[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7151 Introduced in House (IH)]
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117th CONGRESS
2d Session
H. R. 7151
To amend the Investment Advisers Act of 1940 and the Employment
Retirement Income Security Act of 1974 to specify that only pecuniary
factors are to be taken into account in determining best interest, and
for other purposes.
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IN THE HOUSE OF REPRESENTATIVES
March 18, 2022
Mr. Barr (for himself and Mr. Allen) introduced the following bill;
which was referred to the Committee on Education and Labor, and in
addition to the Committee on Financial Services, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned
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A BILL
To amend the Investment Advisers Act of 1940 and the Employment
Retirement Income Security Act of 1974 to specify that only pecuniary
factors are to be taken into account in determining best interest, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Ensuring Sound Guidance Act''.
SEC. 2. INVESTMENT ADVISORS ACT OF 1940 AMENDMENT.
(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.--For
purposes of paragraph (1), the best interest of a customer
shall be determined using only pecuniary factors, unless the
customer specifically requests that non-pecuniary factors be
considered.''.
(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).
SEC. 3. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 AMENDMENT.
Section 404(a) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1104(a)) is amended by adding at the end the following:
``(3) Interest based on pecuniary factors.--
``(A) In general.--For purposes of paragraph (1), a
fiduciary of a plan shall be considered to act solely
in the interest of the participants and beneficiaries
of the plan with respect to a plan investment or
investment course of action only if the fiduciary's
action with respect to such investment is based only on
pecuniary factors. The fiduciary may not subordinate
the interests of the participants and beneficiaries in
their retirement income or financial benefits under the
plan to other objectives and may not sacrifice
investment return or take on additional investment risk
to promote non-pecuniary benefits or goals. The weight
given to any pecuniary factor by a fiduciary should
appropriately reflect a prudent assessment of the
impact of such factor on risk-return.
``(B) Investment alternatives for participant-
directed individual account plans.--In selecting
investment options for a pension plan described in
subsection (c)(1)(A), a fiduciary is not prohibited
from considering or including an investment option on
the basis that such investment option promotes non-
pecuniary benefits or goals, provided that the
fiduciary--
``(i) satisfies the requirements of
paragraph (1) and subparagraph (A) in
considering or including any such investment
option; and
``(ii) does not consider or include such
investment option as a default investment (as
defined in the regulations issued by the
Secretary under subsection (c)(5)(A)), or a
component thereof.
``(C) Pecuniary factor defined.--For the purposes
of this paragraph, the term `pecuniary factor' means a
factor that a fiduciary prudently determines is
expected to have a material effect on the risk and
return of an investment based on appropriate investment
horizons consistent with the plan's investment
objectives and the funding policy established pursuant
to section 402(b)(1).''.
SEC. 4. PROHIBITION OF RULE RELATED TO FIDUCIARY PRUDENCE AND LOYALTY.
The Secretary of Labor may not finalize, implement, administer, or
enforce the proposed rule entitled ``Prudence and Loyalty in Selecting
Plan Investments and Exercising Shareholder Rights'' (86 Fed. Reg.
57272) and dated October 14, 2021.
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