[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4648 Introduced in House (IH)]
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118th CONGRESS
1st Session
H. R. 4648
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 14, 2023
Mr. Loudermilk introduced the following bill; which was referred to the
Committee on Financial Services
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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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. DUTIES OF INVESTMENT ADVISORS, ASSET MANAGERS, AND PENSION
FUNDS.
(a) In General.--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 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) Certification requirement.--Each report
required under this paragraph shall be certified by the
chief executive officer and chief financial officer of
the institutional investment manager.
``(D) 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.''.
(b) Proxy Advisory Firm Defined.--Section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended 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.''.
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