I 

114TH CONGRESS 

2D SESSION H. R. 5019 

To direct the Securities and Exchange Commission to provide a safe harbor 

related to certain investment fund research reports, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 21, 2016 

Mr. HILL (for himself and Mr. CARNEY) introduced the following bill; which 

was referred to the Committee on Financial Services 

A BILL 

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, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Fair Access to Invest5 ment Research Act of 2016’’. 

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

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

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

9 of enactment of this Act, the Securities and Exchange 

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


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1 the 180-day period beginning on such date, the Commis2 sion shall adopt, upon such terms, conditions, or require3 ments as the Commission may determine necessary or ap4 propriate in the public interest, for the protection of inves5 tors, and for the promotion of capital formation, revisions 

6 to section 230.139 of title 17, Code of Federal Regula7 tions, to provide that a covered investment fund research 

8 report that is published or distributed by a broker or deal9 er— 

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

11 2(a)(10) and 5(c) of the Securities Act of 1933 (15 

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

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

14 subject of an offering pursuant to a registration 

15 statement that is effective, even if the broker or 

16 dealer is participating or will participate in the reg17 istered offering of the covered investment fund’s se18 curities; and 

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

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

21 17, Code of Federal Regulations, or any successor 

22 provisions, for purposes of the Commission’s rules 

23 and regulations under the Federal securities laws 

24 and the rules of any self-regulatory organization. 


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1 (b) IMPLEMENTATION OF SAFE HARBOR.—In imple2 menting the safe harbor pursuant to subsection (a), the 

3 Commission shall— 

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

5 fund with a class of securities in substantially con6 tinuous distribution, condition the safe harbor on 

7 whether the broker’s or dealer’s publication or dis8 tribution of a covered investment fund research re9 port constitutes such broker’s or dealer’s initiation 

10 or reinitiation of research coverage on such covered 

11 investment fund or its securities; 

12 (2) not— 

13 (A) require the covered investment fund to 

14 have been registered as an investment company 

15 under the Investment Company Act of 1940 

16 (15 U.S.C. 80a–1 et seq.) or subject to the re17 porting requirements of section 13 or 15(d) of 

18 the Securities Exchange Act of 1934 (15 

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

20 the period of time referenced under paragraph 

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

22 Code of Federal Regulations; or 

23 (B) impose a minimum float provision ex24 ceeding that referenced in paragraph 


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

2 Code of Federal Regulations; 

3 (3) provide that a self-regulatory organization 

4 may not maintain or enforce any rule that would— 

5 (A) prohibit the ability of a member to 

6 publish or distribute a covered investment fund 

7 research report solely because the member is 

8 also participating in a registered offering or 

9 other distribution of any securities of such cov10 ered investment fund; or 

11 (B) prohibit the ability of a member to 

12 participate in a registered offering or other dis13 tribution of securities of a covered investment 

14 fund solely because the member has published 

15 or distributed a covered investment fund re16 search report about such covered investment 

17 fund or its securities; and 

18 (4) provide that a covered investment fund re19 search report shall not be subject to section 24(b) of 

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

21 80a–24(b)) or the rules and regulations thereunder, 

22 except that such report may still be subject to such 

23 section and the rules and regulations thereunder to 

24 the extent that it is otherwise not subject to the con25 tent standards in the rules of any self-regulatory orVerDate Sep 11 2014 22:00 Apr 22, 2016 Jkt 059200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5019.IH H5019

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1 ganization related to research reports, including 

2 those contained in the rules governing communica3 tions with the public regarding investment compa4 nies or substantially similar standards. 

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

6 shall be construed as in any way limiting— 

7 (1) the applicability of the antifraud or 

8 antimanipulation provisions of the Federal securities 

9 laws and rules adopted thereunder to a covered in10 vestment fund research report, including section 17 

11 of the Securities Act of 1933 (15 U.S.C. 77q), sec12 tion 34(b) of the Investment Company Act of 1940 

13 (15 U.S.C. 80a–33), and sections 9 and 10 of the 

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

15 78j); or 

16 (2) the authority of any self-regulatory organi17 zation to examine or supervise a member’s practices 

18 in connection with such member’s publication or dis19 tribution of a covered investment fund research re20 port for compliance with applicable provisions of the 

21 Federal securities laws or self-regulatory organiza22 tion rules related to research reports, including those 

23 contained in rules governing communications with 

24 the public. 

25 (d) INTERIM EFFECTIVENESS OF SAFE HARBOR.— 


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

2 period beginning on the date of enactment of this 

3 Act, if the Commission has not adopted revisions to 

4 section 230.139 of title 17, Code of Federal Regula5 tions, as required by subsection (a), and until such 

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

7 dealer distributing or publishing a covered invest8 ment fund research report after such date shall be 

9 able to rely on the provisions of section 230.139 of 

10 title 17, Code of Federal Regulations, and the 

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

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

13 or (a)(2) of section 230.139 of title 17, Code of Fed14 eral Regulations, if the covered investment fund that 

15 is the subject of such report satisfies the reporting 

16 history requirements (without regard to Form S–3 

17 or Form F–3 eligibility) and minimum float provi18 sions of such subsections for purposes of the Com19 mission’s rules and regulations under the Federal 

20 securities laws and the rules of any self-regulatory 

21 organization, as if revised and implemented in ac22 cordance with subsections (a) and (b). 

23 (2) STATUS OF COVERED INVESTMENT FUND.— 

24 After such period and until the Commission has 

25 adopted revisions to section 230.139 and FINRA 


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1 has revised rule 2210, for purposes of subsection 

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

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

4 national securities exchange and that is not subject 

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

6 1940 (15 U.S.C. 80a–24(b)). Communications con7 cerning only covered investment funds that fall with8 in the scope of such section shall not be required to 

9 be filed with FINRA. 

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

11 (1) The term ‘‘covered investment fund re12 search report’’ means a research report published or 

13 distributed by a broker or dealer about a covered in14 vestment fund or any securities issued by the cov15 ered investment fund, but not including a research 

16 report to the extent that it is published or distrib17 uted by the covered investment fund or any affiliate 

18 of the covered investment fund. 

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

20 means— 

21 (A) an investment company registered 

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

23 as a business development company under, the 

24 Investment Company Act of 1940 and that has 

25 filed a registration statement under the SecuriVerDate Sep 11 2014 22:00 Apr 22, 2016 Jkt 059200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H5019.IH H5019

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1 ties Act of 1933 for the public offering of a 

2 class of its securities, which registration state3 ment has been declared effective by the Com4 mission; and 

5 (B) a trust or other person— 

6 (i) issuing securities in an offering 

7 registered under the Securities Act of 1933 

8 and which class of securities is listed for 

9 trading on a national securities exchange; 

10 (ii) the assets of which consist pri11 marily of commodities, currencies, or deriv12 ative instruments that reference commod13 ities or currencies, or interests in the fore14 going; and 

15 (iii) that provides in its registration 

16 statement under the Securities Act of 1933 

17 that a class of its securities are purchased 

18 or redeemed, subject to conditions or limi19 tations, for a ratable share of its assets. 

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

21 Industry Regulatory Authority. 

22 (4) The term ‘‘research report’’ has the mean23 ing given that term under section 2(a)(3) of the Se24 curities Act of 1933 (15 U.S.C. 77b(a)(3)), except 


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1 that such term shall not include an oral communica2 tion. 

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

4 the meaning given to that term under section 

5 3(a)(26) of the Securities Exchange Act of 1934 (15 

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

Æ 


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