59–008 

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 


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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. 


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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) 


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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. 


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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— 


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‘‘(i) has been barred from association with a broker 

or dealer by the Commission, any State, or any selfregulatory 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 

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pany 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’’. 


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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 

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form the customer or customers of the justification for the customer’s account termination described under subsection (b). 

Æ 


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