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[House Report 114-414]
[From the U.S. Government Publishing Office]

114th Congress    }                                     {     Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      114-414
======================================================================

 
   PROVIDING FOR CONSIDERATION OF THE BILL (H.R. 1675) TO DIRECT THE 
    SECURITIES AND EXCHANGE COMMISSION TO REVISE ITS RULES SO AS TO 
INCREASE THE THRESHOLD AMOUNT FOR REQUIRING ISSUERS TO PROVIDE CERTAIN 
 DISCLOSURES RELATING TO COMPENSATORY BENEFIT PLANS, AND PROVIDING FOR 
 CONSIDERATION OF THE BILL (H.R. 766) TO PROVIDE REQUIREMENTS FOR THE 
  APPROPRIATE FEDERAL BANKING AGENCIES WHEN REQUESTING OR ORDERING A 
  DEPOSITORY INSTITUTION TO TERMINATE A SPECIFIC CUSTOMER ACCOUNT, TO 
 PROVIDE FOR ADDITIONAL REQUIREMENTS RELATED TO SUBPOENAS ISSUED UNDER 
  THE FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT OF 
                      1989, AND FOR OTHER PURPOSES

                                _______
                                

  February 2, 2016.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

               Mr. Stivers, from the Committee on Rules, 
                        submitted the following

                              R E P O R T

                       [To accompany H. Res. 595]

    The Committee on Rules, having had under consideration 
House Resolution 595, by a record vote of 9 to 4, report the 
same to the House with the recommendation that the resolution 
be adopted.

                SUMMARY OF PROVISIONS OF THE RESOLUTION

    The resolution provides for consideration of H.R. 1675, the 
Encouraging Employee Ownership Act of 2015, under a structured 
rule. The resolution provides one hour of general debate 
equally divided and controlled by the chair and ranking 
minority member of the Committee on Financial Services. The 
resolution waives all points of order against consideration of 
the bill. The resolution makes in order as original text for 
the purpose of amendment an amendment in the nature of a 
substitute consisting of the text of Rules Committee Print 114-
43 and provides that it shall be considered as read. The 
resolution waives all points of order against that amendment in 
the nature of a substitute. The resolution makes in order only 
those further amendments printed in part A of this report. Each 
such amendment may be offered only in the order printed in this 
report, may be offered only by a Member designated in this 
report, shall be considered as read, shall be debatable for the 
time specified in this report equally divided and controlled by 
the proponent and an opponent, shall not be subject to 
amendment, and shall not be subject to a demand for division of 
the question in the House or in the Committee of the Whole. The 
resolution waives all points of order against the amendments 
printed in part A of this report. The resolution provides one 
motion to recommit with or without instructions.
    Section 2 of the resolution provides for consideration of 
H.R. 766, the Financial Institution Customer Protection Act of 
2015, under a structured rule. The resolution provides one hour 
of general debate equally divided and controlled by the chair 
and ranking minority member of the Committee on Financial 
Services. The resolution waives all points of order against 
consideration of the bill. The resolution makes in order as 
original text for the purpose of amendment an amendment in the 
nature of a substitute consisting of the text of Rules 
Committee Print 114-41 and provides that it shall be considered 
as read. The resolution waives all points of order against that 
amendment in the nature of a substitute. The resolution makes 
in order only those further amendments printed in part B of 
this report. Each such amendment may be offered only in the 
order printed in this report, may be offered only by a Member 
designated in this report, shall be considered as read, shall 
be debatable for the time specified in this report equally 
divided and controlled by the proponent and an opponent, shall 
not be subject to amendment, and shall not be subject to a 
demand for division of the question in the House or in the 
Committee of the Whole. The resolution waives all points of 
order against the amendments printed in part B of this report. 
The resolution provides one motion to recommit with or without 
instructions.

                         EXPLANATION OF WAIVERS

    Although the resolution waives all points of order against 
consideration of H.R. 1675, the Committee is not aware of any 
points of order. The waiver is prophylactic in nature.
    The waiver of all points of order against the amendment in 
the nature of a substitute to H.R. 1675 made in order as 
original text includes a waiver of clause 7 of rule XVI, which 
requires that no motion or proposition on a subject different 
from that under consideration shall be admitted under color of 
amendment.
    Although the resolution waives all points of order against 
the amendments to H.R. 1675 printed in part A of this report, 
the Committee is not aware of any points of order. The waiver 
is prophylactic in nature.
    The waiver of all points of order against consideration of 
H.R. 766 includes a waiver of Clause 3(e)(1) of rule XIII 
(``Ramseyer''), requiring a committee report accompanying a 
bill amending or repealing statutes to show, by typographical 
device, parts of statute affected.
    The waiver is provided because the submission provided by 
the Committee on Financial Services was insufficient to meet 
the standards established by the rule in its current form. The 
Committee on Rules continues to work with the House Office of 
Legislative Counsel and committees to determine the steps 
necessary to comply with the updated rule.
    Although the resolution waives all points of order against 
the amendment in the nature of a substitute to H.R. 766 made in 
order as original text, the Committee is not aware of any 
points of order. The waiver is prophylactic in nature.
    Although the resolution waives all points of order against 
the amendments to H.R. 766 printed in part B of this report, 
the Committee is not aware of any points of order. The waiver 
is prophylactic in nature.

                            COMMITTEE VOTES

    The results of each record vote on an amendment or motion 
to report, together with the names of those voting for and 
against, are printed below:

Rules Committee record vote No. 142

    Motion by Mr. Polis make in order and provide the 
appropriate waivers for amendment #2 to H.R. 766, offered by 
Rep. Perlmutter (CO) and Rep. Heck (WA), which provides a safe 
harbor for banks and credit unions to provide financial 
services to legal and licensed marijuana businesses. Regulators 
would not be able to threaten or limit a bank's deposit 
insurance, take any action against or force a depository 
institution to halt providing banking services to a marijuana-
related legitimate business. Defeated: 3-9

----------------------------------------------------------------------------------------------------------------
                Majority Members                      Vote               Minority Members               Vote
----------------------------------------------------------------------------------------------------------------
Ms. Foxx........................................          Nay   Ms. Slaughter.....................          Yea
Mr. Cole........................................          Nay   Mr. McGovern......................          Yea
Mr. Woodall.....................................          Nay   Mr. Hastings of Florida...........  ............
Mr. Burgess.....................................          Nay   Mr. Polis.........................          Yea
Mr. Stivers.....................................          Nay
Mr. Collins.....................................          Nay
Mr. Byrne.......................................          Nay
Mr. Newhouse....................................          Nay
Mr. Sessions, Chairman..........................          Nay
----------------------------------------------------------------------------------------------------------------

Rules Committee record vote No. 143

    Motion by Ms. Foxx to report the rule. Adopted: 9-4

----------------------------------------------------------------------------------------------------------------
                Majority Members                      Vote               Minority Members               Vote
----------------------------------------------------------------------------------------------------------------
Ms. Foxx........................................          Yea   Ms. Slaughter.....................          Nay
Mr. Cole........................................          Yea   Mr. McGovern......................          Nay
Mr. Woodall.....................................          Yea   Mr. Hastings of Florida...........          Nay
Mr. Burgess.....................................          Yea   Mr. Polis.........................          Nay
Mr. Stivers.....................................          Yea
Mr. Collins.....................................          Yea
Mr. Byrne.......................................          Yea
Mr. Newhouse....................................          Yea
Mr. Sessions, Chairman..........................          Yea
----------------------------------------------------------------------------------------------------------------

     SUMMARY OF THE AMENDMENTS TO H.R. 1675 IN PART A MADE IN ORDER

    1. DeSaulnier (CA): Directs the SEC to study and report to 
Congress the prevalence of employee ownership plans within 
companies that include a flexible or social benefit component 
in their articles of incorporation, as allowed under relevant 
state laws. (10 minutes)
    2. Huizenga (MI): Clarifies the disqualification from the 
exemption of any broker or associated person who is subject to 
suspension or revocation of registration, and the in-
applicability of the exemption to any M&A transaction where one 
party or more is a shell company. (10 minutes)
    3. Sherman (CA): Provides exclusions for when a mergers and 
acquisitions broker is not exempt from registration with the 
SEC. (10 minutes)
    4. Ellison (MN), Polis (CO): Narrows the exemption to 
emerging growth companies and only for a period of three years. 
Nullifies that exemption if the Securities and Exchange 
Commission permits corporations to file their information using 
Inline XBRL formatting. (10 minutes)
    5. Issa (CA), Polis (CO): Leaves intact the exemption from 
XBRL reporting for Emerging Growth Companies (EGCs,) while 
decreasing the exemption for other small companies with total 
annual gross revenues of less than $250,000,000 from five years 
to two years and allowing the Securities and Exchange 
Commission to cancel the exemption within 180 days, instead of 
two years, if a cost-benefit analysis shows the benefits of 
XBRL reporting as outweighing the costs. (10 minutes)
    6. Issa (CA), Polis (CO): Limits all exemptions granted 
therein only to companies obligated to begin submitting 
financial disclosures to the Securities and Exchange Commission 
after the date of enactment. (10 minutes)
    7. Ellison (MN), Maloney, Carolyn (NY), Quigley (IL), Polis 
(CO): Repeals the Small Company Disclosure Act (H.R. 1965) in 
its entirety from the bill thus preserving the S.E.C. 
requirement that public companies report their information 
related to corporate financial performance as searchable data. 
(10 minutes)

     SUMMARY OF THE AMENDMENTS TO H.R. 766 IN PART B MADE IN ORDER

    1. Sherman (CA): Clarifies that H.R. 766 does not prevent 
federal banking regulators from requesting or requiring a 
financial institution to terminate a relationship with a 
customer because (1) the customer poses a threat to national 
security, (2) is engaged in terrorist financing, (3) is doing 
business with Iran, North Korea, Syria, or another State 
Sponsor of Terrorism, or (4) is doing business with an entity 
in any of those countries. (10 minutes)
    2. Gosar (AZ): Requires notice to banking customers if a 
customer account is terminated at the direction of federal 
banking regulators. (10 minutes)

         PART A--TEXT OF AMENDMENTS TO H.R. 1675 MADE IN ORDER

     1. An Amendment To Be Offered by Representative DeSaulnier of 
          California or His Designee, Debatable for 10 Minutes

  Page 2, after line 17, insert the following:

SEC. 102. STUDY AND REPORT.

  Not later than 1 year after the date of the enactment of this 
Act, the Securities and Exchange Commission shall complete a 
study and submit to Congress a report on the prevalence of 
employee ownership plans within companies that have a flexible 
or social benefit component in the articles of incorporation or 
similar governing documents of such companies, as permitted 
under applicable State law.
                              ----------                              

2. An Amendment To Be Offered by Representative Huizenga of Michigan or 
                 His Designee, Debatable for 10 Minutes

  Page 9, after line 16, insert the following:
                          ``(iii) Engages on behalf of any 
                        party in a transaction involving a 
                        public shell company.
                  ``(C) Disqualifications.--An M&A broker is 
                not exempt from registration under this 
                paragraph if such broker is subject to--
                          ``(i) suspension or revocation of 
                        registration under paragraph (4);
                          ``(ii) a statutory disqualification 
                        described in section 3(a)(39);
                          ``(iii) a disqualification under the 
                        rules adopted by the Commission under 
                        section 926 of the Investor Protection 
                        and Securities Reform Act of 2010 (15 
                        U.S.C. 77d note); or
                          ``(iv) a final order described in 
                        paragraph (4)(H).''.
  Page 9, line 17, strike ``(C)'' and insert ``(D)''.
  Page 9, line 23, strike ``(D)'' and insert ``(E)''.
  Page 10, line 23, insert ``privately held'' after ``means 
a''.
  Page 13, beginning on line 6, strike ``year-end balance 
sheet'' and all that follows through ``report of the 
independent auditor'' and insert ``fiscal year-end financial 
statements of the issuer of the securities as customarily 
prepared by the management of the issuer in the normal course 
of operations and, if the financial statements of the issuer 
are audited, reviewed, or compiled, any related statement by 
the independent accountant''.
  Page 13, after line 20, insert the following:
                          ``(iv) Public shell company.--The 
                        term `public shell company' is a 
                        company that at the time of a 
                        transaction with an eligible privately 
                        held company--
                                  ``(I) has any class of 
                                securities registered, or 
                                required to be registered, with 
                                the Commission under section 12 
                                or that is required to file 
                                reports pursuant to subsection 
                                (d);
                                  ``(II) has no or nominal 
                                operations; and
                                  ``(III) has--
                                          ``(aa) no or nominal 
                                        assets;
                                          ``(bb) assets 
                                        consisting solely of 
                                        cash and cash 
                                        equivalents; or
                                          ``(cc) assets 
                                        consisting of any 
                                        amount of cash and cash 
                                        equivalents and nominal 
                                        other assets.''.
  Page 13, line 21, strike ``(E)'' and insert ``(F)''.
  Page 14, beginning on line 2, strike ``subparagraph 
(D)(ii)(II)'' and insert ``subparagraph (E)(ii)(II)''.
                              ----------                              

 3. An Amendment To Be Offered by Representative Sherman of California 
               or His Designee, Debatable for 10 Minutes

  Page 9, after line 16, insert the following:
                  ``(C) Disqualification for certain conduct.--
                An M&A broker may not make use of the exemption 
                under this paragraph if the broker--
                          ``(i) has been barred from 
                        association with a broker or dealer by 
                        the Commission, any State, or any self-
                        regulatory organization; or
                          ``(ii) is suspended from association 
                        with a broker or dealer.
                  ``(D) Transactions involving shell companies 
                prohibited.--
                          ``(i) In general.--An M&A broker 
                        making use of the exemption under this 
                        paragraph may not engage in a 
                        transaction involving a shell company, 
                        other than a business combination 
                        related shell company.
                          ``(ii) Shell company defined.--In 
                        this subparagraph, the term `shell 
                        company' means a company that--
                                  ``(I) has no or nominal 
                                operations; and
                                  ``(II) has--
                                          ``(aa) no or nominal 
                                        assets;
                                          ``(bb) assets 
                                        consisting solely of 
                                        cash and cash 
                                        equivalents; or
                                          ``(cc) assets 
                                        consisting of any 
                                        amount of cash and cash 
                                        equivalents and nominal 
                                        other assets.
                          ``(iii) Business combination related 
                        shell company defined.--In this 
                        subparagraph, the term `business 
                        combination related shell company' 
                        means a shell company that is formed by 
                        an entity that is not a shell company 
                        solely for the purpose of--
                                  ``(I) changing the corporate 
                                domicile of such entity solely 
                                within the United States; or
                                  ``(II) completing a business 
                                combination transaction (as 
                                defined in section 230.165(f) 
                                of title 17, Code of Federal 
                                Regulations) among one or more 
                                entities other than the shell 
                                company, none of which is a 
                                shell company.
                  ``(E) Financing by m&a brokers prohibited.--
                An M&A broker may not provide financing, either 
                directly or indirectly, related to the transfer 
                of ownership of an eligible privately held 
                company.
                  ``(F) Disclosure and consent.--To the extent 
                an M&A broker represents both buyers and 
                sellers of an eligible privately held company, 
                the broker shall provide clear written 
                disclosure as to the parties the broker 
                represents and obtain written consent from all 
                parties to the joint representation.
                  ``(G) Passive buyers prohibited.--An M&A 
                broker may not engage in a transaction 
                involving the transfer of ownership of an 
                eligible privately held company to a passive 
                buyer or group of passive buyers.
                  ``(H) No authority to bind party to 
                transfer.--The M&A broker may not bind a party 
                to a transfer of ownership of an eligible 
                privately held company.
                  ``(I) Restricted securities.--Any securities 
                purchased or received by the buyer or M&A 
                broker in connection with the transfer of 
                ownership of an eligible privately held company 
                are restricted securities (as defined in 
                section 230.144(a)(3) of title 17, Code of 
                Federal Regulations).
  Page 10, line 8, insert ``, and'' after ``officer''.
  Page 10, beginning on line 11, strike ``20 percent'' and 
insert ``25 percent''.
  Page 10, line 14, strike ``20 percent'' and insert ``25 
percent''.
  Page 10, line 19, strike ``20 percent'' and insert ``25 
percent''.
  Page 12, beginning on line 19, strike ``will be active in the 
management of'' and insert ``will actively operate''.
                              ----------                              

4. An Amendment To Be Offered by Representative Ellison of Minnesota or 
                 His Designee, Debatable for 10 Minutes

  Page 15, beginning on line 4, strike ``and other smaller 
companies''.
  Page 15, beginning on line 6, strike ``Exemption'' and all 
that follows through ``Emerging'' on line 7 and insert ``In 
General.--Emerging''.
  Page 15, line 12, insert after the period the following: ``An 
exemption under this subsection shall continue in effect until 
the date that is three years after the date of enactment of 
this Act.''.
  Beginning on page 15, strike line 13 and all that follows 
through page 16, line 3.
  Page 16, beginning on line 8, strike ``the exemptions set 
forth in subsections (a) and (b)'' and insert ``the exemption 
set forth in subsection (a)''.
  Strike section 402 and insert the following:

SEC. 402. NULLIFICATION OF EXEMPTION IF SEC ADOPTS DISCLOSURE FORMAT.

  (a) Nullification of Exemption.--Notwithstanding any other 
provision of this title, the exemption provided by section 401 
shall have no force or effect if the Commission, by rule, 
adopts the inline XBRL format (or a similar format) for 
corporate financial information for which the Commission was 
using the XBRL format as of the date of enactment of this Act, 
and permits a filing in the inline XBRL format rather than 
collecting each financial statement once as a document and 
again as an XBRL file. For purposes of this section, an inline 
XBRL format is a filing format that allows filers to embed XBRL 
data directly in a required financial statement.
  (b) Characteristics.--If the Commission adopts the inline 
XBRL format (or similar format) as described in subsection (a), 
that format adopted shall be a non-proprietary data standard, 
both human-readable and machine-readable, that is consistent 
with and implements applicable accounting principles, and 
permits registrants to file financial statements with embedded 
electronic tags.
  Page 18, strike lines 6 and 7.
  Page 18, line 14, strike ```issuer',''.
                              ----------                              

 5. An Amendment To Be Offered by Representative Issa of California or 
                 His Designee, Debatable for 10 Minutes

  Page 15, line 20, insert ``the earlier of'' after ``until''.
  Page 15, line 21, strike ``five years'' and insert ``two 
years''.
  Page 15, line 23, strike ``two years'' and insert ``180 
days''.
  Page 16, beginning on line 2, strike ``, but no earlier than 
three years after enactment of this Act''.
                              ----------                              

 6. An Amendment To Be Offered by Representative Issa of California or 
                 His Designee, Debatable for 10 Minutes

  Page 16, after line 9, insert the following:
  (d) Limitation to New Filers.--The exemptions set forth in 
subsections (a) and (b) shall apply only with respect to 
issuers that are first required to file financial statements 
and other periodic reporting with the Commission under the 
securities laws after the date of the enactment of this Act.
                              ----------                              

7. An Amendment To Be Offered by Representative Ellison of Minnesota or 
                 His Designee, Debatable for 10 Minutes

  Strike title IV.
                              ----------                              

          PART B--TEXT OF AMENDMENTS TO H.R 766 MADE IN ORDER

 1. An Amendment To Be Offered by Representative Sherman of California 
               or His Designee, Debatable for 10 Minutes

  Page 2, line 6, strike ``poses'' and all that follows through 
``such belief'' and insert the following: ``is, or is acting as 
a conduit for, an entity which--
                  (A) poses a threat to national security;
                  (B) is involved in terrorist financing;
                  (C) is an agency of the government of Iran, 
                North Korea, Syria, or any country listed from 
                time to time on the State Sponsors of Terrorism 
                list;
                  (D) is located in, or is subject to the 
                jurisdiction of, any country specified in 
                subparagraph (C); or
                  (E) does business with any entity described 
                in subparagraph (C) or (D), unless the 
                appropriate Federal banking agency determines 
                that the customer or group of customers has 
                used due diligence to avoid doing business with 
                any entity described in subparagraph (C) or 
                (D),
        such belief
  Page 2, line 9, strike ``materiality requirement under 
paragraph (1)(A)'' and insert ``requirement under paragraph 
(1)''.
  Page 3, line 16, after ``security'' insert the following: ``, 
or are otherwise described under subsection (a)(2)''.
                              ----------                              

2. An Amendment To Be Offered by Representative Gosar of Arizona or His 
                   Designee, Debatable for 10 Minutes

  Page 3, strike lines 4 through 9 and insert the following:
          (1) Notice required.--Except as provided under 
        paragraph (2), if an appropriate Federal banking agency 
        orders a depository institution to terminate a specific 
        customer account or a group of customer accounts, the 
        depository institution shall inform the customer or 
        customers of the justification for the customer's 
        account termination described under subsection (b).

                                  [all]
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