119-hr3402

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3402 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 3402

 To amend the Securities Exchange Act of 1934 to require certain 
 disclosures by institutional investment managers in connection with 
 proxy advisory firms, and for other purposes.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 May 14, 2025

Mr. Loudermilk introduced the following bill; which was referred to the 
 Committee on Financial Services

_______________________________________________________________________

 A BILL

 To amend the Securities Exchange Act of 1934 to require certain 
 disclosures by institutional investment managers in connection with 
 proxy advisory firms, 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.

 

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) === Definitions. ===
-In this paragraph:
 ``
            (i) Best economic interest.--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.
 ``
            (ii) Proxy advisory firm.--The term `proxy 
 advisory firm'--
 ``
            (I) 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
 ``
            (II) 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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