IIB 

114TH CONGRESS 

2D SESSION H. R. 5019 

IN THE SENATE OF THE UNITED STATES 

MAY 9, 2016 

Received; read twice and referred to the Committee on Banking, Housing, and 

Urban Affairs 

AN ACT 

To direct the Securities and Exchange Commission to provide 

a safe harbor related to certain investment fund research 

reports, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Fair Access to Invest3 ment Research Act of 2016’’. 

4 SEC. 2. SAFE HARBOR FOR INVESTMENT FUND RESEARCH. 

5 (a) EXPANSION OF THE SAFE HARBOR.—Not later 

6 than the end of the 45-day period beginning on the date 

7 of enactment of this Act, the Securities and Exchange 

8 Commission shall propose, and not later than the end of 

9 the 180-day period beginning on such date, the Commis10 sion shall adopt, upon such terms, conditions, or require11 ments as the Commission may determine necessary or ap12 propriate in the public interest, for the protection of inves13 tors, and for the promotion of capital formation, revisions 

14 to section 230.139 of title 17, Code of Federal Regula15 tions, to provide that a covered investment fund research 

16 report that is published or distributed by a broker or deal17 er— 

18 (1) shall be deemed, for purposes of sections 

19 2(a)(10) and 5(c) of the Securities Act of 1933 (15 

20 U.S.C. 77b(a)(10), 77e(c)), not to constitute an 

21 offer for sale or an offer to sell a security that is the 

22 subject of an offering pursuant to a registration 

23 statement that is effective, even if the broker or 

24 dealer is participating or will participate in the reg25 istered offering of the covered investment fund’s se26 curities; and 


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1 (2) shall be deemed to satisfy the conditions of 

2 subsection (a)(1) or (a)(2) of section 230.139 of title 

3 17, Code of Federal Regulations, or any successor 

4 provisions, for purposes of the Commission’s rules 

5 and regulations under the Federal securities laws 

6 and the rules of any self-regulatory organization. 

7 (b) IMPLEMENTATION OF SAFE HARBOR.—In imple8 menting the safe harbor pursuant to subsection (a), the 

9 Commission shall— 

10 (1) not, in the case of a covered investment 

11 fund with a class of securities in substantially con12 tinuous distribution, condition the safe harbor on 

13 whether the broker’s or dealer’s publication or dis14 tribution of a covered investment fund research re15 port constitutes such broker’s or dealer’s initiation 

16 or reinitiation of research coverage on such covered 

17 investment fund or its securities; 

18 (2) not— 

19 (A) require the covered investment fund to 

20 have been registered as an investment company 

21 under the Investment Company Act of 1940 

22 (15 U.S.C. 80a–1 et seq.) or subject to the re23 porting requirements of section 13 or 15(d) of 

24 the Securities Exchange Act of 1934 (15 

25 U.S.C. 78m, 78o(d)) for any period exceeding 


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1 the period of time referenced under paragraph 

2 (a)(1)(i)(A)(1) of section 230.139 of title 17, 

3 Code of Federal Regulations; or 

4 (B) impose a minimum float provision ex5 ceeding that referenced in paragraph 

6 (a)(1)(i)(A)(1)(i) of section 230.139 of title 17, 

7 Code of Federal Regulations; 

8 (3) provide that a self-regulatory organization 

9 may not maintain or enforce any rule that would— 

10 (A) prohibit the ability of a member to 

11 publish or distribute a covered investment fund 

12 research report solely because the member is 

13 also participating in a registered offering or 

14 other distribution of any securities of such cov15 ered investment fund; or 

16 (B) prohibit the ability of a member to 

17 participate in a registered offering or other dis18 tribution of securities of a covered investment 

19 fund solely because the member has published 

20 or distributed a covered investment fund re21 search report about such covered investment 

22 fund or its securities; and 

23 (4) provide that a covered investment fund re24 search report shall not be subject to section 24(b) of 

25 the Investment Company Act of 1940 (15 U.S.C. 


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1 80a–24(b)) or the rules and regulations thereunder, 

2 except that such report may still be subject to such 

3 section and the rules and regulations thereunder to 

4 the extent that it is otherwise not subject to the con5 tent standards in the rules of any self-regulatory or6 ganization related to research reports, including 

7 those contained in the rules governing communica8 tions with the public regarding investment compa9 nies or substantially similar standards. 

10 (c) RULES OF CONSTRUCTION.—Nothing in this Act 

11 shall be construed as in any way limiting— 

12 (1) the applicability of the antifraud or 

13 antimanipulation provisions of the Federal securities 

14 laws and rules adopted thereunder to a covered in15 vestment fund research report, including section 17 

16 of the Securities Act of 1933 (15 U.S.C. 77q), sec17 tion 34(b) of the Investment Company Act of 1940 

18 (15 U.S.C. 80a–33), and sections 9 and 10 of the 

19 Securities Exchange Act of 1934 (15 U.S.C. 78i, 

20 78j); or 

21 (2) the authority of any self-regulatory organi22 zation to examine or supervise a member’s practices 

23 in connection with such member’s publication or dis24 tribution of a covered investment fund research re25 port for compliance with applicable provisions of the 


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1 Federal securities laws or self-regulatory organiza2 tion rules related to research reports, including those 

3 contained in rules governing communications with 

4 the public. 

5 (d) INTERIM EFFECTIVENESS OF SAFE HARBOR.— 

6 (1) IN GENERAL.—From and after the 180-day 

7 period beginning on the date of enactment of this 

8 Act, if the Commission has not adopted revisions to 

9 section 230.139 of title 17, Code of Federal Regula10 tions, as required by subsection (a), and until such 

11 time as the Commission has done so, a broker or 

12 dealer distributing or publishing a covered invest13 ment fund research report after such date shall be 

14 able to rely on the provisions of section 230.139 of 

15 title 17, Code of Federal Regulations, and the 

16 broker or dealer’s publication of such report shall be 

17 deemed to satisfy the conditions of subsection (a)(1) 

18 or (a)(2) of section 230.139 of title 17, Code of Fed19 eral Regulations, if the covered investment fund that 

20 is the subject of such report satisfies the reporting 

21 history requirements (without regard to Form S–3 

22 or Form F–3 eligibility) and minimum float provi23 sions of such subsections for purposes of the Com24 mission’s rules and regulations under the Federal 

25 securities laws and the rules of any self-regulatory 


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1 organization, as if revised and implemented in ac2 cordance with subsections (a) and (b). 

3 (2) STATUS OF COVERED INVESTMENT FUND.— 

4 After such period and until the Commission has 

5 adopted revisions to section 230.139 and FINRA 

6 has revised rule 2210, for purposes of subsection 

7 (c)(7)(O) of such rule, a covered investment fund 

8 shall be deemed to be a security that is listed on a 

9 national securities exchange and that is not subject 

10 to section 24(b) of the Investment Company Act of 

11 1940 (15 U.S.C. 80a–24(b)). Communications con12 cerning only covered investment funds that fall with13 in the scope of such section shall not be required to 

14 be filed with FINRA. 

15 (e) DEFINITIONS.—For purposes of this Act: 

16 (1) The term ‘‘covered investment fund re17 search report’’ means a research report published or 

18 distributed by a broker or dealer about a covered in19 vestment fund or any securities issued by the cov20 ered investment fund, but not including a research 

21 report to the extent that it is published or distrib22 uted by the covered investment fund or any affiliate 

23 of the covered investment fund. 

24 (2) The term ‘‘covered investment fund’’ 

25 means— 


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1 (A) an investment company registered 

2 under, or that has filed an election to be treated 

3 as a business development company under, the 

4 Investment Company Act of 1940 and that has 

5 filed a registration statement under the Securi6 ties Act of 1933 for the public offering of a 

7 class of its securities, which registration state8 ment has been declared effective by the Com9 mission; and 

10 (B) a trust or other person— 

11 (i) issuing securities in an offering 

12 registered under the Securities Act of 1933 

13 and which class of securities is listed for 

14 trading on a national securities exchange; 

15 (ii) the assets of which consist pri16 marily of commodities, currencies, or deriv17 ative instruments that reference commod18 ities or currencies, or interests in the fore19 going; and 

20 (iii) that provides in its registration 

21 statement under the Securities Act of 1933 

22 that a class of its securities are purchased 

23 or redeemed, subject to conditions or limi24 tations, for a ratable share of its assets. 


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1 (3) The term ‘‘FINRA’’ means the Financial 

2 Industry Regulatory Authority. 

3 (4) The term ‘‘research report’’ has the mean4 ing given that term under section 2(a)(3) of the Se5 curities Act of 1933 (15 U.S.C. 77b(a)(3)), except 

6 that such term shall not include an oral communica7 tion. 

8 (5) The term ‘‘self-regulatory organization’’ has 

9 the meaning given to that term under section 

10 3(a)(26) of the Securities Exchange Act of 1934 (15 

11 U.S.C. 78c(a)(26)). 

Passed the House of Representatives April 28, 2016. 

Attest: KAREN L. HAAS, 

Clerk. 


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