promptly--
                  (A) transmit the report to--
                          (i) the President;
                          (ii) the Committee on Foreign Affairs 
                        and the Committee on Financial Services 
                        of the House of Representatives; and
                          (iii) the Committee on Foreign 
                        Relations and the Committee on Banking, 
                        Housing, and Urban Affairs of the 
                        Senate; and
                  (B) make the information provided in the 
                disclosure and the notice available to the 
                public by posting the information on the 
                Internet website of the Commission.
          (5) Investigations.--Upon receiving a report under 
        paragraph (4) that includes a disclosure of an activity 
        described in paragraph (1) (other than an activity 
        described in subparagraph (D)(iii) of that paragraph), 
        the President shall--
                  (A) initiate an investigation into the 
                possible imposition of sanctions under the Iran 
                Sanctions Act of 1996 (Public Law 104-172; 50 
                U.S.C. 1701 note), section 104 or 105A of the 
                Comprehensive Iran Sanctions, Accountability, 
                and Divestment Act of 2010, an Executive order 
                specified in clause (i) or (ii) of paragraph 
                (1)(D), or any other provision of law relating 
                to the imposition of sanctions with respect to 
                Iran, as applicable; and
                  (B) not later than 180 days after initiating 
                such an investigation, make a determination 
                with respect to whether sanctions should be 
                imposed with respect to the issuer or the 
                affiliate of the issuer (as the case may be).
          (6) Sunset.--The provisions of this subsection shall 
        terminate on the date that is 30 days after the date on 
        which the President makes the certification described 
        in section 401(a) of the Comprehensive Iran Sanctions, 
        Accountability, and Divestment Act of 2010 (22 U.S.C. 
        8551(a)).
  (s) Data Standards.--
          (1) Requirement.--The Commission shall, by rule, 
        adopt data standards for all collections of information 
        with respect to periodic and current reports required 
        to be filed or furnished under this section or under 
        section 15(d), except that the Commission may exempt 
        exhibits, signatures, and certifications from those 
        data standards.
          (2) Consistency.--The data standards required under 
        paragraph (1) shall incorporate, and ensure 
        compatibility with (to the extent feasible), all 
        applicable data standards established in the rules 
        promulgated under section 124 of the Financial 
        Stability Act of 2010, including, to the extent 
        practicable, by having the characteristics described in 
        clauses (i) through (vi) of subsection (c)(1)(B) of 
        such section 124.

           *       *       *       *       *       *       *


                                proxies

  Sec. 14. (a)(1) It shall be unlawful for any person, by the 
use of the mails or by any means or instrumentality of 
interstate commerce or of any facility of a national securities 
exchange or otherwise, in contravention of such rules and 
regulations as the Commission may prescribe as necessary or 
appropriate in the public interest or for the protection of 
investors, to solicit or to permit the use of his name to 
solicit any proxy or consent or authorization in respect of any 
security (other than an exempted security) registered pursuant 
to section 12 of this title.
  (2) The rules and regulations prescribed by the Commission 
under paragraph (1) may include--
          (A) a requirement that a solicitation of proxy, 
        consent, or authorization by (or on behalf of) an 
        issuer include a nominee submitted by a shareholder to 
        serve on the board of directors of the issuer; and
          (B) a requirement that an issuer follow a certain 
        procedure in relation to a solicitation described in 
        subparagraph (A).
  (b)(1) It shall be unlawful for any member of a national 
securities exchange, or any broker or dealer registered under 
this title, or any bank, association, or other entity that 
exercises fiduciary powers, in contravention of such rules and 
regulations as the Commission may prescribe as necessary or 
appropriate in the public interest or for the protection of 
investors, to give, or to refrain from giving a proxy, consent, 
authorization, or information statement in respect of any 
security registered pursuant to section 12 of this title, or 
any security issued by an investment company registered under 
the Investment Company Act of 1940, and carried for the account 
of a customer.
  (2) With respect to banks, the rules and regulations 
prescribed by the Commission under paragraph (1) shall not 
require the disclosure of the names of beneficial owners of 
securities in an account held by the bank on the date of 
enactment of this paragraph unless the beneficial owner 
consents to the disclosure. The provisions of this paragraph 
shall not apply in the case of a bank which the Commission 
finds has not made a good faith effort to obtain such consent 
from such beneficial owners.
  (c) Unless proxies, consents, or authorizations in respect of 
a security registered pursuant to section 12 of this title, or 
a security issued by an investment company registered under the 
Investment Company Act of 1940, are solicited by or on behalf 
of the management of the issuer from the holders of record of 
such security in accordance with the rules and regulations 
prescribed under subsection (a) of this section, prior to any 
annual or other meeting of the holders of such security, such 
issuer shall, in accordance with rules and regulations 
prescribed by the Commission, file with the Commission and 
transmit to all holders of record of such security information 
substantially equivalent to the information which would be 
required to be transmitted if a solicitation were made, but no 
information shall be required to be filed or transmitted 
pursuant to this subsection before July 1, 1964.
  (d)(1) It shall be unlawful for any person, directly or 
indirectly, by use of the mails or by any means or 
instrumentality of interstate commerce or of any facility of a 
national securities exchange or otherwise, to make a tender 
offer for, or a request or invitation for tenders of, any class 
of any equity security which is registered pursuant to section 
12 of this title, or any equity security of an insurance 
company which would have been required to be so registered 
except for the exemption contained in section 12(g)(2)(G) of 
this title, or any equity security issued by a closed-end 
investment company registered under the Investment Company Act 
of 1940, if, after consummation thereof, such person would, 
directly or indirectly, be the beneficial owner of more than 5 
per centum of such class, unless at the time copies of the 
offer or request or invitation are first published or sent or 
given to security holders such person has filed with the 
Commission a statement containing such of the information 
specified in section 13(d) of this title, and such additional 
information as the Commission may by rules and regulations 
prescribe as necessary or appropriate in the public interest or 
for the protection of investors. All requests or invitations 
for tenders or advertisements making a tender offer or 
requesting or inviting tenders, of such a security shall be 
filed as a part of such statement and shall contain such of the 
information contained in such statement as the Commission may 
by rules and regulations prescribe. Copies of any additional 
material soliciting or requesting such tender offers subsequent 
to the initial solicitation or request shall contain such 
information as the Commission may by rules and regulations 
prescribe as necessary or appropriate in the public interest or 
for the protection of investors, and shall be filed with the 
Commission not later than the time copies of such material are 
first published or sent or given to security holders. Copies of 
all statements, in the form in which such material is furnished 
to security holders and the Commission, shall be sent to the 
issuer not later than the date such material is first published 
or sent or given to any security holders.
  (2) When two or more persons act as a partnership, limited 
partnership, syndicate, or other group for the purpose of 
acquiring, holding, or disposing of securities of an issuer, 
such syndicate or group shall be deemed a ``person'' for 
purposes of this subsection.
  (3) In determining, for purposes of this subsection, any 
percentage of a class of any security, such class shall be 
deemed to consist of the amount of the outstanding securities 
of such class, exclusive of any securities of such class held 
by or for the account of the issuer or a subsidiary of the 
issuer.
  (4) Any solicitation or recommendation to the holders of such 
a security to accept or reject a tender offer or request or 
invitation for tenders shall be made in accordance with such 
rules and regulations as the Commission may prescribe as 
necessary or appropriate in the public interest or for the 
protection of investors.
  (5) Securities deposited pursuant to a tender offer or 
request or invitation for tenders may be withdrawn by or on 
behalf of the depositor at any time until the expiration of 
seven days after the time definitive copies of the offer or 
request or invitation are first published or sent or given to 
security holders, and at any time after sixty days from the 
date of the original tender offer or request or invitation, 
except as the Commission may otherwise prescribe by rules, 
regulations, or order as necessary or appropriate in the public 
interest or for the protection of investors.
  (6) Where any person makes a tender offer, or request or 
invitation for tenders, for less than all the outstanding 
equity securities of a class, and where a greater number of 
securities is deposited pursuant thereto within ten days after 
copies of the offer or request or invitation are first 
published or sent or given to security holders than such person 
is bound or willing to take up and pay for, the securities 
taken up shall be taken up as nearly as may be pro rata, 
disregarding fractions, according to the number of securities 
deposited by each depositor. The provisions of this subsection 
shall also apply to securities deposited within ten days after 
notice of an increase in the consideration offered to security 
holders, as described in paragraph (7), is first published or 
sent or given to security holders.
  (7) Where any person varies the terms of a tender offer or 
request or invitation for tenders before the expiration thereof 
by increasing the consideration offered to holders of such 
securities, such person shall pay the increased consideration 
to each security holder whose securities are taken up and paid 
for pursuant to the tender offer or request or invitation for 
tenders whether or not such securities have been taken up by 
such person before the variation of the tender offer or request 
or invitation.
  (8) The provisions of this subsection shall not apply to any 
offer for, or request or invitation for tenders of, any 
security--
          (A) if the acquisition of such security, together 
        with all other acquisitions by the same person of 
        securities of the same class during the preceding 
        twelve months, would not exceed 2 per centum of that 
        class;
          (B) by the issuer of such security; or
          (C) which the Commission, by rules or regulations or 
        by order, shall exempt from the provisions of this 
        subsection as not entered into for the purpose of, and 
        not having the effect of, changing or influencing the 
        control of the issuer or otherwise as not comprehended 
        within the purposes of this subsection.
  (e) It shall be unlawful for any person to make any untrue 
statement of a material fact or omit to state any material fact 
necessary in order to make the statements made, in the light of 
the circumstances under which they are made, not misleading, or 
to engage in any fraudulent, deceptive, or manipulative acts or 
practices, in connection with any tender offer or request or 
invitation for tenders, or any solicitation of security holders 
in opposition to or in favor of any such offer, request, or 
invitation. The Commission shall, for the purposes of this 
subsection, by rules and regulations define, and prescribe 
means reasonably designed to prevent, such acts and practices 
as are fraudulent, deceptive, or manipulative.
  (f) If, pursuant to any arrangement or understanding with the 
person or persons acquiring securities in a transaction subject 
to subsection (d) of this section or subsection (d) of section 
13 of this title, any persons are to be elected or designated 
as directors of the issuer, otherwise than at a meeting of 
security holders, and the persons so elected or designated will 
constitute a majority of the directors of the issuer, then, 
prior to the time any such person takes office as a director, 
and in accordance with rules and regulations prescribed by the 
Commission, the issuer shall file with the Commission, and 
transmit to all holders of record of securities of the issuer 
who would be entitled to vote at a meeting for election of 
directors, information substantially equivalent to the 
information which would be required by subsection (a) or (c) of 
this section to be transmitted if such person or persons were 
nominees for election as directors at a meeting of such 
security holders.
  (g)(1)(A) At the time of filing such preliminary proxy 
solicitation material as the Commission may require by rule 
pursuant to subsection (a) of this section that concerns an 
acquisition, merger, consolidation, or proposed sale or other 
disposition of substantially all the assets of a company, the 
person making such filing, other than a company registered 
under the Investment Company Act of 1940, shall pay to the 
Commission the following fees:
          (i) for preliminary proxy solicitation material 
        involving an acquisition, merger, or consolidation, if 
        there is a proposed payment of cash or transfer of 
        securities or property to shareholders, a fee at a rate 
        that, subject to paragraph (4), is equal to $92 per 
        $1,000,000 of such proposed payment, or of the value of 
        such securities or other property proposed to be 
        transferred; and
          (ii) for preliminary proxy solicitation material 
        involving a proposed sale or other disposition of 
        substantially all of the assets of a company, a fee at 
        a rate that, subject to paragraph (4), is equal to $92 
        per $1,000,000 of the cash or of the value of any 
        securities or other property proposed to be received 
        upon such sale or disposition.
  (B) The fee imposed under subparagraph (A) shall be reduced 
with respect to securities in an amount equal to any fee paid 
to the Commission with respect to such securities in connection 
with the proposed transaction under section 6(b) of the 
Securities Act of 1933 (15 U.S.C. 77f(b)), or the fee paid 
under that section shall be reduced in an amount equal to the 
fee paid to the Commission in connection with such transaction 
under this subsection. Where two or more companies involved in 
an acquisition, merger, consolidation, sale, or other 
disposition of substantially all the assets of a company must 
file such proxy material with the Commission, each shall pay a 
proportionate share of such fee.
  (2) At the time of filing such preliminary information 
statement as the Commission may require by rule pursuant to 
subsection (c) of this section, the issuer shall pay to the 
Commission the same fee as required for preliminary proxy 
solicitation material under paragraph (1) of this subsection.
  (3) At the time of filing such statement as the Commission 
may require by rule pursuant to subsection (d)(1) of this 
section, the person making the filing shall pay to the 
Commission a fee at a rate that, subject to paragraph (4), is 
equal to $92 per $1,000,000 of the aggregate amount of cash or 
of the value of securities or other property proposed to be 
offered. The fee shall be reduced with respect to securities in 
an amount equal to any fee paid with respect to such securities 
in connection with the proposed transaction under section 6(b) 
of the Securities Act of 1933 (15 U.S.C. 77f(b)), or the fee 
paid under that section shall be reduced in an amount equal to 
the fee paid to the Commission in connection with such 
transaction under this subsection.
          (4) Annual adjustment.--For each fiscal year, the 
        Commission shall by order adjust the rate required by 
        paragraphs (1) and (3) for such fiscal year to a rate 
        that is equal to the rate (expressed in dollars per 
        million) that is applicable under section 6(b) of the 
        Securities Act of 1933 (15 U.S.C. 77f(b)) for such 
        fiscal year.
          (5) Fee collection.--Fees collected pursuant to this 
        subsection for fiscal year 2012 and each fiscal year 
        thereafter shall be deposited and credited as general 
        revenue of the Treasury and shall not be available for 
        obligation.
          (6) Review; effective date; publication.--In 
        exercising its authority under this subsection, the 
        Commission shall not be required to comply with the 
        provisions of section 553 of title 5, United States 
        Code. An adjusted rate prescribed under paragraph (4) 
        shall be published and take effect in accordance with 
        section 6(b) of the Securities Act of 1933 (15 U.S.C. 
        77f(b)).
          (7) Pro rata application.--The rates per $1,000,000 
        required by this subsection shall be applied pro rata 
        to amounts and balances of less than $1,000,000.
  (8) Notwithstanding any other provision of law, the 
Commission may impose fees, charges, or prices for matters not 
involving any acquisition, merger, consolidation, sale, or 
other disposition of assets described in this subsection, as 
authorized by section 9701 of title 31, United States Code, or 
otherwise.
  (h) Proxy Solicitations and Tender Offers in Connection With 
Limited Partnership Rollup Transactions.--
          (1) Proxy rules to contain special provisions.--It 
        shall be unlawful for any person to solicit any proxy, 
        consent, or authorization concerning a limited 
        partnership rollup transaction, or to make any tender 
        offer in furtherance of a limited partnership rollup 
        transaction, unless such transaction is conducted in 
        accordance with rules prescribed by the Commission 
        under subsections (a) and (d) as required by this 
        subsection. Such rules shall--
                  (A) permit any holder of a security that is 
                the subject of the proposed limited partnership 
                rollup transaction to engage in preliminary 
                communications for the purpose of determining 
                whether to solicit proxies, consents, or 
                authorizations in opposition to the proposed 
                limited partnership rollup transaction, without 
                regard to whether any such communication would 
                otherwise be considered a solicitation of 
                proxies, and without being required to file 
                soliciting material with the Commission prior 
                to making that determination, except that--
                          (i) nothing in this subparagraph 
                        shall be construed to limit the 
                        application of any provision of this 
                        title prohibiting, or reasonably 
                        designed to prevent, fraudulent, 
                        deceptive, or manipulative acts or 
                        practices under this title; and
                          (ii) any holder of not less than 5 
                        percent of the outstanding securities 
                        that are the subject of the proposed 
                        limited partnership rollup transaction 
                        who engages in the business of buying 
                        and selling limited partnership 
                        interests in the secondary market shall 
                        be required to disclose such ownership 
                        interests and any potential conflicts 
                        of interests in such preliminary 
                        communications;
                  (B) require the issuer to provide to holders 
                of the securities that are the subject of the 
                limited partnership rollup transaction such 
                list of the holders of the issuer's securities 
                as the Commission may determine in such form 
                and subject to such terms and conditions as the 
                Commission may specify;
                  (C) prohibit compensating any person 
                soliciting proxies, consents, or authorizations 
                directly from security holders concerning such 
                a limited partnership rollup transaction--
                          (i) on the basis of whether the 
                        solicited proxy, consent, or 
                        authorization either approves or 
                        disapproves the proposed limited 
                        partnership rollup transaction; or
                          (ii) contingent on the approval, 
                        disapproval, or completion of the 
                        limited partnership rollup transaction;
                  (D) set forth disclosure requirements for 
                soliciting material distributed in connection 
                with a limited partnership rollup transaction, 
                including requirements for clear, concise, and 
                comprehensible disclosure with respect to--
                          (i) any changes in the business plan, 
                        voting rights, form of ownership 
                        interest, or the compensation of the 
                        general partner in the proposed limited 
                        partnership rollup transaction from 
                        each of the original limited 
                        partnerships;
                          (ii) the conflicts of interest, if 
                        any, of the general partner;
                          (iii) whether it is expected that 
                        there will be a significant difference 
                        between the exchange values of the 
                        limited partnerships and the trading 
                        price of the securities to be issued in 
                        the limited partnership rollup 
                        transaction;
                          (iv) the valuation of the limited 
                        partnerships and the method used to 
                        determine the value of the interests of 
                        the limited partners to be exchanged 
                        for the securities in the limited 
                        partnership rollup transaction;
                          (v) the differing risks and effects 
                        of the limited partnership rollup 
                        transaction for investors in different 
                        limited partnerships proposed to be 
                        included, and the risks and effects of 
                        completing the limited partnership 
                        rollup transaction with less than all 
                        limited partnerships;
                          (vi) the statement by the general 
                        partner required under subparagraph 
                        (E);
                          (vii) such other matters deemed 
                        necessary or appropriate by the 
                        Commission;
                  (E) require a statement by the general 
                partner as to whether the proposed limited 
                partnership rollup transaction is fair or 
                unfair to investors in each limited 
                partnership, a discussion of the basis for that 
                conclusion, and an evaluation and a description 
                by the general partner of alternatives to the 
                limited partnership rollup transaction, such as 
                liquidation;
                  (F) provide that, if the general partner or 
                sponsor has obtained any opinion (other than an 
                opinion of counsel), appraisal, or report that 
                is prepared by an outside party and that is 
                materially related to the limited partnership 
                rollup transaction, such soliciting materials 
                shall contain or be accompanied by clear, 
                concise, and comprehensible disclosure with 
                respect to--
                          (i) the analysis of the transaction, 
                        scope of review, preparation of the 
                        opinion, and basis for and methods of 
                        arriving at conclusions, and any 
                        representations and undertakings with 
                        respect thereto;
                          (ii) the identity and qualifications 
                        of the person who prepared the opinion, 
                        the method of selection of such person, 
                        and any material past, existing, or 
                        contemplated relationships between the 
                        person or any of its affiliates and the 
                        general partner, sponsor, successor, or 
                        any other affiliate;
                          (iii) any compensation of the 
                        preparer of such opinion, appraisal, or 
                        report that is contingent on the 
                        transaction's approval or completion; 
                        and
                          (iv) any limitations imposed by the 
                        issuer on the access afforded to such 
                        preparer to the issuer's personnel, 
                        premises, and relevant books and 
                        records;
                  (G) provide that, if the general partner or 
                sponsor has obtained any opinion, appraisal, or 
                report as described in subparagraph (F) from 
                any person whose compensation is contingent on 
                the transaction's approval or completion or who 
                has not been given access by the issuer to its 
                personnel and premises and relevant books and 
                records, the general partner or sponsor shall 
                state the reasons therefor;
                  (H) provide that, if the general partner or 
                sponsor has not obtained any opinion on the 
                fairness of the proposed limited partnership 
                rollup transaction to investors in each of the 
                affected partnerships, such soliciting 
                materials shall contain or be accompanied by a 
                statement of such partner's or sponsor's 
                reasons for concluding that such an opinion is 
                not necessary in order to permit the limited 
                partners to make an informed decision on the 
                proposed transaction;
                  (I) require that the soliciting material 
                include a clear, concise, and comprehensible 
                summary of the limited partnership rollup 
                transaction (including a summary of the matters 
                referred to in clauses (i) through (vii) of 
                subparagraph (D) and a summary of the matter 
                referred to in subparagraphs (F), (G), and 
                (H)), with the risks of the limited partnership 
                rollup transaction set forth prominently in the 
                fore part thereof;
                  (J) provide that any solicitation or offering 
                period with respect to any proxy solicitation, 
                tender offer, or information statement in a 
                limited partnership rollup transaction shall be 
                for not less than the lesser of 60 calendar 
                days or the maximum number of days permitted 
                under applicable State law; and
                  (K) contain such other provisions as the 
                Commission determines to be necessary or 
                appropriate for the protection of investors in 
                limited partnership rollup transactions.
          (2) Exemptions.--The Commission may, consistent with 
        the public interest, the protection of investors, and 
        the purposes of this title, exempt by rule or order any 
        security or class of securities, any transaction or 
        class of transactions, or any person or class of 
        persons, in whole or in part, conditionally or 
        unconditionally, from the requirements imposed pursuant 
        to paragraph (1) or from the definition contained in 
        paragraph (4).
          (3) Effect on commission authority.--Nothing in this 
        subsection limits the authority of the Commission under 
        subsection (a) or (d) or any other provision of this 
        title or precludes the Commission from imposing, under 
        subsection (a) or (d) or any other provision of this 
        title, a remedy or procedure required to be imposed 
        under this subsection.
          (4) Definition of limited partnership rollup 
        transaction.--Except as provided in paragraph (5), as 
        used in this subsection, the term ``limited partnership 
        rollup transaction'' means a transaction involving the 
        combination or reorganization of one or more limited 
        partnerships, directly or indirectly, in which--
                  (A) some or all of the investors in any of 
                such limited partnerships will receive new 
                securities, or securities in another entity, 
                that will be reported under a transaction 
                reporting plan declared effective before the 
                date of enactment of this subsection by the 
                Commission under section 11A;
                  (B) any of the investors' limited partnership 
                securities are not, as of the date of filing, 
                reported under a transaction reporting plan 
                declared effective before the date of enactment 
                of this subsection by the Commission under 
                section 11A;
                  (C) investors in any of the limited 
                partnerships involved in the transaction are 
                subject to a significant adverse change with 
                respect to voting rights, the term of existence 
                of the entity, management compensation, or 
                investment objectives; and
                  (D) any of such investors are not provided an 
                option to receive or retain a security under 
                substantially the same terms and conditions as 
                the original issue.
          (5) Exclusions from definition.--Notwithstanding 
        paragraph (4), the term ``limited partnership rollup 
        transaction'' does not include--
                  (A) a transaction that involves only a 
                limited partnership or partnerships having an 
                operating policy or practice of retaining cash 
                available for distribution and reinvesting 
                proceeds from the sale, financing, or 
                refinancing of assets in accordance with such 
                criteria as the Commission determines 
                appropriate;
                  (B) a transaction involving only limited 
                partnerships wherein the interests of the 
                limited partners are repurchased, recalled, or 
                exchanged in accordance with the terms of the 
                preexisting limited partnership agreements for 
                securities in an operating company specifically 
                identified at the time of the formation of the 
                original limited partnership;
                  (C) a transaction in which the securities to 
                be issued or exchanged are not required to be 
                and are not registered under the Securities Act 
                of 1933;
                  (D) a transaction that involves only issuers 
                that are not required to register or report 
                under section 12, both before and after the 
                transaction;
                  (E) a transaction, except as the Commission 
                may otherwise provide by rule for the 
                protection of investors, involving the 
                combination or reorganization of one or more 
                limited partnerships in which a non-affiliated 
                party succeeds to the interests of a general 
                partner or sponsor, if--
                          (i) such action is approved by not 
                        less than 66\2/3\ percent of the 
                        outstanding units of each of the 
                        participating limited partnerships; and
                          (ii) as a result of the transaction, 
                        the existing general partners will 
                        receive only compensation to which they 
                        are entitled as expressly provided for 
                        in the preexisting limited partnership 
                        agreements; or
                  (F) a transaction, except as the Commission 
                may otherwise provide by rule for the 
                protection of investors, in which the 
                securities offered to investors are securities 
                of another entity that are reported under a 
                transaction reporting plan declared effective 
                before the date of enactment of this subsection 
                by the Commission under section 11A, if--
                          (i) such other entity was formed, and 
                        such class of securities was reported 
                        and regularly traded, not less than 12 
                        months before the date on which 
                        soliciting material is mailed to 
                        investors; and
                          (ii) the securities of that entity 
                        issued to investors in the transaction 
                        do not exceed 20 percent of the total 
                        outstanding securities of the entity, 
                        exclusive of any securities of such 
                        class held by or for the account of the 
                        entity or a subsidiary of the entity.
  (i) Disclosure of Pay Versus Performance.--The Commission 
shall, by rule, require each issuer to disclose in any proxy or 
consent solicitation material for an annual meeting of the 
shareholders of the issuer a clear description of any 
compensation required to be disclosed by the issuer under 
section 229.402 of title 17, Code of Federal Regulations (or 
any successor thereto), including, for any issuer other than an 
emerging growth company, information that shows the 
relationship between executive compensation actually paid and 
the financial performance of the issuer, taking into account 
any change in the value of the shares of stock and dividends of 
the issuer and any distributions. The disclosure under this 
subsection may include a graphic representation of the 
information required to be disclosed.
  (j) Disclosure of Hedging by Employees and Directors.--The 
Commission shall, by rule, require each issuer to disclose in 
any proxy or consent solicitation material for an annual 
meeting of the shareholders of the issuer whether any employee 
or member of the board of directors of the issuer, or any 
designee of such employee or member, is permitted to purchase 
financial instruments (including prepaid variable forward 
contracts, equity swaps, collars, and exchange funds) that are 
designed to hedge or offset any decrease in the market value of 
equity securities--
          (1) granted to the employee or member of the board of 
        directors by the issuer as part of the compensation of 
        the employee or member of the board of directors; or
          (2) held, directly or indirectly, by the employee or 
        member of the board of directors.
  (k) Data Standards for Proxy and Consent Solicitation 
Materials.--
          (1) Requirement.--The Commission shall, by rule, 
        adopt data standards for all information contained in 
        any proxy or consent solicitation material prepared by 
        an issuer for an annual meeting of the shareholders of 
        the issuer, except that the Commission may exempt 
        exhibits, signatures, and certifications from those 
        data standards.
          (2) Consistency.--The data standards required under 
        paragraph (1) shall incorporate, and ensure 
        compatibility with (to the extent feasible), all 
        applicable data standards established in the rules 
        promulgated under section 124 of the Financial 
        Stability Act of 2010, including, to the extent 
        practicable, by having the characteristics described in 
        clauses (i) through (vi) of subsection (c)(1)(B) of 
        such section 124.
  (l) False or Misleading Statements.--For purposes of section 
18, the failure to disclose material information (such as a 
proxy voting advice business's methodology, sources of 
information, or conflicts of interest) or the making of a 
material misstatement regarding proxy voting advice that makes 
a recommendation to a security holder as to the security 
holder's vote, consent, or authorization on a specific matter 
for which security holder approval is solicited, and that is 
furnished by a person that markets the person's expertise as a 
provider of such proxy voting advice separately from other 
forms of investment advice, and sells such proxy voting advice 
for a fee, shall be considered to be false or misleading with 
respect to a material fact.
  (m) Prohibition on Robovoting.--
          (1) In general.--The Commission shall issue final 
        rules prohibiting the use of robovoting with respect to 
        votes related to proxy or consent solicitation 
        materials.
          (2) Robovoting defined.--In this subsection, the term 
        ``robovoting'' means the practice of automatically 
        voting in a manner consistent with the recommendations 
        of a proxy advisory firm or pre-populating votes on a 
        proxy advisory firm's electronic voting platform with 
        the proxy advisory firm's recommendations, in either 
        case, without independent review and analysis.
  (n) Prohibition on Outsourcing Voting Decisions by 
Institutional Investors.--With respect to votes related to 
proxy or consent solicitation materials, an institutional 
investor may not outsource voting decisions to any person other 
than an investment adviser or a broker or dealer that is 
registered with the Commission and has a fiduciary or best 
interest duty to the institutional investor.
  (o) No Requirement to Vote.--No person may be required to 
cast votes related to proxy or consent solicitation materials.
  (p) Proxy Advisory Firm Calculation of Votes.--With respect 
to votes related to proxy or consent solicitation materials 
with respect to an issuer, a proxy advisor firm shall calculate 
the vote result consistent with the law of the State in which 
the issuer is incorporated.

           *       *       *       *       *       *       *


SEC. 15H. REGISTRATION OF PROXY ADVISORY FIRMS.

  (a) Conduct Prohibited.--It shall be unlawful for a proxy 
advisory firm to make use of the mails or any means or 
instrumentality of interstate commerce to provide proxy voting 
advice, research, analysis, ratings or recommendations to any 
client, unless such proxy advisory firm is registered under 
this section.
  (b) Registration Procedures.--
          (1) Application for registration.--
                  (A) In general.--A proxy advisory firm shall 
                file with the Commission an application for 
                registration, in such form as the Commission 
                shall require, by rule, and containing the 
                information described in subparagraph (B).
                  (B) Required information.--An application for 
                registration under this section shall contain--
                          (i) a certification that the 
                        applicant is able to consistently 
                        provide proxy advice based on accurate 
                        information;
                          (ii) with respect to clients of the 
                        applicant that vote shares held on 
                        behalf of shareholders, a certification 
                        that the applicant--
                                  (I) will provide proxy voting 
                                advice only in the best 
                                economic interest of those 
                                shareholders; and
                                  (II) has the requisite 
                                expertise to ensure that voting 
                                recommendations are in the best 
                                economic interest of those 
                                shareholders;
                          (iii) information on the procedures 
                        and methodologies that the applicant 
                        uses to ensure that proxy voting 
                        recommendations are in the best 
                        economic interest of the ultimate 
                        shareholders;
                          (iv) information on the 
                        organizational structure of the 
                        applicant;
                          (v) an explanation of whether or not 
                        the applicant has in effect a code of 
                        ethics, and if not, the reasons 
                        therefor;
                          (vi) a description of any potential 
                        or actual conflict of interest relating 
                        to the provision of proxy advisory 
                        services, including those arising out 
                        of or resulting from the ownership 
                        structure of the applicant or the 
                        provision of other services by the 
                        applicant or any person associated with 
                        the applicant;
                          (vii) the policies and procedures in 
                        place to publicly disclose and manage 
                        conflicts of interest under subsection 
                        (f);
                          (viii) information related to the 
                        professional and academic 
                        qualifications of staff tasked with 
                        providing proxy advisory services; and
                          (ix) any other information and 
                        documents concerning the applicant and 
                        any person associated with such 
                        applicant as the Commission, by rule, 
                        may prescribe as necessary or 
                        appropriate in the public interest or 
                        for the protection of investors.
          (2) Review of application.--
                  (A) Initial determination.--Not later than 90 
                days after the date on which the application 
                for registration is filed with the Commission 
                under paragraph (1) (or within such longer 
                period as to which the applicant consents) the 
                Commission shall--
                          (i) by order, grant registration; or
                          (ii) institute proceedings to 
                        determine whether registration should 
                        be denied.
                  (B) Conduct of proceedings.--
                          (i) Content.--Proceedings referred to 
                        in subparagraph (A)(ii) shall--
                                  (I) include notice of the 
                                grounds for denial under 
                                consideration and an 
                                opportunity for hearing; and
                                  (II) be concluded not later 
                                than 120 days after the date on 
                                which the application for 
                                registration is filed with the 
                                Commission under paragraph (1).
                          (ii) Determination.--At the 
                        conclusion of such proceedings, the 
                        Commission, by order, shall grant or 
                        deny such application for registration.
                          (iii) Extension authorized.--The 
                        Commission may extend the time for 
                        conclusion of such proceedings for not 
                        longer than 90 days, if the Commission 
                        finds good cause for such extension and 
                        publishes its reasons for so finding, 
                        or for such longer period as to which 
                        the applicant consents.
                  (C) Grounds for decision.--The Commission 
                shall grant registration under this 
                subsection--
                          (i) if the Commission finds that the 
                        requirements of this section are 
                        satisfied; and
                          (ii) unless the Commission finds (in 
                        which case the Commission shall deny 
                        such registration) that--
                                  (I) the applicant has failed 
                                to certify to the Commission's 
                                satisfaction that it is able to 
                                consistently provide proxy 
                                advice based on accurate 
                                information and to materially 
                                comply with the procedures and 
                                methodologies disclosed under 
                                paragraph (1)(B) and with 
                                subsections (f) and (g); or
                                  (II) if the applicant were so 
                                registered, its registration 
                                would be subject to suspension 
                                or revocation under subsection 
                                (d).
          (3) Public availability of information.--Subject to 
        section 24, the Commission shall make the information 
        and documents submitted to the Commission by a proxy 
        advisory firm in its completed application for 
        registration, or in any amendment submitted under 
        paragraph (1) or (2) of subsection (c), publicly 
        available on the Commission's website, or through 
        another comparable, readily accessible means.
  (c) Update of Registration.--
          (1) Update.--Each registered proxy advisory firm 
        shall promptly amend and update its application for 
        registration under this section if any information or 
        document provided therein becomes materially 
        inaccurate, except that a registered proxy advisory 
        firm is not required to amend the information required 
        to be filed under subsection (b)(1)(B)(i) by filing 
        information under this paragraph, but shall amend such 
        information in the annual submission of the 
        organization under paragraph (2) of this subsection.
          (2) Certification.--Not later than 90 calendar days 
        after the end of each calendar year, each registered 
        proxy advisory firm shall file with the Commission an 
        amendment to its registration, in such form as the 
        Commission, by rule, may prescribe as necessary or 
        appropriate in the public interest or for the 
        protection of investors--
                  (A) certifying that the information and 
                documents in the application for registration 
                of such registered proxy advisory firm continue 
                to be accurate in all material respects; and
                  (B) listing any material change that occurred 
                to such information or documents during the 
                previous calendar year.
  (d) Censure, Denial, or Suspension of Registration; Notice 
and Hearing.--The Commission, by order, shall censure, place 
limitations on the activities, functions, or operations of, 
suspend for a period not exceeding 12 months, or revoke the 
registration of any registered proxy advisory firm if the 
Commission finds, on the record after notice and opportunity 
for hearing, that such censure, placing of limitations, 
suspension, or revocation is necessary for the protection of 
investors and in the public interest and that such registered 
proxy advisory firm, or any person associated with such an 
organization, whether prior to or subsequent to becoming so 
associated--
          (1) has committed or omitted any act, or is subject 
        to an order or finding, enumerated in subparagraph (A), 
        (D), (E), (H), or (G) of section 15(b)(4), has been 
        convicted of any offense specified in section 
        15(b)(4)(B), or is enjoined from any action, conduct, 
        or practice specified in subparagraph (C) of section 
        15(b)(4), during the 10-year period preceding the date 
        of commencement of the proceedings under this 
        subsection, or at any time thereafter;
          (2) has been convicted during the 10-year period 
        preceding the date on which an application for 
        registration is filed with the Commission under this 
        section, or at any time thereafter, of--
                  (A) any crime that is punishable by 
                imprisonment for 1 or more years, and that is 
                not described in section 15(b)(4)(B); or
                  (B) a substantially equivalent crime by a 
                foreign court of competent jurisdiction;
          (3) is subject to any order of the Commission barring 
        or suspending the right of the person to be associated 
        with a registered proxy advisory firm;
          (4) fails to furnish the certifications required 
        under subsections (b)(2)(C)(ii)(I) and (c)(2);
          (5) has engaged in one or more prohibited acts 
        enumerated in paragraph (1);
          (6) fails to maintain adequate financial and 
        managerial resources to consistently offer advisory 
        services to clients that vote shares held on behalf of 
        shareholders consistent with the best economic interest 
        of those shareholders, including by failing to comply 
        with subsections (f) or (g);
          (7) fails to maintain adequate expertise to ensure 
        that proxy advisory services for clients that vote 
        shares held on behalf of shareholders are tied to the 
        best economic interest of those shareholders; or
          (8) engages in a prohibited act enumerated in 
        subsection (j).
  (e) Termination of Registration.--
          (1) Voluntary withdrawal.--A registered proxy 
        advisory firm may, upon such terms and conditions as 
        the Commission may establish as necessary in the public 
        interest or for the protection of investors, which 
        terms and conditions shall include at a minimum that 
        the registered proxy advisory firm will no longer 
        conduct such activities as to bring it within the 
        definition of proxy advisory firm in section 3(a)(82), 
        withdraw from registration by filing a written notice 
        of withdrawal to the Commission.
          (2) Commission authority.--In addition to any other 
        authority of the Commission under this title, if the 
        Commission finds that a registered proxy advisory firm 
        is no longer in existence or has ceased to do business 
        as a proxy advisory firm, the Commission, by order, 
        shall cancel the registration under this section of 
        such registered proxy advisory firm.
  (f) Management of Conflicts of Interest.--
          (1) Organization policies and procedures.--Each 
        registered proxy advisory firm shall establish, 
        maintain, and enforce written policies and procedures 
        reasonably designed, taking into consideration the 
        nature of the business of such registered proxy 
        advisory firm and associated persons, to publicly 
        disclose and manage any conflicts of interest that 
        arise or would reasonably be expected to arise from 
        such business.
          (2) Commission authority.--The Commission shall, 
        within one year of the date of enactment of this 
        section, issue final rules to prohibit, or require the 
        management and public disclosure of, any conflicts of 
        interest relating to the offering of proxy advisory 
        services by a registered proxy advisory firm, 
        including, without limitation, conflicts of interest 
        relating to--
                  (A) the manner in which a registered proxy 
                advisory firm is compensated by the client, any 
                affiliate of the client, or any other person 
                for providing proxy advisory services;
                  (B) business relationships, ownership 
                interests, or any other financial or personal 
                interests between a registered proxy advisory 
                firm, or any person associated with such 
                registered proxy advisory firm, and any client, 
                or any affiliate of such client;
                  (C) the formulation of proxy voting policies;
                  (D) the execution, or assistance with the 
                execution, of proxy votes if such votes are 
                based upon recommendations made by the proxy 
                advisory firm in which a person other than the 
                issuer is a proponent; and
                  (E) any other potential conflict of interest, 
                as the Commission deems necessary or 
                appropriate in the public interest or for the 
                protection of investors.
          (3) Disclosure on factors influencing 
        recommendations.--Each registered proxy advisory firm 
        shall annually disclose to the Commission and make 
        publicly available the economic and other factors that 
        a reasonable investor would expect to influence the 
        recommendations of such proxy advisory firm, including 
        the ownership composition of such proxy advisory firm 
        and any meetings with, or feedback received from, 
        outside entities.
  (g) Reliability of Proxy Advisory Firm Services.--
          (1) In general.--Each registered proxy advisory firm 
        shall--
                  (A) have staff and other resources sufficient 
                to produce proxy voting recommendations that 
                are based on accurate and current information 
                and designed for clients that vote shares held 
                on behalf of shareholders to advance the best 
                economic interest of those shareholders;
                  (B) implement procedures that permit issuers 
                that are the subject of proxy voting 
                recommendations--
                          (i) access in a reasonable time to 
                        data and information used to make 
                        recommendations; and
                          (ii) a reasonable opportunity to 
                        provide meaningful comment and 
                        corrections to such data and 
                        information, including the opportunity 
                        to present (in person or 
                        telephonically) details to the person 
                        responsible for developing such data 
                        and information prior to the 
                        publication of proxy voting 
                        recommendations to clients;
                  (C) employ an ombudsman to receive complaints 
                about the accuracy of information used in 
                making recommendations from the companies that 
                are the subject of the proxy advisory firm's 
                voting recommendations and seek to resolve 
                those complaints in a timely fashion and prior 
                to the publication of proxy voting 
                recommendations to clients; and
                  (D) if the ombudsman is unable to resolve a 
                complaint to a company's satisfaction prior to 
                the publication of proxy voting recommendations 
                to clients, include in the final report of the 
                firm to clients--
                          (i) a statement detailing the 
                        company's complaints, if requested in 
                        writing by the company; and
                          (ii) a statement explaining why the 
                        proxy voting recommendation is in the 
                        best economic interest of shareholders.
          (2) Definitions.--In this subsection:
                  (A) Data and information used to make 
                recommendations.--The term ``data and 
                information used to make voting 
                recommendations''--
                          (i) means the financial, operational, 
                        or descriptive data and information on 
                        an issuer used by proxy advisory firms 
                        and any contextual or substantive 
                        analysis impacting the recommendation; 
                        and
                          (ii) does not include the entirety of 
                        the proxy advisory firm's final report 
                        to its clients.
                  (B) Reasonable time.--The term ``reasonable 
                time''--
                          (i) means not less than 1 week before 
                        the publication of proxy voting 
                        recommendations for clients; and
                          (ii) shall not otherwise interfere 
                        with a proxy advisory firm's ability to 
                        provide its clients with timely access 
                        to accurate proxy voting research, 
                        analysis, or recommendations.
  (h) Private Right of Action With Respect to Illegal 
Recommendations.--Any proxy advisory firm that endorses a 
proposal that is not supported by the issuer but is approved 
and subsequently found by a court of competent jurisdiction to 
violate State or Federal law shall be liable to the applicable 
issuer for the costs associated with the approval of such 
proposal, including implementation costs and any penalties 
incurred by the issuer.
  (i) Designation of Compliance Officer.--Each registered proxy 
advisory firm shall designate an individual who reports 
directly to senior management as responsible for administering 
the policies and procedures that are required to be established 
pursuant to subsections (f) and (g), and for ensuring 
compliance with the securities laws and the rules and 
regulations thereunder, including those promulgated by the 
Commission pursuant to this section.
  (j) Prohibited Conduct.--
          (1) Prohibited acts and practices.--Not later than 
        one year after the date of enactment of this section, 
        the Commission shall issue final rules to prohibit any 
        act or practice relating to the offering of proxy 
        advisory services by a registered proxy advisory firm 
        that the Commission determines to be unfair, coercive, 
        or abusive, including any act or practice relating to--
                  (A) advisory or consulting services (offered 
                directly or indirectly, including through an 
                affiliate) related to corporate governance 
                issues; or
                  (B) modifying a voting recommendation or 
                otherwise departing from its adopted systematic 
                procedures and methodologies in the provision 
                of proxy advisory services, based on whether an 
                issuer, or affiliate thereof, subscribes or 
                will subscribe to other services or product of 
                the registered proxy advisory firm or any 
                person associated with such organization.
          (2) Rule of construction.--Nothing in paragraph (1), 
        or in any rules or regulations adopted thereunder, may 
        be construed to modify, impair, or supersede the 
        operation of any of the antitrust laws (as defined in 
        the first section of the Clayton Act, except that such 
        term includes section 5 of the Federal Trade Commission 
        Act, to the extent that such section 5 applies to 
        unfair methods of competition).
  (k) Statements of Financial Condition.--Each registered proxy 
advisory firm shall, on a confidential basis, file with the 
Commission, at intervals determined by the Commission, such 
financial statements, certified (if required by the rules or 
regulations of the Commission) by an independent public 
auditor, and information concerning its financial condition, as 
the Commission, by rule, may prescribe as necessary or 
appropriate in the public interest or for the protection of 
investors.
  (l) Annual Report.--
          (1) In general.--Each registered proxy advisory firm 
        shall, not later than 90 calendar days after the end of 
        each fiscal year, file with the Commission and make 
        publicly available an annual report in such form as the 
        Commission, by rule, may prescribe as necessary or 
        appropriate in the public interest or for the 
        protection of investors.
          (2) Contents.--Each annual report required under 
        paragraph (1) shall include, at a minimum, disclosure 
        by the registered proxy advisory firm of the following:
                  (A) A list of shareholder proposals the staff 
                of the registered proxy advisory firm reviewed 
                in the prior fiscal year.
                  (B) A list of the recommendations made in the 
                prior fiscal year.
                  (C) The economic analysis conducted to 
                determine that final recommendations provided 
                in the prior fiscal year (other than 
                recommendations relating to an issuer-sponsored 
                proposal or recommendations consistent with 
                that of a board of directors composed of a 
                majority of independent directors) delivered to 
                clients that vote shares held on behalf of 
                shareholders were in the best economic interest 
                of those shareholders.
                  (D) The staff who reviewed and made 
                recommendations on such proposals in the prior 
                fiscal year.
                  (E) The qualifications of such staff to 
                ensure that each of the recommendations for 
                clients that vote shares held on behalf of 
                shareholders were tied to the best economic 
                interest of those shareholders.
                  (F) The recommendations made in the prior 
                fiscal year where the proponent of such 
                recommendation was a client of or received 
                services from the proxy advisory firm.
                  (G) A certification by the chief executive 
                officer, chief financial officer, and the 
                primary executive responsible for overseeing 
                the compilation and dissemination of proxy 
                voting advice that the final recommendations 
                (other than recommendations relating to an 
                issuer-sponsored proposal or recommendations 
                consistent with that of a board of directors 
                composed of a majority of independent 
                directors) delivered to clients that vote 
                shares held on behalf of shareholders in the 
                last fiscal year--
                          (i) were based on internal controls 
                        and procedures that are designed to 
                        ensure accurate information and that 
                        such internal controls and procedures 
                        are effective;
                          (ii) do not violate applicable State 
                        or Federal law; and
                          (iii) were based on the best economic 
                        interest of those shareholders.
                  (H) The economic and other factors that a 
                reasonable investor would expect to influence 
                the recommendations of such proxy advisory 
                firm, including the ownership composition of 
                such proxy advisory firm.
  (m) Transparent Policies.--Each registered proxy advisory 
firm shall file with the Commission and make publicly available 
its methodology for the formulation of proxy voting policies 
and voting recommendations to clients that vote shares held on 
behalf of shareholders and how that methodology ensures that 
the firm's voting recommendations are in the best economic 
interest of those shareholders.
  (n) Rules of Construction.--Registration under and compliance 
with this section does not constitute a waiver of, or otherwise 
diminish, any right, privilege, or defense that a registered 
proxy advisory firm may otherwise have under any provision of 
State or Federal law, including any rule, regulation, or order 
thereunder.
  (o) Regulations.--
          (1) New provisions.--Such rules and regulations as 
        are required by this section or are otherwise necessary 
        to carry out this section, including the application 
        form required under subsection (a)--
                  (A) shall be issued by the Commission, not 
                later than 180 days after the date of enactment 
                of this section; and
                  (B) shall become effective not later than 1 
                year after the date of enactment of this 
                section.
          (2) Review of existing regulations.--Not later than 
        270 days after the date of enactment of this section, 
        the Commission shall--
                  (A) review its existing rules and regulations 
                which affect the operations of proxy advisory 
                firms; and
                  (B) amend or revise such rules and 
                regulations in accordance with the purposes of 
                this section, and issue such guidance as the 
                Commission may prescribe as necessary or 
                appropriate in the public interest or for the 
                protection of investors.
  (p) Applicability.--This section, other than subsection (n), 
which shall apply on the date of enactment of this section, 
shall apply on the earlier of--
          (1) the date on which regulations are issued in final 
        form under subsection (o)(1); or
          (2) 270 days after the date of enactment of this 
        section.
  (q) Best Economic Interest Defined.--In this section, 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 the shareholders are invested.

           *       *       *       *       *       *       *


  accounts and records, examinations of exchanges, members, and others

  Sec. 17. (a)(1) Every national securities exchange, member 
thereof, broker or dealer who transacts a business in 
securities through the medium of any such member, registered 
securities association, registered broker or dealer, registered 
municipal securities dealer municipal advisor,, registered 
securities information processor, registered transfer agent, 
nationally recognized statistical rating organization, proxy 
advisory firm, and registered clearing agency and the Municipal 
Securities Rulemaking Board shall make and keep for prescribed 
periods such records, furnish such copies thereof, and make and 
disseminate such reports as the Commission, by rule, prescribes 
as necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the 
purposes of this title. Any report that a nationally recognized 
statistical rating organization is required by Commission rules 
under this paragraph to make and disseminate to the Commission 
shall be deemed furnished to the Commission.
  (2) Every registered clearing agency shall also make and keep 
for prescribed periods such records, furnish such copies 
thereof, and make and disseminate such reports, as the 
appropriate regulatory agency for such clearing agency, by 
rule, prescribes as necessary or appropriate for the 
safeguarding of securities and funds in the custody or control 
of such clearing agency or for which it is responsible.
  (3) Every registered transfer agent shall also make and keep 
for prescribed periods such records, furnish such copies 
thereof, and make such reports as the appropriate regulatory 
agency for such transfer agent, by rule, prescribes as 
necessary or appropriate in furtherance of the purposes of 
section 17A of this title.
  (b) Records Subject to Examination.--
          (1) Procedures for cooperation with other agencies.--
        All records of persons described in subsection (a) of 
        this section are subject at any time, or from time to 
        time, to such reasonable periodic, special, or other 
        examinations by representatives of the Commission and 
        the appropriate regulatory agency for such persons as 
        the Commission or the appropriate regulatory agency for 
        such persons deems necessary or appropriate in the 
        public interest, for the protection of investors, or 
        otherwise in furtherance of the purposes of this title: 
        Provided, however, That the Commission shall, prior to 
        conducting any such examination of a--
                  (A) registered clearing agency, registered 
                transfer agent, or registered municipal 
                securities dealer for which it is not the 
                appropriate regulatory agency, give notice to 
                the appropriate regulatory agency for such 
                clearing agency, transfer agent, or municipal 
                securities dealer of such proposed examination 
                and consult with such appropriate regulatory 
                agency concerning the feasibility and 
                desirability of coordinating such examination 
                with examinations conducted by such appropriate 
                regulatory agency with a view to avoiding 
                unnecessary regulatory duplication or undue 
                regulatory burdens for such clearing agency, 
                transfer agent, or municipal securities dealer; 
                or
                  (B) broker or dealer registered pursuant to 
                section 15(b)(11), exchange registered pursuant 
                to section 6(g), or national securities 
                association registered pursuant to section 
                15A(k), give notice to the Commodity Futures 
                Trading Commission of such proposed examination 
                and consults with the Commodity Futures Trading 
                Commission concerning the feasibility and 
                desirability of coordinating such examination 
                with examinations conducted by the Commodity 
                Futures Trading Commission in order to avoid 
                unnecessary regulatory duplication or undue 
                regulatory burdens for such broker or dealer or 
                exchange.
          (2) Furnishing data and reports to cftc.--The 
        Commission shall notify the Commodity Futures Trading 
        Commission of any examination conducted of any broker 
        or dealer registered pursuant to section 15(b)(11), 
        exchange registered pursuant to section 6(g), or 
        national securities association registered pursuant to 
        section 15A(k) and, upon request, furnish to the 
        Commodity Futures Trading Commission any examination 
        report and data supplied to, or prepared by, the 
        Commission in connection with such examination.
          (3) Use of cftc reports.--Prior to conducting an 
        examination under paragraph (1), the Commission shall 
        use the reports of examinations, if the information 
        available therein is sufficient for the purposes of the 
        examination, of--
                  (A) any broker or dealer registered pursuant 
                to section 15(b)(11);
                  (B) exchange registered pursuant to section 
                6(g); or
                  (C) national securities association 
                registered pursuant to section 15A(k);
        that is made by the Commodity Futures Trading 
        Commission, a national securities association 
        registered pursuant to section 15A(k), or an exchange 
        registered pursuant to section 6(g).
          (4) Rules of construction.--
                  (A) Notwithstanding any other provision of 
                this subsection, the records of a broker or 
                dealer registered pursuant to section 
                15(b)(11), an exchange registered pursuant to 
                section 6(g), or a national securities 
                association registered pursuant to section 
                15A(k) described in this subparagraph shall not 
                be subject to routine periodic examinations by 
                the Commission.
                  (B) Any recordkeeping rules adopted under 
                this subsection for a broker or dealer 
                registered pursuant to section 15(b)(11), an 
                exchange registered pursuant to section 6(g), 
                or a national securities association registered 
                pursuant to section 15A(k) shall be limited to 
                records with respect to persons, accounts, 
                agreements, contracts, and transactions 
                involving security futures products.
                  (C) Nothing in the proviso in paragraph (1) 
                shall be construed to impair or limit (other 
                than by the requirement of prior consultation) 
                the power of the Commission under this 
                subsection to examine any clearing agency, 
                transfer agent, or municipal securities dealer 
                or to affect in any way the power of the 
                Commission under any other provision of this 
                title or otherwise to inspect, examine, or 
                investigate any such clearing agency, transfer 
                agent, or municipal securities dealer.
  (c)(1) Every clearing agency, transfer agent, and municipal 
securities dealer for which the Commission is not the 
appropriate regulatory agency shall (A) file with the 
appropriate regulatory agency for such clearing agency, 
transfer agent, or municipal securities dealer a copy of any 
application, notice, proposal, report, or document filed with 
the Commission by reason of its being a clearing agency, 
transfer agent, or municipal securities dealer and (B) file 
with the Commission a copy of any application, notice, 
proposal, report, or document filed with such appropriate 
regulatory agency by reason of its being a clearing agency, 
transfer agent, or municipal securities dealer. The Municipal 
Securities Rulemaking Board shall file with each agency 
enumerated in section 3(a)(34)(A) of this title copies of every 
proposed rule change filed with the Commission pursuant to 
section 19(b) of this title.
  (2) The appropriate regulatory agency for a clearing agency, 
transfer agent, or municipal securities dealer for which the 
Commission is not the appropriate regulatory agency shall file 
with the Commission notice of the commencement of any 
proceeding and a copy of any order entered by such appropriate 
regulatory agency against any clearing agency, transfer agent, 
municipal securities dealer, or person associated with a 
transfer agent or municipal securities dealer, and the 
Commission shall file with such appropriate regulatory agency, 
if any, notice of the commencement of any proceeding and a copy 
of any order entered by the Commission against the clearing 
agency, transfer agent, or municipal securities dealer, or 
against any person associated with a transfer agent or 
municipal securities dealer for which the agency is the 
appropriate regulatory agency.
  (3) The Commission and the appropriate regulatory agency for 
a clearing agency, transfer agent, or municipal securities 
dealer for which the Commission is not the appropriate 
regulatory agency shall each notify the other and make a report 
of any examination conducted by it of such clearing agency, 
transfer agent, or municipal securities dealer, and, upon 
request, furnish to the other a copy of such report and any 
data supplied to it in connection with such examination.
  (4) The Commission or the appropriate regulatory agency may 
specify that documents required to be filed pursuant to this 
subsection with the Commission or such agency, respectively, 
may be retained by the originating clearing agency, transfer 
agent, or municipal securities dealer, or filed with another 
appropriate regulatory agency. The Commission or the 
appropriate regulatory agency (as the case may be) making such 
a specification shall continue to have access to the document 
on request.
  (d)(1) The Commission, by rule or order, as it deems 
necessary or appropriate in the public interest and for the 
protection of investors, to foster cooperation and coordination 
among self-regulatory organizations, or to remove impediments 
to and foster the development of a national market system and 
national system for the clearance and settlement of securities 
transactions, may--
          (A) with respect to any person who is a member of or 
        participant in more than one self-regulatory 
        organization, relieve any such self-regulatory 
        organization of any responsibility under this title (i) 
        to receive regulatory reports from such person, (ii) to 
        examine such person for compliance, or to enforce 
        compliance by such person, with specified provisions of 
        this title, the rules and regulations thereunder, and 
        its own rules, or (iii) to carry out other specified 
        regulatory functions with respect to such person, and
          (B) allocate among self-regulatory organizations the 
        authority to adopt rules with respect to matters as to 
        which, in the absence of such allocation, such self-
        regulatory organizations share authority under this 
        title.
In making any such rule or entering any such order, the 
Commission shall take into consideration the regulatory 
capabilities and procedures of the self-regulatory 
organizations, availability of staff, convenience of location, 
unnecessary regulatory duplication, and such other factors as 
the Commission may consider germane to the protection of 
investors, cooperation and coordination among self-regulatory 
organizations, and the development of a national market system 
and a national system for the clearance and settlement of 
securities transactions. The Commission, by rule or order, as 
it deems necessary or appropriate in the public interest and 
for the protection of investors, may require any self-
regulatory organization relieved of any responsibility pursuant 
to this paragraph, and any person with respect to whom such 
responsibility relates, to take such steps as are specified in 
any such rule or order to notify customers of, and persons 
doing business with, such person of the limited nature of such 
self-regulatory organization's responsibility for such person's 
acts, practices, and course of business.
  (2) A self-regulatory organization shall furnish copies of 
any report of examination of any person who is a member of or a 
participant in such self-regulatory organization to any other 
self-regulatory organization of which such person is a member 
or in which such person is a participant upon the request of 
such person, such other self-regulatory organization, or the 
Commission.
  (e)(1)(A) Every registered broker or dealer shall annually 
file with the Commission a balance sheet and income statement 
certified by a independent public accounting firm, or by a 
registered public accounting firm if the firm is required to be 
registered under the Sarbanes-Oxley Act of 2002,, prepared on a 
calendar or fiscal year basis, and such other financial 
statements (which shall, as the Commission specifies, be 
certified) and information concerning its financial condition 
as the Commission, by rule may prescribe as necessary or 
appropriate in the public interest or for the protection of 
investors.
  (B) Every registered broker and dealer shall annually send to 
its customers its certified balance sheet and such other 
financial statements and information concerning its financial 
condition as the Commission, by rule, may prescribe pursuant to 
subsection (a) of this section.
  (C) The Commission, by rule or order, may conditionally or 
unconditionally exempt any registered broker or dealer, or 
class of such brokers or dealers, from any provision of this 
paragraph if the Commission determines that such exemption is 
consistent with the public interest and the protection of 
investors.
  (2) The Commission, by rule, as it deems necessary or 
appropriate in the public interest or for the protection of 
investors, may prescribe the form and content of financial 
statements filed pursuant to this title and the accounting 
principles and accounting standards used in their preparation.
  (f)(1) Every national securities exchange, member thereof, 
registered securities association, broker, dealer, municipal 
securities dealer, government securities broker, government 
securities dealer, registered transfer agent, registered 
clearing agency, participant therein, member of the Federal 
Reserve System, and bank whose deposits are insured by the 
Federal Deposit Insurance Corporation shall--
          (A) report to the Commission or other person 
        designated by the Commission and, in the case of 
        securities issued pursuant to chapter 31 of title 31, 
        United States Code, to the Secretary of the Treasury 
        such information about securities that are missing, 
        lost, counterfeit, stolen, or cancelled, in such form 
        and within such time as the Commission, by rule, 
        determines is necessary or appropriate in the public 
        interest or for the protection of investors; such 
        information shall be available on request for a 
        reasonable fee, to any such exchange, member, 
        association, broker, dealer, municipal securities 
        dealer, transfer agent, clearing agency, participant, 
        member of the Federal Reserve System, or insured bank, 
        and such other persons as the Commission, by rule, 
        designates; and
          (B) make such inquiry with respect to information 
        reported pursuant to this subsection as the Commission, 
        by rule, prescribes as necessary or appropriate in the 
        public interest or for the protection of investors, to 
        determine whether securities in their custody or 
        control, for which they are responsible, or in which 
        they are effecting, clearing, or settling a transaction 
        have been reported as missing, lost, counterfeit, 
        stolen, cancelled, or reported in such other manner as 
        the Commission, by rule, may prescribe.
  (2) Every member of a national securities exchange, broker, 
dealer, registered transfer agent, registered clearing agency, 
registered securities information processor, national 
securities exchange, and national securities association shall 
require that each of its partners, directors, officers, and 
employees be fingerprinted and shall submit such fingerprints, 
or cause the same to be submitted, to the Attorney General of 
the United States for identification and appropriate 
processing. The Commission, by rule, may exempt from the 
provisions of this paragraph upon specified terms, conditions, 
and periods, any class of partners, directors, officers, or 
employees of any such member, broker, dealer, transfer agent, 
clearing agency, securities information processor, national 
securities exchange, or national securities association, if the 
Commission finds that such action is not inconsistent with the 
public interest or the protection of investors. Notwithstanding 
any other provision of law, in providing identification and 
processing functions, the Attorney General shall provide the 
Commission and self-regulatory organizations designated by the 
Commission with access to all criminal history record 
information.
  (3)(A) In order to carry out the authority under paragraph 
(1) above, the Commission or its designee may enter into 
agreement with the Attorney General to use the facilities of 
the National Crime Information Center (``NCIC'') to receive, 
store, and disseminate information in regard to missing, lost, 
counterfeit, or stolen securities and to permit direct inquiry 
access to NCIC's file on such securities for the financial 
community.
  (B) In order to carry out the authority under paragraph (1) 
of this subsection, the Commission or its designee and the 
Secretary of the Treasury shall enter into an agreement whereby 
the Commission or its designee will receive, store, and 
disseminate information in the possession, and which comes into 
the possession, of the Department of the Treasury in regard to 
missing, lost, counterfeit, or stolen securities.
  (4) In regard to paragraphs (1), (2), and (3), above insofar 
as such paragraphs apply to any bank or member of the Federal 
Reserve System, the Commission may delegate its authority to:
          (A) the Comptroller of the Currency as to national 
        banks;
          (B) the Federal Reserve Board in regard to any member 
        of the Federal Reserve System which is not a national 
        bank; and
          (C) the Federal Deposit Insurance Corporation for any 
        State bank which is insured by the Federal Deposit 
        Insurance Corporation but which is not a member of the 
        Federal Reserve System.
  (5) The Commission shall encourage the insurance industry to 
require their insured to report expeditiously instances of 
missing, lost, counterfeit, or stolen securities to the 
Commission or to such other person as the Commission may, by 
rule, designate to receive such information.
  (g) Any broker, dealer, or other person extending credit who 
is subject to the rules and regulations prescribed by the Board 
of Governors of the Federal Reserve System pursuant to this 
title shall make such reports to the Board as it may require as 
necessary or appropriate to enable it to perform the functions 
conferred upon it by this title. If any such broker, dealer, or 
other person shall fail to make any such report or fail to 
furnish full information therein, or, if in the judgment of the 
Board it is otherwise necessary, such broker, dealer, or other 
person shall permit such inspections to be made by the Board 
with respect to the business operations of such broker, dealer, 
or other person as the Board may deem necessary to enable it to 
obtain the required information.
  (h) Risk Assessment for Holding Company Systems.--
          (1) Obligations to obtain, maintain, and report 
        information.--Every person who is (A) a registered 
        broker or dealer, or (B) a registered municipal 
        securities dealer for which the Commission is the 
        appropriate regulatory agency, shall obtain such 
        information and make and keep such records as the 
        Commission by rule prescribes concerning the registered 
        person's policies, procedures, or systems for 
        monitoring and controlling financial and operational 
        risks to it resulting from the activities of any of its 
        associated persons, other than a natural person. Such 
        records shall describe, in the aggregate, each of the 
        financial and securities activities conducted by, and 
        the customary sources of capital and funding of, those 
        of its associated persons whose business activities are 
        reasonably likely to have a material impact on the 
        financial or operational condition of such registered 
        person, including its net capital, its liquidity, or 
        its ability to conduct or finance its operations. The 
        Commission, by rule, may require summary reports of 
        such information to be filed with the Commission no 
        more frequently than quarterly.
          (2) Authority to require additional information.--If, 
        as a result of adverse market conditions or based on 
        reports provided to the Commission pursuant to 
        paragraph (1) of this subsection or other available 
        information, the Commission reasonably concludes that 
        it has concerns regarding the financial or operational 
        condition of (A) any registered broker or dealer, or 
        (B) any registered municipal securities dealer, 
        government securities broker, or government securities 
        dealer for which the Commission is the appropriate 
        regulatory agency, the Commission may require the 
        registered person to make reports concerning the 
        financial and securities activities of any of such 
        person's associated persons, other than a natural 
        person, whose business activities are reasonably likely 
        to have a material impact on the financial or 
        operational condition of such registered person. The 
        Commission, in requiring reports pursuant to this 
        paragraph, shall specify the information required, the 
        period for which it is required, the time and date on 
        which the information must be furnished, and whether 
        the information is to be furnished directly to the 
        Commission or to a self-regulatory organization with 
        primary responsibility for examining the registered 
        person's financial and operational condition.
          (3) Special provisions with respect to associated 
        persons subject to federal banking agency regulation.--
                  (A) Cooperation in implementation.--In 
                developing and implementing reporting 
                requirements pursuant to paragraph (1) of this 
                subsection with respect to associated persons 
                subject to examination by or reporting 
                requirements of a Federal banking agency, the 
                Commission shall consult with and consider the 
                views of each such Federal banking agency. If a 
                Federal banking agency comments in writing on a 
                proposed rule of the Commission under this 
                subsection that has been published for comment, 
                the Commission shall respond in writing to such 
                written comment before adopting the proposed 
                rule. The Commission shall, at the request of 
                the Federal banking agency, publish such 
                comment and response in the Federal Register at 
                the time of publishing the adopted rule.
                  (B) Use of banking agency reports.--A 
                registered broker, dealer, or municipal 
                securities dealer shall be in compliance with 
                any recordkeeping or reporting requirement 
                adopted pursuant to paragraph (1) of this 
                subsection concerning an associated person that 
                is subject to examination by or reporting 
                requirements of a Federal banking agency if 
                such broker, dealer, or municipal securities 
                dealer utilizes for such recordkeeping or 
                reporting requirement copies of reports filed 
                by the associated person with the Federal 
                banking agency pursuant to section 5211 of the 
                Revised Statutes, section 9 of the Federal 
                Reserve Act, section 7(a) of the Federal 
                Deposit Insurance Act, section 10(b) of the 
                Home Owners' Loan Act, or section 8 of the Bank 
                Holding Company Act of 1956. The Commission 
                may, however, by rule adopted pursuant to 
                paragraph (1), require any broker, dealer, or 
                municipal securities dealer filing such reports 
                with the Commission to obtain, maintain, or 
                report supplemental information if the 
                Commission makes an explicit finding that such 
                supplemental information is necessary to inform 
                the Commission regarding potential risks to 
                such broker, dealer, or municipal securities 
                dealer. Prior to requiring any such 
                supplemental information, the Commission shall 
                first request the Federal banking agency to 
                expand its reporting requirements to include 
                such information.
                  (C) Procedure for requiring additional 
                information.--Prior to making a request 
                pursuant to paragraph (2) of this subsection 
                for information with respect to an associated 
                person that is subject to examination by or 
                reporting requirements of a Federal banking 
                agency, the Commission shall--
                          (i) notify such agency of the 
                        information required with respect to 
                        such associated person; and
                          (ii) consult with such agency to 
                        determine whether the information 
                        required is available from such agency 
                        and for other purposes, unless the 
                        Commission determines that any delay 
                        resulting from such consultation would 
                        be inconsistent with ensuring the 
                        financial and operational condition of 
                        the broker, dealer, municipal 
                        securities dealer, government 
                        securities broker, or government 
                        securities dealer or the stability or 
                        integrity of the securities markets.
                  (D) Exclusion for examination reports.--
                Nothing in this subsection shall be construed 
                to permit the Commission to require any 
                registered broker or dealer, or any registered 
                municipal securities dealer, government 
                securities broker, or government securities 
                dealer for which the Commission is the 
                appropriate regulatory agency, to obtain, 
                maintain, or furnish any examination report of 
                any Federal banking agency or any supervisory 
                recommendations or analysis contained therein.
                  (E) Confidentiality of information 
                provided.--No information provided to or 
                obtained by the Commission from any Federal 
                banking agency pursuant to a request by the 
                Commission under subparagraph (C) of this 
                paragraph regarding any associated person which 
                is subject to examination by or reporting 
                requirements of a Federal banking agency may be 
                disclosed to any other person (other than a 
                self-regulatory organization), without the 
                prior written approval of the Federal banking 
                agency. Nothing in this subsection shall 
                authorize the Commission to withhold 
                information from Congress, or prevent the 
                Commission from complying with a request for 
                information from any other Federal department 
                or agency requesting the information for 
                purposes within the scope of its jurisdiction, 
                or complying with an order of a court of the 
                United States in an action brought by the 
                United States or the Commission.
                  (F) Notice to banking agencies concerning 
                financial and operational condition concerns.--
                The Commission shall notify the Federal banking 
                agency of any concerns of the Commission 
                regarding significant financial or operational 
                risks resulting from the activities of any 
                registered broker or dealer, or any registered 
                municipal securities dealer, government 
                securities broker, or government securities 
                dealer for which the Commission is the 
                appropriate regulatory agency, to any 
                associated person thereof which is subject to 
                examination by or reporting requirements of the 
                Federal banking agency.
                  (G) Definition.--For purposes of this 
                paragraph, the term ``Federal banking agency'' 
                shall have the same meaning as the term 
                ``appropriate Federal bank agency'' in section 
                3(q) of the Federal Deposit Insurance Act (12 
                U.S.C. 1813(q)).
          (4) Exemptions.--The Commission by rule or order may 
        exempt any person or class of persons, under such terms 
        and conditions and for such periods as the Commission 
        shall provide in such rule or order, from the 
        provisions of this subsection, and the rules 
        thereunder. In granting such exemptions, the Commission 
        shall consider, among other factors--
                  (A) whether information of the type required 
                under this subsection is available from a 
                supervisory agency (as defined in section 
                1101(6) of the Right to Financial Privacy Act 
                of 1978 (12 U.S.C. 3401(6))), a State insurance 
                commission or similar State agency, the 
                Commodity Futures Trading Commission, or a 
                similar foreign regulator;
                  (B) the primary business of any associated 
                person;
                  (C) the nature and extent of domestic or 
                foreign regulation of the associated person's 
                activities;
                  (D) the nature and extent of the registered 
                person's securities activities; and
                  (E) with respect to the registered person and 
                its associated persons, on a consolidated 
                basis, the amount and proportion of assets 
                devoted to, and revenues derived from, 
                activities in the United States securities 
                markets.
          (5) Authority to limit disclosure of information.--
        Notwithstanding any other provision of law, the 
        Commission shall not be compelled to disclose any 
        information required to be reported under this 
        subsection, or any information supplied to the 
        Commission by any domestic or foreign regulatory agency 
        that relates to the financial or operational condition 
        of any associated person of a registered broker, 
        dealer, government securities broker, government 
        securities dealer, or municipal securities dealer. 
        Nothing in this subsection shall authorize the 
        Commission to withhold information from Congress, or 
        prevent the Commission from complying with a request 
        for information from any other Federal department or 
        agency requesting the information for purposes within 
        the scope of its jurisdiction, or complying with an 
        order of a court of the United States in an action 
        brought by the United States or the Commission. For 
        purposes of section 552 of title 5, United States Code, 
        this subsection shall be considered a statute described 
        in subsection (b)(3)(B) of such section 552. In 
        prescribing regulations to carry out the requirements 
        of this subsection, the Commission shall designate 
        information described in or obtained pursuant to 
        subparagraph (B) or (C) of paragraph (3) of this 
        subsection as confidential information for purposes of 
        section 24(b)(2) of this title.
  (i) Authority To Limit Disclosure of Information.--
Notwithstanding any other provision of law, the Commission 
shall not be compelled to disclose any information required to 
be reported under subsection (h) or (i) or any information 
supplied to the Commission by any domestic or foreign 
regulatory agency that relates to the financial or operational 
condition of any associated person of a broker or dealer, 
investment bank holding company, or any affiliate of an 
investment bank holding company. Nothing in this subsection 
shall authorize the Commission to withhold information from 
Congress, or prevent the Commission from complying with a 
request for information from any other Federal department or 
agency or any self-regulatory organization requesting the 
information for purposes within the scope of its jurisdiction, 
or complying with an order of a court of the United States in 
an action brought by the United States or the Commission. For 
purposes of section 552 of title 5, United States Code, this 
subsection shall be considered a statute described in 
subsection (b)(3)(B) of such section 552. In prescribing 
regulations to carry out the requirements of this subsection, 
the Commission shall designate information described in or 
obtained pursuant to subparagraphs (A), (B), and (C) of 
subsection (i)(5) as confidential information for purposes of 
section 24(b)(2) of this title.
  (j) Coordination of Examining Authorities.--
          (1) Elimination of duplication.--The Commission and 
        the examining authorities, through cooperation and 
        coordination of examination and oversight activities, 
        shall eliminate any unnecessary and burdensome 
        duplication in the examination process.
          (2) Coordination of examinations.--The Commission and 
        the examining authorities shall share such information, 
        including reports of examinations, customer complaint 
        information, and other nonpublic regulatory 
        information, as appropriate to foster a coordinated 
        approach to regulatory oversight of brokers and dealers 
        that are subject to examination by more than one 
        examining authority.
          (3) Examinations for cause.--At any time, any 
        examining authority may conduct an examination for 
        cause of any broker or dealer subject to its 
        jurisdiction.
          (4) Confidentiality.--
                  (A) In general.--Section 24 shall apply to 
                the sharing of information in accordance with 
                this subsection. The Commission shall take 
                appropriate action under section 24(c) to 
                ensure that such information is not 
                inappropriately disclosed.
                  (B) Appropriate disclosure not prohibited.--
                Nothing in this paragraph authorizes the 
                Commission or any examining authority to 
                withhold information from the Congress, or 
                prevent the Commission or any examining 
                authority from complying with a request for 
                information from any other Federal department 
                or agency requesting the information for 
                purposes within the scope of its jurisdiction, 
                or complying with an order of a court of the 
                United States in an action brought by the 
                United States or the Commission.
          (5) Definition.--For purposes of this subsection, the 
        term ``examining authority'' means a self-regulatory 
        organization registered with the Commission under this 
        title (other than a registered clearing agency) with 
        the authority to examine, inspect, and otherwise 
        oversee the activities of a registered broker or 
        dealer.

           *       *       *       *       *       *       *

                              ----------                              


                    INVESTMENT ADVISERS ACT OF 1940

TITLE II--INVESTMENT ADVISERS

           *       *       *       *       *       *       *


SEC. 208A. PROXY VOTING OF PASSIVELY MANAGED FUNDS.

  (a) Investment Adviser Proxy Voting.--
          (1) In general.--An investment adviser that holds 
        authority to vote a proxy solicited by an issuer 
        pursuant to section 14 of the Securities Exchange Act 
        of 1934 (15 U.S.C. 78n) in connection with any vote of 
        covered securities held by a passively managed fund 
        shall--
                  (A) vote in accordance with the instructions 
                of the beneficial owner of a voting security of 
                the passively managed fund;
                  (B) vote in accordance with the voting 
                recommendations of such issuer; or
                  (C) abstain from voting but make reasonable 
                efforts to be considered present for purposes 
                of establishing a quorum.
          (2) Exception.--Paragraph (1) shall not apply with 
        respect to a vote on a routine matter.
  (b) Safe Harbor.--With respect to a matter that is not a 
routine matter, in the case of a vote described in subsection 
(a)(1), an investment adviser shall not be liable to any person 
under any law or regulation of the United States, any 
constitution, law, or regulation of any State or political 
subdivision thereof, or under any contract or other legally 
enforceable agreement (including any arbitration agreement), 
for any of the following:
          (1) Voting in accordance with the instructions of the 
        beneficial owner of a voting security of the passively 
        managed fund.
          (2) Not soliciting voting instructing from any person 
        under subsection (a)(1) with respect to such vote.
          (3) Voting in accordance with the voting 
        recommendations of an issuer pursuant to subparagraph 
        (B) of such subsection.
          (4) Abstaining from voting in accordance with 
        subparagraph (C) of such subsection.
  (c) Foreign Private Issuers Exemption.--Subsection (a) shall 
not apply with respect to a foreign private issuer if the 
voting policy of the investment advisor with respect to such 
foreign private issuers is fully and fairly disclosed to 
beneficial owners, including the extent to which such policy 
differs from the voting policy for non-exempt issuers.
  (d) Definitions.--In this section:
          (1) Covered security.--The term ``covered 
        security''--
                  (A) means a voting security, as that term is 
                defined in section 2(a) of the Investment 
                Company Act of 1940 (15 U.S.C. 80a-2(a)), in 
                which a qualified fund is invested; and
                  (B) does not include any voting security (as 
                defined in subparagraph (A)) of an issuer 
                registered with the Commission as an investment 
                company under section 8 of the Investment 
                Company Act of 1940 (15 U.S.C. 80a-8).
          (2) Passively managed fund.--The term ``passively 
        managed fund'' means a qualified fund that--
                  (A) is designed to track, or is derived from, 
                an index of securities or a portion of such an 
                index;
                  (B) discloses that the qualified fund is a 
                passive index fund; or
                  (C) allocates not less than 60 percent of the 
                total assets of the qualified fund to an 
                investment strategy that is designed to track, 
                or is derived from, an index of securities or a 
                portion of such an index fund.
          (3) Qualified fund.--The term ``qualified fund'' 
        means--
                  (A) an investment company, as that term is 
                defined in section 3 of the Investment Company 
                Act of 1940 (15 U.S.C. 80a-3);
                  (B) a private fund;
                  (C) an eligible deferred compensation plan, 
                as that term is defined in section 457(b) of 
                the Internal Revenue Code of 1986;
                  (D) a trust, plan, account, or other entity 
                described in section 3(c)(11) of the Investment 
                Company Act of 1940 (15 U.S.C. 80a-3(c)(11));
                  (E) a plan maintained by an employer 
                described in clause (i), (ii), or (iii) of 
                section 403(b)(1)(A) of the Internal Revenue 
                Code of 1986 to provide annuity contracts 
                described in section 403(b) of such Code;
                  (F) a common trust fund, or similar fund, 
                maintained by a bank;
                  (G) any fund established under section 
                8438(b)(1) of title 5, United States Code; or
                  (H) any separate managed account of a client 
                of an investment adviser.
          (4) Registrant.--The term ``registrant'' means an 
        issuer of covered securities.
          (5) Routine matter.--The term ``routine matter''--
                  (A) includes a proposal that relates to--
                          (i) an election with respect to the 
                        board of directors of the registrant;
                          (ii) the compensation of management 
                        or the board of directors of the 
                        registrant;
                          (iii) the selection of auditors;
                          (iv) a matter where there is a 
                        material conflict of interest between 
                        or among the issuer, members of 
                        management, members of the board of 
                        directors, or an affiliate of the 
                        issuer;
                          (v) declassification; or
                          (vi) transactions that would 
                        transform the structure of the 
                        registrant, including--
                                  (I) a merger or 
                                consolidation; and
                                  (II) the sale, lease, or 
                                exchange of all, or 
                                substantially all, of the 
                                property and assets of a 
                                registrant; and
                  (B) does not include--
                          (i) a proposal that is not submitted 
                        to a holder of covered securities by 
                        means of a proxy statement comparable 
                        to that described in section 240.14a-
                        101 of title 17, Code of Federal 
                        Regulations, or any successor 
                        regulation; or
                          (ii) a proposal that is--
                                  (I) the subject of a counter-
                                solicitation; or
                                  (II) part of a proposal made 
                                by a person other than the 
                                applicable registrant.

           *       *       *       *       *       *       *


                     rules, regulations, and orders

  Sec. 211. (a) The Commission shall have authority from time 
to time to make, issue, amend, and rescind such rules and 
regulations and such orders as are necessary or appropriate to 
the exercise of the functions and powers conferred upon the 
Commission elsewhere in this title, including rules and 
regulations defining technical, trade, and other terms used in 
this title, except that the Commission may not define the term 
``client'' for purposes of paragraphs (1) and (2) of section 
206 to include an investor in a private fund managed by an 
investment adviser, if such private fund has entered into an 
advisory contract with such adviser. For the purposes of its 
rules or regulations the Commission may classify persons and 
matters within its jurisdiction and prescribe different 
requirements for different classes of persons or matters.
  (b) Subject to the provisions of chapter 15 of title 44, 
United States Code, and regulations prescribed under the 
authority thereof, the rules and regulations of the Commission 
under this title, and amendments thereof, shall be effective 
upon publication in the manner which the Commission shall 
prescribe, or upon such later date as may be provided in such 
rules and regulations.
  (c) Orders of the Commission under this title shall be issued 
only after appropriate notice and opportunity for hearing. 
Notice to the parties to a proceeding before the Commission 
shall be given by personal service upon each party or by 
registered mail or certified mail or confirmed telegraphic 
notice to the party's last known business address. Notice to 
interested persons, if any, other than parties may be given in 
the same manner or by publication in the Federal Register.
  (d) No provision of this title imposing any liability shall 
apply to any act done or omitted in good faith in conformity 
with any rule, regulation, or order of the Commission, 
notwithstanding that such rule, regulation, or order may, after 
such act or omission, be amended or rescinded or be determined 
by judicial or other authority to be invalid for any reason.
  (e) Disclosure Rules on Private Funds.--The Commission and 
the Commodity Futures Trading Commission shall, after 
consultation with the Council but not later than 12 months 
after the date of enactment of the Private Fund Investment 
Advisers Registration Act of 2010, jointly promulgate rules to 
establish the form and content of the reports required to be 
filed with the Commission under subsection 204(b) and with the 
Commodity Futures Trading Commission by investment advisers 
that are registered both under this title and the Commodity 
Exchange Act (7 U.S.C. 1a et seq.).
  (g) Standard of Conduct.--
          (1) In general.--The Commission may promulgate rules 
        to provide that the standard of conduct for all 
        brokers, dealers, and investment advisers, when 
        providing personalized investment advice about 
        securities to retail customers (and such other 
        customers as the Commission may by rule provide), shall 
        be to act in the best interest of the customer without 
        regard to the financial or other interest of the 
        broker, dealer, or investment adviser providing the 
        advice. In accordance with such rules, any material 
        conflicts of interest shall be disclosed and may be 
        consented to by the customer. Such rules shall provide 
        that such standard of conduct shall be no less 
        stringent than the standard applicable to investment 
        advisers under section 206(1) and (2) of this Act when 
        providing personalized investment advice about 
        securities, except the Commission shall not ascribe a 
        meaning to the term ``customer'' that would include an 
        investor in a private fund managed by an investment 
        adviser, where such private fund has entered into an 
        advisory contract with such adviser. The receipt of 
        compensation based on commission or fees shall not, in 
        and of itself, be considered a violation of such 
        standard applied to a broker, dealer, or investment 
        adviser.
          (2) Retail customer defined.--For purposes of this 
        subsection, the term ``retail customer'' means a 
        natural person, or the legal representative of such 
        natural person, who--
                  (A) receives personalized investment advice 
                about securities from a broker, dealer, or 
                investment adviser; and
                  (B) uses such advice primarily for personal, 
                family, or household purposes.
          (3) Best interest based on pecuniary factors.--
                  (A) In general.--For purposes of paragraph 
                (1), the best interest of a customer shall be 
                determined using pecuniary factors, which may 
                not be subordinated to or limited by non-
                pecuniary factors, unless the customer provides 
                informed consent, in writing, that such non-
                pecuniary factors be considered.
                  (B) Disclosure of pecuniary factors.--If a 
                customer provides a broker, dealer, or 
                investment adviser with the informed consent to 
                consider non-pecuniary factors described under 
                subparagraph (A), the broker, dealer, or 
                investment adviser shall--
                          (i) disclose the expected pecuniary 
                        effects to the customer over a time 
                        period selected by the customer and not 
                        to exceed three years; and
                          (ii) at the end of the time period 
                        described in clause (i), disclose, by 
                        comparison to a reasonably comparable 
                        index or basket of securities selected 
                        by the customer, the actual pecuniary 
                        effects of that time period, including 
                        all fees, costs, and other expenses 
                        incurred to consider non-pecuniary 
                        factors.
                  (C) Pecuniary factor defined.--In this 
                paragraph, the term ``pecuniary factor'' means 
                a factor that a fiduciary prudently determines 
                is expected to have a material effect on the 
                risk or return of an investment based on 
                appropriate investment horizons.
  (h) Other Matters.--The Commission shall--
          (1) facilitate the provision of simple and clear 
        disclosures to investors regarding the terms of their 
        relationships with brokers, dealers, and investment 
        advisers, including any material conflicts of interest; 
        and
          (2) examine and, where appropriate, promulgate rules 
        prohibiting or restricting certain sales practices, 
        conflicts of interest, and compensation schemes for 
        brokers, dealers, and investment advisers that the 
        Commission deems contrary to the public interest and 
        the protection of investors.
  (i) Harmonization of Enforcement.--The enforcement authority 
of the Commission with respect to violations of the standard of 
conduct applicable to an investment adviser shall include--
          (1) the enforcement authority of the Commission with 
        respect to such violations provided under this Act; and
          (2) the enforcement authority of the Commission with 
        respect to violations of the standard of conduct 
        applicable to a broker or dealer providing personalized 
        investment advice about securities to a retail customer 
        under the Securities Exchange Act of 1934, including 
        the authority to impose sanctions for such violations, 
        and
the Commission shall seek to prosecute and sanction violators 
of the standard of conduct applicable to an investment adviser 
under this Act to same extent as the Commission prosecutes and 
sanctions violators of the standard of conduct applicable to a 
broker or dealer providing personalized investment advice about 
securities to a retail customer under the Securities Exchange 
Act of 1934.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    This bill is part of the Republican war on so-called ``woke 
capitalism.'' H.R. 4767 would make it harder for shareholders 
to offer proposals to strengthen the companies that they own, 
targeting shareholder proposals that push companies to be more 
diverse, more inclusive, better managed, and more concerned 
about their impact on our climate. These are all issues that 
research has demonstrated have a significant impact on a 
company's profitability. For example, corporations that are 
actively managing and planning for climate change--which 
includes providing public climate-related disclosures--secure 
an 18% higher return on investment than companies that aren't--
and 67% higher than companies who refuse to disclose their 
emissions.\1\ Furthermore, research shows that diverse boards 
lead to improved financial results; indeed, companies with the 
highest percentages of women board directors outperformed those 
with the least by 53% when it comes to return on equity.\2\ 
Ultimately, this bill runs counter to the most basic principles 
of capitalism and democracy by taking away the ability of the 
holders of capital--investors--from being able to influence 
corporate decisions and make informed investment decisions.
---------------------------------------------------------------------------
    \1\The Guardian, ``Sustainable corporations perform better 
financially, report finds'' (accessed Sep. 25, 2023).
    \2\BoardReady, Lessons from the Pandemic: Board Diversity and 
Performance, (Jul. 13, 2021).
---------------------------------------------------------------------------
    In addition to making it harder for shareholders to offer 
proposals this bill also places burdensome new requirements on 
proxy advisory firms, which provide independent analysis and 
data to help shareholders and their representatives to make 
informed voting decisions on the proposals that are voted on at 
a company's annual meeting. Proxy advisory firms level the 
playing field for investors as their research and 
recommendations offer an independent perspective on proposals 
that can differ from what management is recommending. Proxy 
advisory firms effectively provide a check on management's 
ability to influence votes in their favor, overall increasing 
ordinary investors' say in the corporate decision-making 
process. This bill caters to corporate managers who don't want 
to be bothered by the true owners of the company they run and 
who dislike the fact that proxy advisory firms help 
shareholders get information and analysis beyond what corporate 
managers provide.
    The bill is comprised of eleven titles, each briefly 
discussed below.
           Title I is a direct attempt by Republicans 
        and the corporate managerial class to limit the ability 
        of shareholders to influence the direction of the 
        companies they are invested in. This title would 
        increase the thresholds to resubmit a proposal, in 
        effect, making it harder for shareholders to have their 
        proposals included in a company's annual meeting.
           Title II, like Title I, also makes it harder 
        for shareholders to have their proposals included in a 
        company's annual meeting. Specifically, this title 
        nullifies the SEC's pending amendments\3\ to its 
        shareholder proposal rule regarding implementation, 
        duplication, and resubmission.
---------------------------------------------------------------------------
    \3\Sidley, SEC Proposes Amendments to the Substantial 
Implementation, Duplication, and Resubmission Bases (Jul. 2022).
---------------------------------------------------------------------------
           Title III directly limits shareholders' 
        ability to call for votes on environmental, social, or 
        corporate governance (``ESG'') -related topics--in the 
        process making management less accountable to the 
        desires of their investors. Research shows that the 
        vast majority of investors want companies to disclose 
        information about what they are doing to combat climate 
        risk, instate diverse workforces, and invest in their 
        employees.\4\
---------------------------------------------------------------------------
    \4\PRNewswire, Nuveen ESG Investor Survey (Feb. 2, 2023).
---------------------------------------------------------------------------
           Title IV would allow company management to 
        wholesale exclude any shareholder proposal related to 
        ESG issues.
           Title V asks the SEC to use economic cost-
        benefit analysis to examine the totality of the proxy 
        process; cost-benefit analyses are often used by 
        conservative policy makers as a justification to strike 
        down regulations they find unfavorable.\5\ Cost-benefit 
        analyses are also often flawed because the full impact 
        of many regulations is hard to quantify accurately; 
        they disregard benefits, such as stronger corporate 
        governance or the long term impacts on climate change, 
        that can be difficult to measure but are still critical 
        to the goals of regulation.\6\
---------------------------------------------------------------------------
    \5\Center for American Progress, Reckoning With Conservatives' Bad 
Faith Cost-Benefit Analysis (Aug. 2020).
    \6\Id.
---------------------------------------------------------------------------
           Title VI would compromise the independence 
        of proxy advisory firms by inserting corporate 
        management into their decision-making process. Proxy 
        advisors are a valuable part of our capital markets in 
        large part because they are independent. They help 
        provide independent advice to shareholders to help them 
        make more informed voting decisions.
           Title VII makes proxy advisors liable for 
        failures to disclose material information (such as a 
        proxy advisor's methodology, sources of information, 
        and conflicts of interest) or making material 
        misstatements regarding that advice.
           Title VIII would effectively discourage the 
        use of proxy advisors by requiring extensive and 
        burdensome reporting for institutional investors who 
        choose to utilize the services of a proxy advisor. The 
        title needlessly requires institutional investors who 
        hire proxy advisors to certify that their voting 
        decisions were based solely on the best economic 
        interest of the shareholders they represent; to be 
        clear, institutional investment managers already have 
        existing fiduciary duties and legal obligations to vote 
        proxies in accordance with the best interests of their 
        beneficiaries.
           Title IX outlaws the ability of investment 
        advisers, asset managers, and pension funds--who do not 
        have the ability to conduct their own independent 
        investment research given the sheer number of proxies 
        they must cast on behalf of their investors--to trust 
        the advice of their proxy advisors, and straps the 
        former with the burden of having to conduct their own 
        research which is costly and likely not to be as high 
        quality as the research provided by the expert proxy 
        advisors whom they outsource this task to.\7\
---------------------------------------------------------------------------
    \7\Id.
---------------------------------------------------------------------------
           Title X effectively prevents investment 
        advisers that vote on behalf of shares held by 
        passively managed funds--funds that merely track an 
        industry or market index rather than employing an 
        active buy-or-sell strategy--from voting based on the 
        advice of a proxy advisor.
           Title XI, amongst other things, prevents an 
        investment adviser from considering ESG-related metrics 
        when investing their client's money. Furthermore, the 
        latter part of the title is just another attempt by 
        Republicans to limit the availability of investors to 
        see information related to climate risk as well as to 
        prevent shareholders from having a say in corporate 
        decision-making, this time within the context of 
        municipal (ie, government-issued) bonds.
    Democratic members offered three amendments to this bill, 
all of which Republicans rejected:
    1. An amendment offered by Rep. Vargas which prohibits the 
bill from taking effect if the SEC's economic analysis of the 
bill concludes the bill would limit information that investors 
consider material or limit the ability for shareholders to 
submit proposals.
    2. An amendment offered by Rep. Casten that prohibits the 
bill from going into effect unless the SEC has determined that 
no provisions in the bill will negatively affect State pension 
fund earnings, increase municipal borrowing costs and 
indirectly increase costs to taxpayers.
    3. An amendment offered by Rep. Casten expressing a sense 
of Congress that praises the virtues of capitalism and 
expresses concerns that government should not interfere with 
investor choice and market forces.
    H.R. 4767 is opposed by several groups, including (but not 
limited to): Americans for Financial Reform, Better Markets, US 
SIF, the Interfaith Center on Corporate Responsibility, Ceres, 
OUT Leadership, the US Impact Investing Alliance, the 
Shareholder Rights Group, Green America, PRI, the Family Farm 
Defenders, Food and Water Watch, the Institute for Agriculture 
and Trade Policy, and the Union for Concerned Scientists.
    For these reasons, we oppose H.R. 4767.
            Sincerely,
                                   Maxine Waters,
                                           Ranking Member, Committee on 
                                               Financial Services.
                                   Nydia M. Velazquez,
                                   Brad Sherman,
                                   Gregory W. Meeks,
                                   Stephen F. Lynch,
                                   Emanuel Cleaver II,
                                   Bill Foster,
                                   Juan Vargas,
                                   David Scott,
                                   Al Green,
                                   Jim Himes,
                                   Joyce Beatty,
                                   Vicente Gonzalez,
                                   Sean Casten,
                                   Rashida Tlaib,
                                   Nikema Williams,
                                   Ayanna Pressley,
                                   Sylvia R. Garcia,
                                   Brittany Pettersen.
                                           Members of Congress.

                                  [all]