[DOCID: f:hr620p1.111]
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111th Congress                                            Rept. 111-620
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================



 
                   SHAREHOLDER PROTECTION ACT OF 2010

                                _______
                                

 September 22, 2010.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 4790]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Financial Services, to whom was referred the 
bill (H.R. 4790) to amend the Securities Exchange Act of 1934 
to require shareholder authorization before a public company 
may make certain political expenditures, and for other 
purposes, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     4
Background and Need for Legislation..............................     5
Hearings.........................................................     6
Committee Consideration..........................................     6
Committee Votes..................................................     7
Committee Oversight Findings.....................................    13
Performance Goals and Objectives.................................    13
New Budget Authority, Entitlement Authority, and Tax Expenditures    14
Committee Cost Estimate..........................................    14
Congressional Budget Office Estimate.............................    14
Federal Mandates Statement.......................................    15
Advisory Committee Statement.....................................    15
Constitutional Authority Statement...............................    15
Applicability to Legislative Branch..............................    15
Earmark Identification...........................................    15
Section-by-Section Analysis of the Legislation...................    16
Changes in Existing Law Made by the Bill, as Reported............    17
Dissenting Views.................................................    21

                               Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Shareholder Protection Act of 2010''.

SEC. 2. FINDINGS.

  Congress finds the following:
          (1) Corporations make significant political contributions and 
        expenditures that directly or indirectly influence the election 
        of candidates and support or oppose political causes. Decisions 
        to use corporate funds for political contributions and 
        expenditures are usually made by corporate boards and 
        executives, rather than shareholders.
          (2) Corporations, acting through their boards and executives, 
        are obligated to conduct business for the best interests of 
        their owners, the shareholders.
          (3) Historically, shareholders have not had a way to know, or 
        to influence, the political activities of corporations they 
        own. Shareholders and the public have a right to know how 
        corporations are spending their funds to make political 
        contributions or expenditures benefitting candidates, political 
        parties, and political causes.
          (4) Corporations should be accountable to their shareholders 
        in making political contributions or expenditures affecting 
        Federal governance and public policy. Requiring the express 
        approval of a corporation's shareholders prior to making 
        political contributions or expenditures will establish 
        necessary accountability.

SEC. 3. SHAREHOLDER APPROVAL OF CORPORATE POLITICAL ACTIVITY.

  The Securities Exchange Act of 1934 is amended by inserting after 
section 14B the following new section:

``SEC. 14C. SHAREHOLDER APPROVAL OF CERTAIN POLITICAL EXPENDITURES AND 
                    DISCLOSURE OF VOTES OF INSTITUTIONAL INVESTORS.

  ``(a) Shareholder Authorization for Political Expenditures.--Any 
solicitation of any proxy or consent or authorization in respect of any 
security of an issuer shall--
          ``(1) contain a description of the specific nature of any 
        expenditures for political activities proposed to be made by 
        the issuer for the forthcoming fiscal year not previously 
        approved, to the extent the specific nature is known to the 
        issuer and including the total amount of such proposed 
        expenditures; and
          ``(2) provide for a separate shareholder vote to authorize 
        such proposed expenditures in such amount.
  ``(b) Requirements for Expenditures.--No issuer shall make any 
expenditure for political activities in any fiscal year unless--
          ``(1) such expenditure is of the nature of those proposed by 
        the issuer pursuant to subsection (a)(1); and
          ``(2) authorization for such expenditures has been granted by 
        votes representing a majority of outstanding shares pursuant to 
        subsection (a)(2).
  ``(c) Fiduciary Duty; Liability.--A violation of subsection (b) shall 
be considered a breach of a fiduciary duty of the officers and 
directors who authorized such an expenditure. The officers and 
directors who authorize such an expenditure without first obtaining 
such authorization of shareholders shall be jointly and severally 
liable in any action brought in any court of competent jurisdiction to 
any individual or class of individuals who held shares at the time such 
expenditure was made for an amount equal to 3 times the amount of such 
expenditure.
  ``(d) Definition of Expenditure for Political Activities.--As used in 
this section:
          ``(1) The term `expenditure for political activities' means--
                  ``(A) an independent expenditure, as such term is 
                defined in section 301(17) of the Federal Election 
                Campaign Act of 1971 (2 U.S.C. 431(17));
                  ``(B) an electioneering communication, as such term 
                is defined in section 304(f)(3) of such Act (2 U.S.C. 
                434(f)(3)) and any other public communication (as such 
                term is defined in section 301(22) of such Act (2 
                U.S.C. 431(22))) that would be an electioneering 
                communication if it were a broadcast, cable, or 
                satellite communication; or
                  ``(C) dues or other payments to trade associations or 
                other tax exempt organizations that are, or could 
                reasonably be anticipated to be, used or transferred to 
                another association or organization for the purposes 
                described in subparagraph (A) or (B).
          ``(2) Such term shall not include--
                  ``(A) direct lobbying efforts through registered 
                lobbyists employed or hired by the issuer;
                  ``(B) communications by an issuer to its shareholders 
                and executive or administrative personnel and their 
                families; or
                  ``(C) the establishment and administration of 
                contributions to a separate segregated fund to be 
                utilized for political purposes by a corporation.
  ``(e) Disclosure of Votes.--Every institutional investment manager 
subject to section 13(f) shall report at least annually how it voted on 
any shareholder vote pursuant to subsection (a), unless such vote is 
otherwise required to be reported publicly by rule or regulation of the 
Commission. Not later than 6 months after the date of enactment of this 
section, the Commission shall issue rules and regulations to implement 
this subsection. Such rules shall require that such report be made not 
later than 30 days after such a vote and be made available to the 
public through the EDGAR system as soon as practicable.
  ``(f) Safe Harbor for Certain Divestment Decisions.--Notwithstanding 
any other provision of Federal or State law, no person may bring any 
civil, criminal, or administrative action against any institutional 
investment manager, or any employee, officer, or director thereof, 
based solely upon a decision of the investment manager to divest from, 
or not to invest in, securities of an issuer because of expenditures 
for political activities made by that issuer. This subsection shall not 
apply to any institutional investment manager, or any employee, 
officer, or director thereof, unless the institutional investment 
manager makes disclosures in accordance with regulations prescribed by 
the Commission.''.

SEC. 4. REQUIRED BOARD VOTE ON CORPORATE EXPENDITURES FOR POLITICAL 
                    ACTIVITIES.

  (a) Required Vote.--The Securities Exchange Act of 1934 is amended by 
adding after section 16 the following new section:

``SEC. 16A. REQUIRED BOARD VOTE ON CORPORATE EXPENDITURES FOR POLITICAL 
                    ACTIVITIES.

  ``(a) Listing on Exchanges.--Effective not later than 180 days after 
the date of enactment of this section, the Commission shall, by rule, 
direct the national securities exchanges and national securities 
associations to prohibit the listing of any class of equity security of 
an issuer that is not in compliance with the requirements of any 
portion of subsection (b).
  ``(b) Requirement for Vote in Corporate Bylaws.--The corporate bylaws 
of an issuer shall expressly provide for a vote of the directors of the 
issuer on any individual expenditure for political activities (as such 
term is defined in section 14C(d)(1)) in excess of $50,000, or any 
expenditure that makes the total amount spent by the issuer for the 
particular election (as such term is defined in section 301(1) of the 
Federal Election Campaign Act of 1971 (2 U.S.C. 431(1))) $50,000 or 
more. An issuer shall make publicly available the individual votes of 
the directors required by the preceding sentence within 48 hours of the 
vote, including in a clear and conspicuous location on the Internet 
website of the issuer.''.
  (b) No Effect on Determination of Coordination With Candidates or 
Campaigns.--For purposes of determining whether an expenditure for 
political activities by an issuer under the Securities Exchange Act of 
1934 is an independent expenditure under the Federal Election Campaign 
Act of 1971, the expenditure may not be treated as made in concert or 
cooperation with, or at the request or suggestion of, any candidate or 
committee solely on the grounds that any director of the issuer voted 
on the expenditure as required under section 16A(b) of the Securities 
Exchange Act of 1934 (as added by subsection (a)).

SEC. 5. REPORTING REQUIREMENTS.

  Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is 
amended by adding at the end the following:
  ``(r) Reporting Requirements Relating to Certain Political 
Expenditures.--
          ``(1) Quarterly reports.--Not later than 180 days after the 
        date of enactment of this subsection, the Commission shall 
        modify its reporting rules under this section to require 
        issuers to disclose quarterly any expenditure for political 
        activities (as such term is defined in section 14C(d)(1)) made 
        during the preceding quarter and the individual votes by board 
        members authorizing such expenditures as required under section 
        16A(b). Such a report shall be filed with the Commission and 
        provided to shareholders and shall include--
                  ``(A) the date of each expenditure;
                  ``(B) the amount of each expenditure;
                  ``(C) if the expenditure was made for or against a 
                candidate, the name of the candidate, the office sought 
                by and the political party affiliation of the 
                candidate; and
                  ``(D) the name or identity of trade associations or 
                other tax-exempt organizations which receive dues or 
                other payments as described in section 14C(d)(1)(B).
          ``(2) Annual reports.--Not later than 180 days after the date 
        of enactment of this subsection, the Commission shall, by rule, 
        require each issuer to include in its annual report to 
        shareholders an annual summary of all expenditures for 
        political activities (as such term is defined in section 
        14C(d)(1)) made during the preceding year in excess of $10,000.
          ``(3) Disclosure of materials purchased by political 
        expenditures.--The Commission shall, by rule, require each 
        issuer to obtain and disclose in the reports required under 
        this section, any materials created with or purchased by any 
        expenditure for political activities (as such term is defined 
        in section 14C(d)) made by the issuer. Such rule shall also 
        require that each issuer disclose such materials in a clear and 
        conspicuous location on the Internet website of the issuer 
        within 48 hours of obtaining the materials.
          ``(4) Public availability.--The Commission shall ensure that, 
        to the greatest extent practicable, the quarterly reports 
        required by this subsection are publicly available through the 
        Commission website and through the EDGAR system in a manner 
        that is searchable, sortable, and downloadable, consistent with 
        the requirements of section 24.''.

SEC. 6. REPORTS.

  The Securities and Exchange Commission shall annually assess the 
compliance of public corporations and their management with the 
requirements of the amendments made by this Act, and shall transmit to 
Congress an annual report of its findings. The Comptroller General of 
the United States shall periodically evaluate and report to Congress on 
the effectiveness of the Securities and Exchange Commission's oversight 
of the reporting and disclosure requirements of the amendments made by 
this Act.

SEC. 7. SEVERABILITY.

  If any provision of this Act, an amendment made by this Act, or the 
application of such provision or amendment to any person or 
circumstance is held to be unconstitutional, the remainder of this Act, 
the amendments made by this Act, and the application of such provision 
or amendment to any person or circumstance shall not be affected 
thereby.

                          Purpose and Summary

    The Shareholder Protection Act of 2010 (H.R. 4790) is a 
response to the U.S. Supreme Court's decision in Citizens 
United v. Federal Election Commission, 558 U.S. 50 (2010).\1\ 
In Citizens United, the Court held that corporations have a 
First Amendment right to spend unlimited amounts of general 
treasury funds on political expenditures and electioneering 
communications. The ruling invalidated longstanding provisions 
in U.S. election laws and raised fresh concerns about corporate 
influence in our political process.
---------------------------------------------------------------------------
    \1\Available at http://www.supremecourtus.gov/opinions/09pdf/08-
205.pdf.
---------------------------------------------------------------------------
    To address those concerns, the Shareholder Protection Act 
gives shareholders of public companies the right to vote on the 
company's annual budget for political expenditures. The bill 
makes that right enforceable through actions for breach of 
fiduciary duty against officers and directors who authorize 
political expenditures that are not in the nature of those set 
forth in the annual budget. The bill also requires a board vote 
on certain individual political expenditures, including those 
exceeding $50,000. The bill enhances transparency by requiring 
public companies to make quarterly and annual reports regarding 
their political expenditures, and by requiring institutional 
investment managers to publicly report their proxy votes on 
political expenditures within 30 days.

                  Background and Need for Legislation

    U.S. election laws have long prohibited corporations from 
using general treasury funds to pay for independent 
expenditures that advocate the election or defeat of political 
candidates. On January 21, 2010, the U.S. Supreme Court 
invalidated those provisions in Citizens United. In its 5-to-4 
decision, the Court held in effect that corporations have a 
First Amendment right to spend unlimited amounts of money from 
their general treasuries to influence Federal elections through 
independent expenditures and electioneering communications. In 
arriving at its decision, the Court overturned precedents that 
had limited corporate influence in politics for decades.\2\
---------------------------------------------------------------------------
    \2\For example, see Austin v. Michigan Chamber of Commerce, 494 
U.S. 652 (2000), and McConnell v. Federal Election Commission, 540 U.S. 
93 (2003).
---------------------------------------------------------------------------
    The case arose when Citizens United, a non-profit 
corporation, sought injunctive and declaratory relief against 
enforcement of the Bipartisan Campaign Reform Act (BCRA). BCRA 
prohibited corporations and labor unions from using general 
treasury funds--as opposed to funds segregated in political 
action committees or PACs--either for ``electioneering 
communications'' or for express advocacy in favor of or in 
opposition to a candidate. Citizens United had produced a 90-
minute film entitled Hillary: The Movie, which was critical of 
presidential candidate Hillary Clinton. Citizens United wanted 
to advertise and broadcast the film on cable television, but 
feared that doing so would subject it to civil and criminal 
penalties under BCRA. It therefore sought judicial protection.
    The Supreme Court sided with Citizens United, struck down 
the statutory provisions at issue, and established the broad 
principle that, under the First Amendment, independent 
corporate expenditures on political advocacy may not be 
prohibited.
    The decision generated significant controversy. Many 
criticized it as a major setback in the effort to ensure that 
corporations do not unduly influence the electoral process. 
Some commentators suggested that short of public financing of 
political campaigns or a constitutional amendment, little could 
be done legislatively to undo Citizens United. In testimony 
before the House Judiciary Committee, however, Professor 
Laurence Tribe observed that ``despite the blow they [the 
majority of justices] struck against the interests of ordinary 
citizens and genuine self-government, they did not entirely 
foreclose meaningful avenues of legislative relief short of 
constitutional amendment.''\3\
---------------------------------------------------------------------------
    \3\Prepared Testimony of Laurence H. Tribe, House Judiciary 
Committee, February 2, 2010, available at http://judiciary.house.gov/
hearings/pdf/Tribe100203.pdf
---------------------------------------------------------------------------
    In keeping with Professor Tribe's comment, Members of the 
House and Senate introduced a number of bills that through 
various means sought to mitigate the impact of Citizens United 
on political campaigns and to curb the influence of 
corporations on our elections. Among them is H.R. 4790.
    H.R. 4790 has two goals: (1) it gives shareholders of 
public companies more control over a company's political 
expenditures, and (2) it subjects those expenditures to greater 
transparency. In terms of shareholder control, H.R. 4790 
requires a public company's proxy solicitations to include a 
description of the nature and amount of political expenditures 
planned for the ensuing fiscal year. The bill prohibits 
companies from making any political expenditures unless they 
are consistent with the types of expenditures described in the 
proxy materials and unless they have been approved by a 
majority shareholder vote. The bill makes officers and 
directors jointly and severally liable for breach of fiduciary 
duty if they authorize political expenditures without 
shareholder approval, and it provides for treble damages.
    The bill also requires a board vote on any individual 
political expenditure exceeding $50,000, or any expenditure 
causing the total amount spent in an election to exceed 
$50,000. Those votes must be posted on the issuer's website 
within 48 hours.
    H.R. 4790 promotes transparency in several ways. The bill 
requires public companies to make quarterly public disclosure 
of all expenditures for political activities during the 
preceding quarter, along with the individual votes of board 
members authorizing such expenditures. Those reports must 
include copies of any materials created or purchased with 
political expenditures, and must be posted on the company's 
website within 48 hours. In addition, public companies will be 
required to include in their annual reports a summary of all 
political expenditures over $10,000.
    The bill requires institutional investment managers to 
report at least annually on how they voted on a public 
company's proposed political expenditures. Those reports must 
be made within 30 days and placed on the EDGAR system as soon 
as practicable.
    The bill defines ``political expenditures'' as independent 
expenditures, electioneering and other public communications, 
and payments to trade associations to fund political activity. 
Direct lobbying, communications by issuers to shareholders, and 
establishment of political action committees are excluded from 
the definition.

                                Hearings

    The Subcommittee on Capital Markets, Insurance, and 
Government Sponsored Enterprises held a hearing entitled 
``Corporate Governance After Citizens United'' on March 11, 
2010. At the hearing, the following witnesses testified:
          <bullet> Professor John C. Coffee, Jr., Adolf A. 
        Berle Professor of Law, Columbia Law School
          <bullet> Mr. Karl Sandstrom, Of Counsel, Perkins Cole
          <bullet> Ms. Ann Yerger, Executive Director, Council 
        of Institutional Investors
          <bullet> Professor J.W. Verret, Assistant Professor 
        of Law, George Mason University School of Law
          <bullet> Ms. Nell Minow, Editor and Co-Founder, The 
        Corporate Library
          <bullet> Professor Michael Klausner, Nancy and 
        Charles Munger Professor of Business and Professor of 
        Law, Stanford Law School
          <bullet> Mr. Jan Baran, Partner, Wiley Rein LLP

                        Committee Consideration

    The Committee on Financial Services met in open session on 
July 28, 2010, and on July 29, 2010, ordered H.R. 4790, the 
Shareholder Protection Act of 2010, as amended, favorably 
reported to the House by a record vote of 35 yeas and 28 nays.

                            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 motion to report legislation and amendments thereto. A 
motion by Mr. Frank to report the bill, as amended, to the 
House with a favorable recommendation was agreed to by a record 
vote of 35 yeas and 28 nays (Record vote no. FC-143). The names 
of Members voting for and against follow:

                                             RECORD VOTE NO. FC-143
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................        X   ........  .........  Mr. Bachus.......  ........        X   .........
Mr. Kanjorski..................        X   ........  .........  Mr. Castle.......  ........        X   .........
Ms. Waters.....................        X   ........  .........  Mr. King (NY)....  ........  ........  .........
Mrs. Maloney...................        X   ........  .........  Mr. Royce........  ........        X   .........
Mr. Gutierrez..................        X   ........  .........  Mr. Lucas........  ........        X   .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........  ........        X   .........
Mr. Watt.......................        X   ........  .........  Mr. Manzullo.....  ........        X   .........
Mr. Ackerman...................        X   ........  .........  Mr. Jones........  ........  ........  .........
Mr. Sherman....................        X   ........  .........  Mrs. Biggert.....  ........        X   .........
Mr. Meeks......................        X   ........  .........  Mr. Miller (CA)..  ........        X   .........
Mr. Moore (KS).................        X   ........  .........  Mrs. Capito......  ........        X   .........
Mr. Capuano....................        X   ........  .........  Mr. Hensarling...  ........        X   .........
Mr. Hinojosa...................  ........  ........  .........  Mr. Garrett (NJ).  ........        X   .........
Mr. Clay.......................  ........  ........  .........  Mr. Barrett (SC).  ........  ........  .........
Mrs. McCarthy..................        X   ........  .........  Mr. Gerlach......  ........        X   .........
Mr. Baca.......................        X   ........  .........  Mr. Neugebauer...  ........        X   .........
Mr. Lynch......................  ........  ........  .........  Mr. Price (GA)...  ........        X   .........
Mr. Miller (NC)................        X   ........  .........  Mr. McHenry......  ........        X   .........
Mr. Scott......................        X   ........  .........  Mr. Campbell.....  ........        X   .........
Mr. Green......................        X   ........  .........  Mr. Putnam.......  ........        X   .........
Mr. Cleaver....................        X   ........  .........  Mrs. Bachmann....  ........        X   .........
Ms. Bean.......................        X   ........  .........  Mr. Marchant.....  ........  ........  .........
Ms. Moore (WI).................        X   ........  .........  Mr. McCotter.....  ........        X   .........
Mr. Hodes......................        X   ........  .........  Mr. McCarthy.....  ........        X   .........
Mr. Ellison....................        X   ........  .........  Mr. Posey........  ........        X   .........
Mr. Klein......................        X   ........  .........  Ms. Jenkins......  ........        X   .........
Mr. Wilson.....................        X   ........  .........  Mr. Lee..........  ........        X   .........
Mr. Perlmutter.................        X   ........  .........  Mr. Paulsen......  ........        X   .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........  ........        X   .........
Mr. Foster.....................        X   ........  .........
Mr. Carson.....................        X   ........  .........
Ms. Speier.....................        X   ........  .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................        X   ........  .........
Ms. Kilroy.....................        X   ........  .........
Mr. Driehaus...................        X   ........  .........
Ms. Kosmas.....................        X   ........  .........
Mr. Grayson....................        X   ........  .........
Mr. Himes......................        X   ........  .........
Mr. Peters.....................        X   ........  .........
Mr. Maffei.....................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

    During consideration of the bill, the following amendments 
were disposed of by record votes. The names of Members voting 
for and against follow:
    An amendment by Mr. Grayson (and Mr. Capuano), no. 1a, to 
the amendment offered by Mr. Capuano, no. 1, a manager's 
amendment, was agreed to by a record vote of 34 yeas and 25 
nays (FC-136):

                                             RECORD VOTE NO. FC-136
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................        X   ........  .........  Mr. Bachus.......  ........        X   .........
Mr. Kanjorski..................        X   ........  .........  Mr. Castle.......  ........        X   .........
Ms. Waters.....................        X   ........  .........  Mr. King (NY)....  ........  ........  .........
Mrs. Maloney...................        X   ........  .........  Mr. Royce........  ........        X   .........
Mr. Gutierrez..................        X   ........  .........  Mr. Lucas........  ........        X   .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........  ........        X   .........
Mr. Watt.......................        X   ........  .........  Mr. Manzullo.....  ........  ........  .........
Mr. Ackerman...................        X   ........  .........  Mr. Jones........  ........  ........  .........
Mr. Sherman....................        X   ........  .........  Mrs. Biggert.....  ........        X   .........
Mr. Meeks......................        X   ........  .........  Mr. Miller (CA)..  ........        X   .........
Mr. Moore (KS).................        X   ........  .........  Mrs. Capito......  ........        X   .........
Mr. Capuano....................        X   ........  .........  Mr. Hensarling...  ........        X   .........
Mr. Hinojosa...................  ........  ........  .........  Mr. Garrett (NJ).  ........        X   .........
Mr. Clay.......................  ........  ........  .........  Mr. Barrett (SC).  ........  ........  .........
Mrs. McCarthy..................        X   ........  .........  Mr. Gerlach......  ........        X   .........
Mr. Baca.......................        X   ........  .........  Mr. Neugebauer...  ........        X   .........
Mr. Lynch......................  ........  ........  .........  Mr. Price (GA)...  ........        X   .........
Mr. Miller (NC)................        X   ........  .........  Mr. McHenry......  ........        X   .........
Mr. Scott......................        X   ........  .........  Mr. Campbell.....  ........  ........  .........
Mr. Green......................        X   ........  .........  Mr. Putnam.......  ........        X   .........
Mr. Cleaver....................        X   ........  .........  Mrs. Bachmann....  ........        X   .........
Ms. Bean.......................        X   ........  .........  Mr. Marchant.....  ........  ........  .........
Ms. Moore (WI).................  ........  ........  .........  Mr. McCotter.....  ........        X   .........
Mr. Hodes......................        X   ........  .........  Mr. McCarthy.....  ........        X   .........
Mr. Ellison....................        X   ........  .........  Mr. Posey........  ........  ........  .........
Mr. Klein......................        X   ........  .........  Ms. Jenkins......  ........        X   .........
Mr. Wilson.....................        X   ........  .........  Mr. Lee..........  ........        X   .........
Mr. Perlmutter.................        X   ........  .........  Mr. Paulsen......  ........        X   .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........  ........        X   .........
Mr. Foster.....................        X   ........  .........
Mr. Carson.....................        X   ........  .........
Ms. Speier.....................        X   ........  .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................        X   ........  .........
Ms. Kilroy.....................        X   ........  .........
Mr. Driehaus...................        X   ........  .........
Ms. Kosmas.....................        X   ........  .........
Mr. Grayson....................        X   ........  .........
Mr. Himes......................        X   ........  .........
Mr. Peters.....................        X   ........  .........
Mr. Maffei.....................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Ms. Jenkins, no. 2, striking section 
14A(d)(C) (relating to the definition of `expenditure for 
political activities') was not agreed to by a record vote of 25 
yeas and 37 nays (Record vote no. FC-137):

                                             RECORD VOTE NO. FC-137
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....  ........  ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....  ........  ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........  ........  ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........  ........  .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........  ........  .........  Mr. Barrett (SC).  ........  ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........  ........  .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....  ........  ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Ms. Speier.....................  ........        X   .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................        X   ........  .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Carson, no. 5, regarding liability 
amount equal to 3 times expenditure, was agreed to by a record 
vote of 33 yeas and 30 nays (Record vote no. FC-138):

                                             RECORD VOTE NO. FC-138
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................        X   ........  .........  Mr. Bachus.......  ........        x   .........
Mr. Kanjorski..................        X   ........  .........  Mr. Castle.......  ........        X   .........
Ms. Waters.....................        X   ........  .........  Mr. King (NY)....  ........  ........  .........
Mrs. Maloney...................        X   ........  .........  Mr. Royce........  ........        X   .........
Mr. Gutierrez..................        X   ........  .........  Mr. Lucas........  ........        X   .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........  ........        X   .........
Mr. Watt.......................        X   ........  .........  Mr. Manzullo.....  ........        X   .........
Mr. Ackerman...................        X   ........  .........  Mr. Jones........  ........  ........  .........
Mr. Sherman....................        X   ........  .........  Mrs. Biggert.....  ........        X   .........
Mr. Meeks......................        X   ........  .........  Mr. Miller (CA)..  ........        X   .........
Mr. Moore (KS).................        X   ........  .........  Mrs. Capito......  ........        X   .........
Mr. Capuano....................        X   ........  .........  Mr. Hensarling...  ........        X   .........
Mr. Hinojosa...................  ........  ........  .........  Mr. Garrett (NJ).  ........        X   .........
Mr. Clay.......................  ........  ........  .........  Mr. Barrett (SC).  ........  ........  .........
Mrs. McCarthy..................        X   ........  .........  Mr. Gerlach......  ........        X   .........
Mr. Baca.......................        X   ........  .........  Mr. Neugebauer...  ........        X   .........
Mr. Lynch......................  ........  ........  .........  Mr. Price (GA)...  ........        X   .........
Mr. Miller (NC)................        X   ........  .........  Mr. McHenry......  ........        X   .........
Mr. Scott......................        X   ........  .........  Mr. Campbell.....  ........        X   .........
Mr. Green......................        X   ........  .........  Mr. Putnam.......  ........        X   .........
Mr. Cleaver....................        X   ........  .........  Mrs. Bachmann....  ........        X   .........
Ms. Bean.......................        X   ........  .........  Mr. Marchant.....  ........  ........  .........
Ms. Moore (WI).................        X   ........  .........  Mr. McCotter.....  ........        X   .........
Mr. Hodes......................        X   ........  .........  Mr. McCarthy.....  ........        X   .........
Mr. Ellison....................        X   ........  .........  Mr. Posey........  ........        X   .........
Mr. Klein......................        X   ........  .........  Ms. Jenkins......  ........        X   .........
Mr. Wilson.....................        X   ........  .........  Mr. Lee..........  ........        X   .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......  ........        X   .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........  ........        X   .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................        X   ........  .........
Ms. Speier.....................        X   ........  .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................        X   ........  .........
Ms. Kilroy.....................        X   ........  .........
Mr. Driehaus...................        X   ........  .........
Ms. Kosmas.....................        X   ........  .........
Mr. Grayson....................        X   ........  .........
Mr. Himes......................        X   ........  .........
Mr. Peters.....................        X   ........  .........
Mr. Maffei.....................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Castle, no. 6, relating to exemption 
under state law, was not agreed to by a record vote of 25 yeas 
and 38 nays (Record vote no. FC-139):

                                             RECORD VOTE NO. FC-139
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....  ........  ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........  ........  ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........  ........  .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........  ........  .........  Mr. Barrett (SC).  ........  ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........  ........  .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....  ........  ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Ms. Speier.....................  ........        X   .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Hensarling, no. 8, relating to the 
effective date, was not agreed to by a record vote of 26 yeas 
and 37 nays (Record vote no. FC-140):

                                              RECORD VOTE NO. FC-140
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....  ........  ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........  ........  ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........  ........  .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........  ........  .........  Mr. Barrett (SC).  ........  ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........  ........  .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....  ........  ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Ms. Speier.....................  ........        X   .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................        X   ........  .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment in the nature of a substitute by Mr. Castle, 
no. 9, was not agreed to by a record vote of 25 yeas and 38 
nays (Record vote no. FC-141):

                                              RECORD VOTE NO. FC-141
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....  ........  ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........  ........  ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........  ........  .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........  ........  .........  Mr. Barrett (SC).  ........  ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........  ........  .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....  ........  ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Ms. Speier.....................  ........        X   .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment by Mr. Garrett, no. 10, relating to public 
plan transparency, was not agreed to by a record vote of 25 
yeas and 38 nays (Record vote no. FC-142):

                                              RECORD VOTE NO. FC-142
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....  ........  ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........        X   ........  .........
Ms. Velazquez..................  ........  ........  .........  Mr. Paul.........        X   ........  .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........  ........  ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..        X   ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......        X   ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........  ........  .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........  ........  .........  Mr. Barrett (SC).  ........  ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........  ........  .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....  ........  ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Ms. Speier.....................  ........        X   .........
Mr. Childers...................  ........        X   .........
Mr. Minnick....................  ........        X   .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    The following other amendments were also considered:
    An amendment by Mr. Capuano, no. 1, a manager's amendment, 
as amended by the Grayson amendment, no. 1a, was agreed to by a 
voice vote.
    An amendment by Mr. Grayson (and Mr. Capuano), no. 3, 
relating to disclosure of materials purchased by political 
expenditures, was agreed to by a voice vote.
    An amendment in the nature of a substitute by Mrs. Biggert, 
no. 4, was not agreed to by a voice vote.
    An amendment by Mr. Capuano, no. 7, relating to the annual 
nature of the proxy requirement, as modified, was agreed to by 
a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a hearing and made 
findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 4790 is a response to the decision of the U.S. Supreme 
Court in the Citizens United case and has two goals: (1) giving 
shareholders of public companies more control over a company's 
political expenditures, and (2) subjecting those expenditures 
to greater transparency.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                                September 14, 2010.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4790, the 
Shareholder Protection Act of 2010.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 4790--Shareholder Protection Act of 2010

    H.R. 4790 would require corporations that are registered 
with the Securities and Exchange Commission (SEC) to provide 
shareholders an opportunity to vote on the corporation's 
proposed expenditures for certain political activities for the 
upcoming year. Further, the bill would prohibit security 
exchanges from listing stocks of corporations that do not 
require the board of directors to approve political 
expenditures over $50,000 or any expenditure that would cause 
the amount spent on political activities to exceed $50,000 in a 
fiscal year. The SEC would be required to develop regulations 
to enforce the new requirements and to prepare an annual report 
that assesses compliance.
    Based on information from the SEC, CBO estimates that 
developing and enforcing the new requirements in H.R. 4790 
would not significantly increase spending subject to 
appropriation. Enacting H.R. 4790 could increase collections of 
civil and criminal penalties, thus increasing federal revenues 
and direct spending; therefore, pay-as-you-go procedures apply. 
However, CBO estimates that such collections and spending would 
not be significant in any year.
    The requirements on corporations would impose 
intergovernmental and private-sector mandates, as defined in 
the Unfunded Mandates Reform Act (UMRA). In addition, the bill 
would impose reporting requirements on investment managers and 
preempt state securities laws. Based on information from the 
SEC, CBO estimates that the costs of complying with those 
mandates would be small.
    H.R. 4790 also would prevent public or private investors 
from seeking damages from investment managers on grounds that 
the manager made investment decisions based on a corporation's 
political activities. Because of uncertainty about the number 
of such claims that would be filed, CBO cannot estimate the 
cost of that mandate and, consequently, cannot determine 
whether the aggregate costs of intergovernmental or private-
sector mandates in the bill would exceed the annual thresholds 
established in UMRA ($70 million and $141 million, 
respectively, in 2010, adjusted annually for inflation).
    The CBO staff contacts for this estimate are Susan Willie 
(for federal costs) and Elizabeth Cove Delisle and Brian Prest 
(for the intergovernmental and private-sector impact). The 
estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  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

    H.R. 4790 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

             Section-by-Section Analysis of the Legislation


Sec. 1. Short title

    This section designates the short title of the bill as the 
``Shareholder Protection Act of 2010.''

Sec. 2. Findings

    This section sets forth several findings that support 
giving shareholders the right to vote on corporate political 
expenditures and making those expenditures more transparent.

Sec. 3. Shareholder approval of corporate political activity

    This section amends the Securities Exchange Act of 1934 
(Exchange Act) to require a separate shareholder vote on 
political expenditures by public companies. Proxy solicitations 
must include a description of the specific nature and the total 
amount of the proposed expenditures for political activities to 
be made for the upcoming fiscal year, except for previously 
approved expenditures. Public companies may not make political 
expenditures unless they are in the nature of those described 
in the shareholder proxy and authorized by votes representing a 
majority of outstanding shares.
    This section makes officers and directors jointly and 
severally liable for breach of fiduciary duty if they authorize 
expenditures in violation of the section. This liability is for 
three times the amount of any unauthorized expenditure and is 
owed to any shareholders who held shares at the time the 
unauthorized expenditures were made.
    In addition, this section defines the term ``expenditure 
for political activities'' to include independent expenditures 
as defined by the Federal Election Campaign Act (FECA); 
``electioneering communications'' and other ``public 
communications'' (such as printed materials) as defined by 
FECA; and dues or other payments to trade associations or other 
tax-exempt organizations that ``are, or could reasonably be 
anticipated to be,'' used or transferred to another association 
or organization for independent expenditures or electioneering 
communications. The term, however, excludes direct lobbying 
efforts through registered lobbyists; communications to 
shareholders, executives, and administrative personnel and 
their families; and funding related to the establishment and 
administration of political action committees.
    This section of the bill also amends the Exchange Act to 
require institutional investment managers to disclose at least 
annually how they voted on corporate political expenditures. 
Those reports must be made within 30 days after the votes are 
taken and made available through the EDGAR system as soon as 
practicable. The U.S. Securities and Exchange Commission (SEC) 
must issue rules within six months of enactment to implement 
this disclosure requirement.
    This section also creates a safe harbor from any civil, 
criminal, or administrative action against any institutional 
investment manager based solely upon the investment manager's 
decision to divest from, or not to invest in, securities of a 
company because of political expenditures made by that company. 
The safe harbor is unavailable, however, unless the investment 
manager complies with any disclosure obligations applicable 
under the SEC's rules.

Sec. 4. Required board vote on corporate expenditures for political 
        activities

    This section amends the Exchange Act to require the SEC, 
within 180 days of enactment, to issue rules directing national 
securities exchanges and associations to prohibit the listing 
of any securities of companies that do not expressly provide 
for a board of directors vote on certain political 
expenditures. Board votes are required on any individual 
expenditure for political activities in excess of $50,000, or 
on any expenditure causing the total amount spent in an 
election to exceed $50,000. Companies must make the individual 
votes of the directors publicly available within 48 hours, and 
must post the votes clearly on the company's website.
    This section also clarifies that a director's vote on a 
political expenditure does not affect whether or not the 
expenditure is deemed to be an independent expenditure within 
the meaning of FECA.

Sec. 5. Reporting requirements

    This section requires the SEC, within 180 days of 
enactment, to amend its reporting rules so that public 
companies must disclose to shareholders, on a quarterly basis, 
any political expenditures made during the preceding quarter 
and the individual votes of board members authorizing such 
expenditures. These reports must include the date and amount of 
each expenditure; the name, party, and office of any candidate 
who was the subject of an expenditure; and the identity of any 
trade association or other organization that received dues or 
other payments.
    The SEC must ensure that the quarterly reports are publicly 
available through the SEC's website and through the EDGAR 
system. Companies must include in those reports any materials 
created or purchased with political expenditures, and must post 
those materials on their websites within 48 hours.
    Section 5 also requires the SEC to issue rules obligating 
public companies to include in their annual reports a summary 
of all political expenditures over $10,000.

Sec. 6. Reports

    This section requires the SEC to make an annual assessment 
of compliance with the Act by public companies and their 
managements, and to report its findings to Congress. It also 
requires the Comptroller General to periodically evaluate and 
report to Congress on the SEC's oversight of the reporting and 
disclosure requirements in the Act.

Sec. 7. Severability

    This section clarifies that if any provision of the bill is 
held to be unconstitutional, then the remainder of the bill is 
not affected.

         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 (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

                    SECURITIES EXCHANGE ACT OF 1934


TITLE I--REGULATION OF SECURITIES EXCHANGES

           *       *       *       *       *       *       *



                      PERIODICAL AND OTHER REPORTS

  Sec. 13. (a) * * *

           *       *       *       *       *       *       *

  (r) Reporting Requirements Relating to Certain Political 
Expenditures.--
          (1) Quarterly reports.--Not later than 180 days after 
        the date of enactment of this subsection, the 
        Commission shall modify its reporting rules under this 
        section to require issuers to disclose quarterly any 
        expenditure for political activities (as such term is 
        defined in section 14C(d)(1)) made during the preceding 
        quarter and the individual votes by board members 
        authorizing such expenditures as required under section 
        16A(b). Such a report shall be filed with the 
        Commission and provided to shareholders and shall 
        include--
                  (A) the date of each expenditure;
                  (B) the amount of each expenditure;
                  (C) if the expenditure was made for or 
                against a candidate, the name of the candidate, 
                the office sought by and the political party 
                affiliation of the candidate; and
                  (D) the name or identity of trade 
                associations or other tax-exempt organizations 
                which receive dues or other payments as 
                described in section 14C(d)(1)(B).
          (2) Annual reports.--Not later than 180 days after 
        the date of enactment of this subsection, the 
        Commission shall, by rule, require each issuer to 
        include in its annual report to shareholders an annual 
        summary of all expenditures for political activities 
        (as such term is defined in section 14C(d)(1)) made 
        during the preceding year in excess of $10,000.
          (3) Disclosure of materials purchased by political 
        expenditures.--The Commission shall, by rule, require 
        each issuer to obtain and disclose in the reports 
        required under this section, any materials created with 
        or purchased by any expenditure for political 
        activities (as such term is defined in section 14C(d)) 
        made by the issuer. Such rule shall also require that 
        each issuer disclose such materials in a clear and 
        conspicuous location on the Internet website of the 
        issuer within 48 hours of obtaining the materials.
          (4) Public availability.--The Commission shall ensure 
        that, to the greatest extent practicable, the quarterly 
        reports required by this subsection are publicly 
        available through the Commission website and through 
        the EDGAR system in a manner that is searchable, 
        sortable, and downloadable, consistent with the 
        requirements of section 24.

           *       *       *       *       *       *       *


SEC. 14C. SHAREHOLDER APPROVAL OF CERTAIN POLITICAL EXPENDITURES AND 
                    DISCLOSURE OF VOTES OF INSTITUTIONAL INVESTORS.

  (a) Shareholder Authorization for Political Expenditures.--
Any solicitation of any proxy or consent or authorization in 
respect of any security of an issuer shall--
          (1) contain a description of the specific nature of 
        any expenditures for political activities proposed to 
        be made by the issuer for the forthcoming fiscal year 
        not previously approved, to the extent the specific 
        nature is known to the issuer and including the total 
        amount of such proposed expenditures; and
          (2) provide for a separate shareholder vote to 
        authorize such proposed expenditures in such amount.
  (b) Requirements for Expenditures.--No issuer shall make any 
expenditure for political activities in any fiscal year 
unless--
          (1) such expenditure is of the nature of those 
        proposed by the issuer pursuant to subsection (a)(1); 
        and
          (2) authorization for such expenditures has been 
        granted by votes representing a majority of outstanding 
        shares pursuant to subsection (a)(2).
  (c) Fiduciary Duty; Liability.--A violation of subsection (b) 
shall be considered a breach of a fiduciary duty of the 
officers and directors who authorized such an expenditure. The 
officers and directors who authorize such an expenditure 
without first obtaining such authorization of shareholders 
shall be jointly and severally liable in any action brought in 
any court of competent jurisdiction to any individual or class 
of individuals who held shares at the time such expenditure was 
made for an amount equal to 3 times the amount of such 
expenditure.
  (d) Definition of Expenditure for Political Activities.--As 
used in this section:
          (1) The term ``expenditure for political activities'' 
        means--
                  (A) an independent expenditure, as such term 
                is defined in section 301(17) of the Federal 
                Election Campaign Act of 1971 (2 U.S.C. 
                431(17));
                  (B) an electioneering communication, as such 
                term is defined in section 304(f)(3) of such 
                Act (2 U.S.C. 434(f)(3)) and any other public 
                communication (as such term is defined in 
                section 301(22) of such Act (2 U.S.C. 431(22))) 
                that would be an electioneering communication 
                if it were a broadcast, cable, or satellite 
                communication; or
                  (C) dues or other payments to trade 
                associations or other tax exempt organizations 
                that are, or could reasonably be anticipated to 
                be, used or transferred to another association 
                or organization for the purposes described in 
                subparagraph (A) or (B).
          (2) Such term shall not include--
                  (A) direct lobbying efforts through 
                registered lobbyists employed or hired by the 
                issuer;
                  (B) communications by an issuer to its 
                shareholders and executive or administrative 
                personnel and their families; or
                  (C) the establishment and administration of 
                contributions to a separate segregated fund to 
                be utilized for political purposes by a 
                corporation.
  (e) Disclosure of Votes.--Every institutional investment 
manager subject to section 13(f) shall report at least annually 
how it voted on any shareholder vote pursuant to subsection 
(a), unless such vote is otherwise required to be reported 
publicly by rule or regulation of the Commission. Not later 
than 6 months after the date of enactment of this section, the 
Commission shall issue rules and regulations to implement this 
subsection. Such rules shall require that such report be made 
not later than 30 days after such a vote and be made available 
to the public through the EDGAR system as soon as practicable.
  (f) Safe Harbor for Certain Divestment Decisions.--
Notwithstanding any other provision of Federal or State law, no 
person may bring any civil, criminal, or administrative action 
against any institutional investment manager, or any employee, 
officer, or director thereof, based solely upon a decision of 
the investment manager to divest from, or not to invest in, 
securities of an issuer because of expenditures for political 
activities made by that issuer. This subsection shall not apply 
to any institutional investment manager, or any employee, 
officer, or director thereof, unless the institutional 
investment manager makes disclosures in accordance with 
regulations prescribed by the Commission.

           *       *       *       *       *       *       *


SEC. 16A. REQUIRED BOARD VOTE ON CORPORATE EXPENDITURES FOR POLITICAL 
                    ACTIVITIES.

  (a) Listing on Exchanges.--Effective not later than 180 days 
after the date of enactment of this section, the Commission 
shall, by rule, direct the national securities exchanges and 
national securities associations to prohibit the listing of any 
class of equity security of an issuer that is not in compliance 
with the requirements of any portion of subsection (b).
  (b) Requirement for Vote in Corporate Bylaws.--The corporate 
bylaws of an issuer shall expressly provide for a vote of the 
directors of the issuer on any individual expenditure for 
political activities (as such term is defined in section 
14C(d)(1)) in excess of $50,000, or any expenditure that makes 
the total amount spent by the issuer for the particular 
election (as such term is defined in section 301(1) of the 
Federal Election Campaign Act of 1971 (2 U.S.C. 431(1))) 
$50,000 or more. An issuer shall make publicly available the 
individual votes of the directors required by the preceding 
sentence within 48 hours of the vote, including in a clear and 
conspicuous location on the Internet website of the issuer.

           *       *       *       *       *       *       *


                            DISSENTING VIEWS

    The following represents the views of the Republican 
Members of the Committee on the following issues, consistent 
with H.R. 4790, Shareholder Protection Act of 2010.
    The Majority's designation of H.R. 4790 as the 
``Shareholder Protection Act'' is a misnomer. The bill, 
conceived of as a legislative response to the January 21, 2010 
Supreme Court decision in Citizens United v. Federal Election 
Commission, 558 U.S. 50 (2010), is less about protecting 
shareholders and more about favoring the free speech rights of 
some groups (labor unions) over others (corporations). Under 
the legislation, public companies would have to prepare 
political expenditure plans, present the plan to and seek 
approval from the board, prepare the proxy, and schedule a 
shareholder vote well in advance of the end of each fiscal 
year. H.R. 4790 would deny public corporations the flexibility 
to engage in the political process, and prejudice their ability 
to advocate for or against legislative or regulatory 
initiatives while still allowing unions to freely engage in 
these activities.
    Corporate boards and management have fiduciary duties to 
the company and to the shareholders, yet H.R. 4790 would 
hamstring these obligations and weaken corporations. If H.R. 
4790 is enacted, public corporations will be forced to predict 
all political expenditures for an upcoming fiscal year many 
months in advance to ensure that shareholders approve of the 
plan before the end of the company's fiscal year. This will 
severely limit the free speech of all corporations by 
prohibiting them from reacting to new or unexpected issues that 
impact their business, ultimately eroding shareholder value.
    The Majority confidently asserts that H.R. 4790 would not 
impose additional costs on public companies because 
corporations would simply add another line to their annual 
proxy statement. However, to properly align this new 
shareholder vote with the political calendar, a corporation 
would need to schedule this vote at the end of its fiscal year, 
not, as the Majority suggests, at its annual meeting, which is 
typically held during the first quarter of each year. 
Corporations would then have to prepare and distribute a 
separate proxy statement for shareholders to express their 
approval or disapproval of the proposed political expenditures. 
It is an open question whether the U.S. Securities and Exchange 
Commission (SEC) has the requisite expertise to provide 
guidance to issuers as to what are ``expenditures for political 
activities.'' It is unclear how a corporation would go about 
proposing the ``specific nature'' of political expenditures to 
satisfy the requirements of this bill, especially given the 
fluidity of the political and electoral process.
    By giving shareholders veto power over all political 
expenditures, this legislation also undermines the longstanding 
``business judgment rule,'' which insulates the decisions of a 
corporation's board of directors from legal second-guessing as 
long as the board has engaged in a ``rational or good faith 
effort to advance corporate interest.'' The bill could open the 
door to requiring shareholder approval of other matters 
historically entrusted to corporate boards' discretion, such as 
charitable donations or advertising expenses. Moreover, H.R. 
4790 would preempt state corporate law and make expenditures 
which shareholders have not approved a violation of the 
corporation's fiduciary duty to its shareholders. This is a 
serious departure from the long-established primacy of state 
corporate law. As former Supreme Court Justice Lewis Powell 
wrote in CTS Corp. v. Dynamics Corp. of America, 481 U.S. 69 
(1987), ``no principle of corporation law and practice is more 
firmly established than a State's authority to regulate 
domestic corporations, including the authority to define the 
voting rights of shareholders.''
    Section 4 of H.R. 4790 creates a new provision in the 
Securities Exchange Act of 1934 to require all issuers to 
disclose the votes of individual directors and force the U.S. 
equity exchanges to delist public companies that do not 
disclose their board votes. Such a requirement is not found in 
any state corporate law for any board decision. Board roll call 
votes are not required to declare bankruptcy, sell the 
corporation or its assets, accept a buyout, or oppose a 
takeover, which are all more significant events for any 
publicly traded company than whether to make a specific 
political expenditure.
    As troubling is a provision added during the Committee 
markup that would award triple damages to a shareholder if an 
officer or director authorizes a political expenditure without 
first obtaining the approval of a majority of shareholders. The 
damages awarded would be triple the amount of the political 
expenditure. In effect, these damages are exemplary and 
punitive. This provision is therefore inconsistent with the 
original intent of the Securities Exchange Act of 1934, which 
makes no mention of exemplary or treble damages. Neither 
statute nor case law supports any instance in which a 
shareholder has been allowed to recover treble damages as a 
result of the actions of a director or officer, and there is no 
historical support for awarding treble damages in the context 
of authorizing expenditures for advertisements. While treble 
damages are awarded in antitrust and RICO cases, those cases 
are aimed at punishing criminal behavior. As noted above, 
awarding treble damages in this context goes against the 
original intent of the '34 Act, and inappropriately penalizes 
conduct when the wrong alleged is a civil injury, not a crime 
or misdemeanor.
    The ``Shareholder Protection Act'' applies to corporations, 
but notably, it does not apply to unions. There is no provision 
in Federal law that allows union members to vote to either 
approve or disapprove their union's political expenditures. 
Unions are the single largest contributor to political 
campaigns in the country. Unions and their political action 
committees claim to have spent nearly $450 million in the 2008 
presidential race, and have accounted for approximately 40% of 
campaign-related spending this year, as opposed to 
corporations, which account for less than 15%. Unions 
reportedly ``plan an enormous spending spree to help ensure 
Democratic control of Congress'' after this fall's elections. 
On June 26, 2010 Larry Scanlon, political director for the 
American Federation of State, County, and Municipal Employees 
(``AFSCME''), acknowledged the benefits conferred by the 
Citizens United decision on organizations like his when he said 
that ``the Citizens United case has taken the lid off, and so 
we can use our soft money for express advocacy directly.'' 
Three unions alone--AFSCME, the AFL-CIO, and the Service 
Employees International Union--expect to spend more than $150 
million in the 2010 mid-term elections.
    To provide union members with the ability to decide whether 
their union dues should be used for political purposes or not, 
Republicans strongly supported Representative Hensarling's 
amendment prohibiting H.R. 4790 from taking effect until H.R. 
5860, the ``Union Member Protection Act,'' is first enacted. 
H.R. 5860 applies the framework established in H.R. 4790 to 
unions, creating parity by giving actual union members (not 
just fee-paying nonmembers) a vote on their union's political 
contributions. Unfortunately, the Majority voted almost 
entirely along party lines to reject this equitable application 
of the Citizens United decision to labor unions and publicly 
traded companies despite clear guidance from the Court that 
both were covered by its decision.
    The Committee ordered H.R. 4790 favorably reported without 
holding a single legislative hearing to examine its far-
reaching impact on corporate governance and its chilling effect 
on political free speech. The ``Shareholder Protection Act'' is 
a flawed response in search of a problem that does not exist. 
Republicans believe that the House should reject this ill-
considered legislation and send it back to the Committee on 
Financial Services for a more thorough review of its potential 
unintended consequences.

                                   Spencer Bachus.
                                   Scott Garrett.
                                   Kevin McCarthy.
                                   Jeb Hensarling.
                                   Peter King.
                                   J. Gresham Barrett.
                                   Randy Neugebauer.
                                   Judy Biggert.
                                   Tom Price.
                                   Lynn Jenkins.
                                   Ron Paul.
                                   Mike Castle.

                                  <all>