I 
118TH CONGRESS 
1ST SESSION H. R. 4767 
To make revisions to the Federal securities laws with respect to shareholder 
proposals, proxy voting, and the registration of proxy advisory firms, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 20, 2023 
Mr. STEIL introduced the following bill; which was referred to the Committee 
on Financial Services 
A BILL 
To make revisions to the Federal securities laws with respect 
to shareholder proposals, proxy voting, and the registra-
tion of proxy advisory firms, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Protecting Americans’ Retirement Savings from Politics 
Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; Table of contents. 
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TITLE I—PERFORMANCE OVER POLITICS 
Sec. 101. Exclusion of certain substantially similar shareholder proposals. 
TITLE II—NO EXPENSIVE, STIFLING GOVERNANCE 
Sec. 201. Exclusion of certain shareholder proposals. 
TITLE III—EXCLUSION OF CERTAIN ESG SHAREHOLDER 
PROPOSALS 
Sec. 301. Exclusion of certain ESG shareholder proposals. 
TITLE IV—EXCLUSIONS AVAILABLE REGARDLESS OF 
SIGNIFICANT SOCIAL POLICY ISSUE 
Sec. 401. Exclusions available regardless of significant social policy issue. 
TITLE V—CORPORATE GOVERNANCE EXAMINATION 
Sec. 501. Study of certain issues with respect to shareholder proposals, proxy 
advisory firms, and the proxy process. 
TITLE VI—REGISTRATION OF PROXY ADVISORY FIRMS 
Sec. 601. Registration of proxy advisory firms. 
TITLE VII—LIABILITY FOR CERTAIN FAILURES TO DISCLOSE MA-
TERIAL 
INFORMATION 
OR 
MAKING 
OF 
MATERIAL 
MISSTATEMENTS 
Sec. 701. Liability for certain failures to disclose material information or mak-
ing of material misstatements. 
TITLE VIII—DUTIES OF INVESTMENT ADVISORS, ASSET 
MANAGERS, AND PENSION FUNDS 
Sec. 801. Duties of investment advisors, asset managers, and pension funds. 
TITLE IX—PROTECTING AMERICANS’ SAVINGS 
Sec. 901. Requirements related to proxy voting. 
TITLE X—EMPOWERING SHAREHOLDERS 
Sec. 1001. Proxy voting of passively managed funds. 
TITLE XI—PROTECTING RETAIL INVESTORS’ SAVINGS 
Sec. 1101. Best interest based on pecuniary factors. 
Sec. 1102. Study on climate change and other environmental disclosures in mu-
nicipal bond market. 
Sec. 1103. Study on solicitation of municipal securities business. 
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TITLE I—PERFORMANCE OVER 
POLITICS 
SEC. 101. EXCLUSION OF CERTAIN SUBSTANTIALLY SIMI-
LAR SHAREHOLDER PROPOSALS. 
The Securities and Exchange Commission shall revise 
the resubmission requirements in section 240.14a–8(i)(12) 
of title 17, Code of Federal Regulations, to provide that 
a shareholder proposal may be excluded by an issuer from 
its proxy or consent solicitation material for a meeting of 
the shareholders of such issuer if the shareholder proposal 
addresses substantially the same subject matter as a pro-
posal, or proposals, previously included in the proxy or 
consent solicitation material for a meeting of the share-
holders of such issuer— 
(1) for a meeting of the shareholders conducted 
in the preceding 5 calendar years; and 
(2) if the most recent vote— 
(A) occurred in the preceding 3 calendar 
years; and 
(B)(i) if voted on once during such 5-year 
period, received less than 10 percent of the 
votes cast; 
(ii) if voted on twice during such 5-year 
period, received less than 20 percent of the 
votes cast; or 
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(iii) if voted on three or more times during 
such 5-year period, received less 40 percent of 
the votes cast. 
TITLE II—NO EXPENSIVE, 
STIFLING GOVERNANCE 
SEC. 201. EXCLUSION OF CERTAIN SHAREHOLDER PRO-
POSALS. 
(a) EXCLUSION OF CERTAIN SHAREHOLDER PRO-
POSALS.—A shareholder proposal submitted to an issuer 
pursuant to section 240.14a–8 of title 17, Code of Federal 
Regulations, may be excluded by an issuer from its proxy 
or consent solicitation material for a meeting of the share-
holders of such issuer if the shareholder proposal— 
(1) has been substantially implemented by the 
issuer by implementing policies, practices, or proce-
dures that compare favorably with the guidelines of 
the proposal and address the proposal’s underlying 
concerns; or 
(2) substantially duplicates by having the same 
principal thrust or principal focus as another pro-
posal previously submitted to the issuer by another 
proponent that will be included in such material. 
(b) NULLIFICATION OF PROPOSED RULE.—The Se-
curities and Exchange Commission may not finalize or 
apply the positions contained in the proposed rule entitled 
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‘‘Substantial Implementation, Duplication, and Resubmis-
sion of Shareholder Proposals under Exchange Act Rule 
14a–8’’ (87 Fed. Reg. 45052), issue any substantially 
similar rule, or apply any substantially similar rule, in-
cluding with respect to a no-action or other interpretive 
request. 
TITLE III—EXCLUSION OF CER-
TAIN 
ESG 
SHAREHOLDER 
PROPOSALS 
SEC. 301. EXCLUSION OF CERTAIN ESG SHAREHOLDER 
PROPOSALS. 
A shareholder proposal submitted to an issuer pursu-
ant to section 240.14a–8 of title 17, Code of Federal Reg-
ulations, may be excluded by an issuer from its proxy or 
consent solicitation material for a meeting of the share-
holders of such issuer if the subject matter of the share-
holder proposal is environmental, social, or political (or a 
similar subject matter). 
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TITLE IV—EXCLUSIONS AVAIL-
ABLE REGARDLESS OF SIG-
NIFICANT 
SOCIAL 
POLICY 
ISSUE 
SEC. 401. EXCLUSIONS AVAILABLE REGARDLESS OF SIG-
NIFICANT SOCIAL POLICY ISSUE. 
An issuer may exclude a shareholder proposal pursu-
ant to section 240.14a–8(i) of title 17, Code of Federal 
Regulations, without regard to whether such shareholder 
proposal relates to a significant social policy issue. 
TITLE V—CORPORATE 
GOVERNANCE EXAMINATION 
SEC. 501. STUDY OF CERTAIN ISSUES WITH RESPECT TO 
SHAREHOLDER PROPOSALS, PROXY ADVI-
SORY FIRMS, AND THE PROXY PROCESS. 
Section 4(j) of the Securities Exchange Act of 1934 
(15 U.S.C. 78d(j)) is amended by adding at the end the 
following: 
‘‘(10) STUDY
OF
CERTAIN
ISSUES
WITH
RE-
SPECT TO SHAREHOLDER PROPOSALS, PROXY ADVI-
SORY FIRMS, AND THE PROXY PROCESS.— 
‘‘(A) IN
GENERAL.—Not later than 180 
days after the date of the enactment of this 
paragraph, and every 5 years thereafter, the 
Commission shall conduct a comprehensive 
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study on shareholder proposals, proxy advisory 
firms, and the proxy process. 
‘‘(B) SCOPE OF STUDY.—The studies re-
quired under subparagraph (A) shall cover— 
‘‘(i) the previous 10 years, with re-
spect to the initial study; and 
‘‘(ii) the previous 5 years, with respect 
to each other study. 
‘‘(C) CONTENTS.—Each study required 
under subparagraph (A) shall address the fol-
lowing issues: 
‘‘(i) The financial and other incentives 
and obligations of all groups involved in 
the proxy process. 
‘‘(ii) A consideration of whether finan-
cial and other incentives have created a 
process that no longer serves the economic 
interests of long-term retail investors. 
‘‘(iii) An analysis of whether regula-
tions and financial incentives have created 
and protected the outsized influence of 
proxy advisors or a duopoly in proxy ad-
vice, and if so, what are the benefits and 
costs of that outsized influence or duopoly. 
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‘‘(iv) The costs incurred by issuers in 
responding to politically-, environmentally- 
, or socially-motivated shareholder pro-
posals. 
‘‘(v) An assessment, including a cost- 
benefit analysis, of the adequacy of the 
current submission thresholds in Rule 
14a–8 (17 CFR 240.14a–8) to ensure that 
shareholder proponents have demonstrated 
a meaningful economic stake in a com-
pany, which is appropriate to effectively 
serve markets and shareholders at large. 
‘‘(vi) An examination of the extent to 
which the politicization of the shareholder 
proposal process is increasing the oper-
ating costs of public companies. 
‘‘(vii) An analysis of the impact that 
shareholder proposals have on discouraging 
private companies from going public. 
‘‘(viii) An evaluation of the risk that 
shareholder proposals may contribute to 
the balkanization of the U.S. economy over 
time. 
‘‘(ix) A thorough assessment of the 
economic analysis, if any, conducted by 
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proxy advisory firms and institutional 
shareholders when recommending or voting 
in favor of shareholder proposals. 
‘‘(x) A review of the extent to which 
institutional investors, who owe fiduciary 
duties, rely on proxy advisory firm rec-
ommendations. 
‘‘(xi) An assessment of whether, in 
light of their significant influence on cor-
porate actions and vote outcomes, proxy 
advisors are subject to sufficient and effec-
tive regulation to ensure that their policies 
and recommendations are accurate, free of 
conflicts, and benefit the economic best in-
terest of shareholders at large. 
‘‘(D) REPORT.—At the completion of each 
study required under subparagraph (A) the 
Commission shall issue a report to the Com-
mittee on Banking, Housing, and Urban Affairs 
of the Senate and the Committee on Financial 
Services of the House of Representatives that 
includes the results of the study.’’. 
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TITLE VI—REGISTRATION OF 
PROXY ADVISORY FIRMS 
SEC. 601. REGISTRATION OF PROXY ADVISORY FIRMS. 
(a) AMENDMENT.—The Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.) is amended by inserting after 
section 15G the following new section: 
‘‘SEC. 15H. REGISTRATION OF PROXY ADVISORY FIRMS. 
‘‘(a) CONDUCT PROHIBITED.—It shall be unlawful 
for a proxy advisory firm to make use of the mails or any 
means or instrumentality of interstate commerce to pro-
vide proxy voting advice, research, analysis, ratings or rec-
ommendations to any client, unless such proxy advisory 
firm is registered under this section. 
‘‘(b) REGISTRATION PROCEDURES.— 
‘‘(1) APPLICATION FOR REGISTRATION.— 
‘‘(A) IN GENERAL.—A proxy advisory firm 
shall file with the Commission an application 
for registration, in such form as the Commis-
sion shall require, by rule, and containing the 
information described in subparagraph (B). 
‘‘(B) REQUIRED INFORMATION.—An appli-
cation for registration under this section shall 
contain— 
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‘‘(i) a certification that the applicant 
is able to consistently provide proxy advice 
based on accurate information; 
‘‘(ii) with respect to clients of the ap-
plicant that vote shares held on behalf of 
shareholders, a certification that the appli-
cant— 
‘‘(I) will provide proxy voting ad-
vice only in the best economic interest 
of those shareholders; and 
‘‘(II) has the requisite expertise 
to ensure that voting recommenda-
tions are in the best economic interest 
of those shareholders; 
‘‘(iii) information on the procedures 
and methodologies that the applicant uses 
to ensure that proxy voting recommenda-
tions are in the best economic interest of 
the ultimate shareholders; 
‘‘(iv) information on the organiza-
tional structure of the applicant; 
‘‘(v) an explanation of whether or not 
the applicant has in effect a code of ethics, 
and if not, the reasons therefor; 
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‘‘(vi) a description of any potential or 
actual conflict of interest relating to the 
provision of proxy advisory services, includ-
ing those arising out of or resulting from 
the ownership structure of the applicant or 
the provision of other services by the appli-
cant or any person associated with the ap-
plicant; 
‘‘(vii) the policies and procedures in 
place to publicly disclose and manage con-
flicts of interest under subsection (f); 
‘‘(viii) information related to the pro-
fessional and academic qualifications of 
staff tasked with providing proxy advisory 
services; and 
‘‘(ix) any other information and docu-
ments concerning the applicant and any 
person associated with such applicant as 
the Commission, by rule, may prescribe as 
necessary or appropriate in the public in-
terest or for the protection of investors. 
‘‘(2) REVIEW OF APPLICATION.— 
‘‘(A) INITIAL DETERMINATION.—Not later 
than 90 days after the date on which the appli-
cation for registration is filed with the Commis-
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sion under paragraph (1) (or within such longer 
period as to which the applicant consents) the 
Commission shall— 
‘‘(i) by order, grant registration; or 
‘‘(ii) institute proceedings to deter-
mine whether registration should be de-
nied. 
‘‘(B) CONDUCT OF PROCEEDINGS.— 
‘‘(i) CONTENT.—Proceedings referred 
to in subparagraph (A)(ii) shall— 
‘‘(I) include notice of the grounds 
for denial under consideration and an 
opportunity for hearing; and 
‘‘(II) be concluded not later than 
120 days after the date on which the 
application for registration is filed 
with the Commission under paragraph 
(1). 
‘‘(ii) DETERMINATION.—At the con-
clusion of such proceedings, the Commis-
sion, by order, shall grant or deny such ap-
plication for registration. 
‘‘(iii) EXTENSION AUTHORIZED.—The 
Commission may extend the time for con-
clusion of such proceedings for not longer 
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than 90 days, if the Commission finds 
good cause for such extension and pub-
lishes its reasons for so finding, or for such 
longer period as to which the applicant 
consents. 
‘‘(C) GROUNDS FOR DECISION.—The Com-
mission shall grant registration under this sub-
section— 
‘‘(i) if the Commission finds that the 
requirements of this section are satisfied; 
and 
‘‘(ii) unless the Commission finds (in 
which case the Commission shall deny such 
registration) that— 
‘‘(I) the applicant has failed to 
certify to the Commission’s satisfac-
tion that it is able to consistently pro-
vide proxy advice based on accurate 
information and to materially comply 
with the procedures and methodolo-
gies disclosed under paragraph (1)(B) 
and with subsections (f) and (g); or 
‘‘(II) if the applicant were so reg-
istered, its registration would be sub-
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ject to suspension or revocation under 
subsection (d). 
‘‘(3) PUBLIC AVAILABILITY OF INFORMATION.— 
Subject to section 24, the Commission shall make 
the information and documents submitted to the 
Commission by a proxy advisory firm in its com-
pleted application for registration, or in any amend-
ment submitted under paragraph (1) or (2) of sub-
section (c), publicly available on the Commission’s 
website, or through another comparable, readily ac-
cessible means. 
‘‘(c) UPDATE OF REGISTRATION.— 
‘‘(1) UPDATE.—Each registered proxy advisory 
firm shall promptly amend and update its applica-
tion for registration under this section if any infor-
mation or document provided therein becomes mate-
rially inaccurate, except that a registered proxy advi-
sory firm is not required to amend the information 
required to be filed under subsection (b)(1)(B)(i) by 
filing information under this paragraph, but shall 
amend such information in the annual submission of 
the organization under paragraph (2) of this sub-
section. 
‘‘(2) CERTIFICATION.—Not later than 90 cal-
endar days after the end of each calendar year, each 
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‘‘(1) has committed or omitted any act, or is 
subject to an order or finding, enumerated in sub-
paragraph (A), (D), (E), (H), or (G) of section 
15(b)(4), has been convicted of any offense specified 
in section 15(b)(4)(B), or is enjoined from any ac-
tion, conduct, or practice specified in subparagraph 
(C) of section 15(b)(4), during the 10-year period 
preceding the date of commencement of the pro-
ceedings under this subsection, or at any time there-
after; 
‘‘(2) has been convicted during the 10-year pe-
riod preceding the date on which an application for 
registration is filed with the Commission under this 
section, or at any time thereafter, of— 
‘‘(A) any crime that is punishable by im-
prisonment for 1 or more years, and that is not 
described in section 15(b)(4)(B); or 
‘‘(B) a substantially equivalent crime by a 
foreign court of competent jurisdiction; 
‘‘(3) is subject to any order of the Commission 
barring or suspending the right of the person to be 
associated with a registered proxy advisory firm; 
‘‘(4) fails to furnish the certifications required 
under subsections (b)(2)(C)(ii)(I) and (c)(2); 
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‘‘(5) has engaged in one or more prohibited acts 
enumerated in paragraph (1); 
‘‘(6) fails to maintain adequate financial and 
managerial resources to consistently offer advisory 
services to clients that vote shares held on behalf of 
shareholders consistent with the best economic inter-
est of those shareholders, including by failing to 
comply with subsection (f) or (g); 
‘‘(7) fails to maintain adequate expertise to en-
sure that proxy advisory services for clients that vote 
shares held on behalf of shareholders are tied to the 
best economic interest of those shareholders; or 
‘‘(8) engages in a prohibited act enumerated in 
subsection (j). 
‘‘(e) TERMINATION OF REGISTRATION.— 
‘‘(1) VOLUNTARY WITHDRAWAL.—A registered 
proxy advisory firm may, upon such terms and con-
ditions as the Commission may establish as nec-
essary in the public interest or for the protection of 
investors, which terms and conditions shall include 
at a minimum that the registered proxy advisory 
firm will no longer conduct such activities as to 
bring it within the definition of proxy advisory firm 
in section 3(a)(81), withdraw from registration by 
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filing a written notice of withdrawal to the Commis-
sion. 
‘‘(2) COMMISSION AUTHORITY.—In addition to 
any other authority of the Commission under this 
title, if the Commission finds that a registered proxy 
advisory firm is no longer in existence or has ceased 
to do business as a proxy advisory firm, the Com-
mission, by order, shall cancel the registration under 
this section of such registered proxy advisory firm. 
‘‘(f) MANAGEMENT OF CONFLICTS OF INTEREST.— 
‘‘(1) ORGANIZATION
POLICIES
AND
PROCE-
DURES.—Each registered proxy advisory firm shall 
establish, maintain, and enforce written policies and 
procedures reasonably designed, taking into consid-
eration the nature of the business of such registered 
proxy advisory firm and associated persons, to pub-
licly disclose and manage any conflicts of interest 
that arise or would reasonably be expected to arise 
from such business. 
‘‘(2) COMMISSION AUTHORITY.—The Commis-
sion shall, within one year of enactment, issue final 
rules to prohibit, or require the management and 
public disclosure of, any conflicts of interest relating 
to the offering of proxy advisory services by a reg-
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istered proxy advisory firm, including, without limi-
tation, conflicts of interest relating to— 
‘‘(A) the manner in which a registered 
proxy advisory firm is compensated by the cli-
ent, any affiliate of the client, or any other per-
son for providing proxy advisory services; 
‘‘(B) business relationships, ownership in-
terests, or any other financial or personal inter-
ests between a registered proxy advisory firm, 
or any person associated with such registered 
proxy advisory firm, and any client, or any af-
filiate of such client; 
‘‘(C) the formulation of proxy voting poli-
cies; 
‘‘(D) the execution, or assistance with the 
execution, of proxy votes if such votes are based 
upon recommendations made by the proxy advi-
sory firm in which a person other than the 
issuer is a proponent; and 
‘‘(E) any other potential conflict of inter-
est, as the Commission deems necessary or ap-
propriate in the public interest or for the pro-
tection of investors. 
‘‘(3) DISCLOSURE ON FACTORS INFLUENCING 
RECOMMENDATIONS.—Each registered proxy advi-
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sory firm shall annually disclose to the Commission 
and make publicly available the economic and other 
factors that a reasonable investor would expect to in-
fluence the recommendations of such proxy advisory 
firm, including the ownership composition of such 
proxy advisory firm and any meetings with, or feed-
back received from, outside entities. 
‘‘(g) RELIABILITY OF PROXY ADVISORY FIRM SERV-
ICES.— 
‘‘(1) IN GENERAL.—Each registered proxy advi-
sory firm shall— 
‘‘(A) have staff and other resources suffi-
cient to produce proxy voting recommendations 
that are based on accurate and current infor-
mation and designed for clients that vote shares 
held on behalf of shareholders to advance the 
best economic interest of those shareholders; 
‘‘(B) implement procedures that permit 
issuers that are the subject of proxy voting rec-
ommendations— 
‘‘(i) access in a reasonable time to 
data and information used to make rec-
ommendations; and 
‘‘(ii) a reasonable opportunity to pro-
vide meaningful comment and corrections 
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to such data and information, including 
the opportunity to present (in person or 
telephonically) details to the person re-
sponsible for developing such data and in-
formation prior to the publication of proxy 
voting recommendations to clients; 
‘‘(C) employ an ombudsman to receive 
complaints about the accuracy of information 
used in making recommendations from the com-
panies that are the subject of the proxy advi-
sory firm’s voting recommendations and seek to 
resolve those complaints in a timely fashion and 
prior to the publication of proxy voting rec-
ommendations to clients; and 
‘‘(D) if the ombudsman is unable to re-
solve a complaint to a company’s satisfaction 
prior to the publication of proxy voting rec-
ommendations to clients, include in the final re-
port of the firm to clients— 
‘‘(i) a statement detailing the com-
pany’s complaints, if requested in writing 
by the company; and 
‘‘(ii) a statement explaining why the 
proxy voting recommendation is in the best 
economic interest of shareholders. 
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‘‘(2) DEFINITIONS.—In this subsection: 
‘‘(A) DATA AND INFORMATION USED TO 
MAKE
RECOMMENDATIONS.—The term ‘data 
and information used to make voting rec-
ommendations’— 
‘‘(i) means the financial, operational, 
or descriptive data and information on an 
issuer used by proxy advisory firms and 
any contextual or substantive analysis im-
pacting the recommendation; and 
‘‘(ii) does not include the entirety of 
the proxy advisory firm’s final report to its 
clients. 
‘‘(B) REASONABLE TIME.—The term ‘rea-
sonable time’— 
‘‘(i) means not less than 1 week be-
fore the publication of proxy voting rec-
ommendations for clients; and 
‘‘(ii) shall not otherwise interfere with 
a proxy advisory firm’s ability to provide 
its clients with timely access to accurate 
proxy voting research, analysis, or rec-
ommendations. 
‘‘(h) PRIVATE RIGHT OF ACTION WITH RESPECT TO 
ILLEGAL RECOMMENDATIONS.—Any proxy advisory firm 
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that endorses a proposal that is not supported by the 
issuer but is approved and subsequently found by a court 
of competent jurisdiction to violate State or Federal law 
shall be liable to the applicable issuer for the costs associ-
ated with the approval of such proposal, including imple-
mentation costs and any penalties incurred by the issuer. 
‘‘(i) DESIGNATION OF COMPLIANCE OFFICER.—Each 
registered proxy advisory firm shall designate an indi-
vidual who reports directly to senior management as re-
sponsible for administering the policies and procedures 
that are required to be established pursuant to subsections 
(f) and (g), and for ensuring compliance with the securi-
ties laws and the rules and regulations thereunder, includ-
ing those promulgated by the Commission pursuant to this 
section. 
‘‘(j) PROHIBITED CONDUCT.— 
‘‘(1) PROHIBITED ACTS AND PRACTICES.—Not 
later than one year after the date of enactment of 
this section, the Commission shall issue final rules 
to prohibit any act or practice relating to the offer-
ing of proxy advisory services by a registered proxy 
advisory firm that the Commission determines to be 
unfair, coercive, or abusive, including any act or 
practice relating to— 
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‘‘(A) advisory or consulting services (of-
fered directly or indirectly, including through 
an affiliate) related to corporate governance 
issues; or 
‘‘(B) modifying a voting recommendation 
or otherwise departing from its adopted system-
atic procedures and methodologies in the provi-
sion of proxy advisory services, based on wheth-
er an issuer, or affiliate thereof, subscribes or 
will subscribe to other services or product of the 
registered proxy advisory firm or any person as-
sociated with such organization. 
‘‘(2) RULE
OF
CONSTRUCTION.—Nothing in 
paragraph (1), or in any rules or regulations adopt-
ed thereunder, may be construed to modify, impair, 
or supersede the operation of any of the antitrust 
laws (as defined in the first section of the Clayton 
Act, except that such term includes section 5 of the 
Federal Trade Commission Act, to the extent that 
such section 5 applies to unfair methods of competi-
tion). 
‘‘(k) STATEMENTS
OF FINANCIAL CONDITION.— 
Each registered proxy advisory firm shall, on a confiden-
tial basis, file with the Commission, at intervals deter-
mined by the Commission, such financial statements, cer-
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tified (if required by the rules or regulations of the Com-
mission) by an independent public auditor, and informa-
tion concerning its financial condition, as the Commission, 
by rule, may prescribe as necessary or appropriate in the 
public interest or for the protection of investors. 
‘‘(l) ANNUAL REPORT.— 
‘‘(1) IN GENERAL.—Each registered proxy advi-
sory firm shall, not later than 90 calendar days after 
the end of each fiscal year, file with the Commission 
and make publicly available an annual report in such 
form as the Commission, by rule, may prescribe as 
necessary or appropriate in the public interest or for 
the protection of investors. 
‘‘(2) CONTENTS.—Each annual report required 
under paragraph (1) shall include, at a minimum, 
disclosure by the registered proxy advisory firm of 
the following: 
‘‘(A) A list of shareholder proposals the 
staff of the registered proxy advisory firm re-
viewed in the prior fiscal year. 
‘‘(B) A list of the recommendations made 
in the prior fiscal year. 
‘‘(C) The economic analysis conducted to 
determine that final recommendations provided 
in the prior fiscal year (other than rec-
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ommendations relating to an issuer-sponsored 
proposal or recommendations consistent with 
that of a board of directors composed of a ma-
jority of independent directors) delivered to cli-
ents that vote shares held on behalf of share-
holders were in the best economic interest of 
those shareholders. 
‘‘(D) The staff who reviewed and made 
recommendations on such proposals in the prior 
fiscal year. 
‘‘(E) The qualifications of such staff to en-
sure that each of the recommendations for cli-
ents that vote shares held on behalf of share-
holders were tied to the best economic interest 
of those shareholders. 
‘‘(F) The recommendations made in the 
prior fiscal year where the proponent of such 
recommendation was a client of or received 
services from the proxy advisory firm. 
‘‘(G) A certification by the chief executive 
officer, chief financial officer, and the primary 
executive responsible for overseeing the compila-
tion and dissemination of proxy voting advice 
that the final recommendations (other than rec-
ommendations relating to an issuer-sponsored 
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proposal or recommendations consistent with 
that of a board of directors composed of a ma-
jority of independent directors) delivered to cli-
ents that vote shares held on behalf of share-
holders in the last fiscal year— 
‘‘(i) were based on internal controls 
and procedures that are designed to ensure 
accurate information and that such inter-
nal controls and procedures are effective; 
‘‘(ii) do not violate applicable State or 
Federal law; and 
‘‘(iii) were based on the best economic 
interest of those shareholders. 
‘‘(H) The economic and other factors that 
a reasonable investor would expect to influence 
the recommendations of such proxy advisory 
firm, including the ownership composition of 
such proxy advisory firm. 
‘‘(m) TRANSPARENT
POLICIES.—Each registered 
proxy advisory firm shall file with the Commission and 
make publicly available its methodology for the formula-
tion of proxy voting policies and voting recommendations 
to clients that vote shares held on behalf of shareholders 
and how that methodology ensures that the firm’s voting 
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recommendations are in the best economic interest of 
those shareholders. 
‘‘(n) RULES OF CONSTRUCTION.—Registration under 
and compliance with this section does not constitute a 
waiver of, or otherwise diminish, any right, privilege, or 
defense that a registered proxy advisory firm may other-
wise have under any provision of State or Federal law, 
including any rule, regulation, or order thereunder. 
‘‘(o) REGULATIONS.— 
‘‘(1) NEW PROVISIONS.—Such rules and regula-
tions as are required by this section or are otherwise 
necessary to carry out this section, including the ap-
plication form required under subsection (a)— 
‘‘(A) shall be issued by the Commission, 
not later than 180 days after the date of enact-
ment of this section; and 
‘‘(B) shall become effective not later than 
1 year after the date of enactment of this sec-
tion. 
‘‘(2) REVIEW OF EXISTING REGULATIONS.—Not 
later than 270 days after the date of enactment of 
this section, the Commission shall— 
‘‘(A) review its existing rules and regula-
tions which affect the operations of proxy advi-
sory firms; and 
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‘‘(B) amend or revise such rules and regu-
lations in accordance with the purposes of this 
section, and issue such guidance as the Com-
mission may prescribe as necessary or appro-
priate in the public interest or for the protec-
tion of investors. 
‘‘(p) APPLICABILITY.—This section, other than sub-
section (n), which shall apply on the date of enactment 
of this section, shall apply on the earlier of— 
‘‘(1) the date on which regulations are issued in 
final form under subsection (o)(1); or 
‘‘(2) 270 days after the date of enactment of 
this section. 
‘‘(q) BEST ECONOMIC INTEREST DEFINED.—In this 
section, the term ‘best economic interest’ means decisions 
that seek to maximize investment returns over a time hori-
zon consistent with the investment objectives and risk 
management profile of the fund in which the shareholders 
are invested.’’. 
(b) CONFORMING AMENDMENT.—Section 17(a)(1) of 
the Securities Exchange Act of 1934 (15 U.S.C. 
78q(a)(1)) is amended by inserting ‘‘proxy advisory firm,’’ 
after ‘‘nationally recognized statistical rating organiza-
tion,’’. 
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(c) PROXY ADVISORY FIRM DEFINITIONS.—Section 
3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)) is amended by adding at the end the following: 
‘‘(82) PROXY
ADVISORY
FIRM.—The term 
‘proxy advisory firm’— 
‘‘(A) means any person who is primarily 
engaged in the business of providing proxy vot-
ing advice, research, analysis, ratings, or rec-
ommendations to clients, which conduct con-
stitutes a solicitation within the meaning of sec-
tion 14; and 
‘‘(B) does not include any person that is 
exempt under law or regulation from the re-
quirements otherwise applicable to persons en-
gaged in such a solicitation. 
‘‘(83) PERSON ASSOCIATED WITH A PROXY AD-
VISORY
FIRM.—With respect to a proxy advisory 
firm— 
‘‘(A) a person is ‘associated’ with the 
proxy advisory firm if the person is— 
‘‘(i) a partner, officer, or director of 
the proxy advisory firm (or any person oc-
cupying a similar status or performing 
similar functions); 
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‘‘(ii) a person directly or indirectly 
controlling, controlled by, or under com-
mon control with the proxy advisory firm; 
‘‘(iii) an employee of the proxy advi-
sory firm; or 
‘‘(iv) a person the Commission deter-
mines by rule is controlled by the proxy 
advisory firm; and 
‘‘(B) a person is not ‘associated’ with the 
proxy advisory firm if the person only performs 
clerical or ministerial functions with respect to 
a proxy advisory firm.’’. 
TITLE VII—LIABILITY FOR CER-
TAIN FAILURES TO DISCLOSE 
MATERIAL INFORMATION OR 
MAKING 
OF 
MATERIAL 
MISSTATEMENTS 
SECTION 701. LIABILITY FOR CERTAIN FAILURES TO DIS-
CLOSE MATERIAL INFORMATION OR MAKING 
OF MATERIAL MISSTATEMENTS. 
Section 14 of the Securities Exchange Act of 1934 
(15 U.S.C. 78n) is amended by adding at the end the fol-
lowing: 
‘‘(l) FALSE
OR MISLEADING STATEMENTS.—For 
purposes of section 18, the failure to disclose material in-
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formation (such as a proxy voting advice business’s meth-
odology, sources of information, or conflicts of interest) 
or the making of a material misstatement regarding proxy 
voting advice that makes a recommendation to a security 
holder as to the security holder’s vote, consent, or author-
ization on a specific matter for which security holder ap-
proval is solicited, and that is furnished by a person that 
markets the person’s expertise as a provider of such proxy 
voting advice separately from other forms of investment 
advice, and sells such proxy voting advice for a fee, shall 
be considered to be false or misleading with respect to a 
material fact.’’. 
TITLE VIII—DUTIES OF INVEST-
MENT ADVISORS, ASSET MAN-
AGERS, AND PENSION FUNDS 
SEC. 801. DUTIES OF INVESTMENT ADVISORS, ASSET MAN-
AGERS, AND PENSION FUNDS. 
Section 13(f) of the Securities Exchange Act of 1934 
(15 U.S.C. 78m(f)) is amended by adding at the end the 
following: 
‘‘(7) DISCLOSURES BY INSTITUTIONAL INVEST-
MENT MANAGERS IN CONNECTION WITH PROXY AD-
VISORY FIRMS.— 
‘‘(A) IN GENERAL.—Every institutional in-
vestment manager which uses the mails, or any 
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means or instrumentality of interstate com-
merce in the course of its business as an insti-
tutional investment manager, which engages a 
proxy advisory firm, and which exercises voting 
power with respect to accounts holding equity 
securities of a class described in subsection 
(d)(1) or otherwise becomes or is deemed to be-
come a beneficial owner of any security of a 
class described in subsection (d)(1) upon the 
purchase or sale of a security-based swap that 
the Commission may define by rule, shall file an 
annual report with the Commission con-
taining— 
‘‘(i) an explanation of how the institu-
tional investment manager voted with re-
spect to each shareholder proposal; 
‘‘(ii) the percentage of votes cast on 
shareholder proposals that were consistent 
with proxy advisory firm recommendations, 
for each proxy advisory firm retained by 
the institutional investment manager; 
‘‘(iii) an explanation of— 
‘‘(I) how the institutional invest-
ment manager took into consideration 
proxy advisory firm recommendations 
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in making voting decisions, including 
the degree to which the institutional 
investment manager used those rec-
ommendations in making voting deci-
sions; 
‘‘(II) how often the institutional 
investment manager voted consistent 
with a recommendation made by a 
proxy advisory firm, expressed as a 
percentage; 
‘‘(III) how such votes are rec-
onciled with the fiduciary duty of the 
institutional investment manager to 
vote in the best economic interests of 
shareholders; 
‘‘(IV) how frequently votes were 
changed when an error occurred or 
due to new information from issuers; 
and 
‘‘(V) the degree to which invest-
ment professionals of the institutional 
investment manager were involved in 
proxy voting decisions; and 
‘‘(iv) a certification that the voting de-
cisions of the institutional investment man-
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ager were based solely on the best eco-
nomic interest of the shareholders on be-
half of whom the institutional investment 
manager holds shares. 
‘‘(B) REQUIREMENTS FOR LARGER INSTI-
TUTIONAL INVESTMENT MANAGERS.—Every in-
stitutional investment manager described in 
subparagraph (A) that has an aggregate fair 
market value on the last trading day in any of 
the preceding twelve months of at least 
$100,000,000,000 shall— 
‘‘(i) in any materials provided to cus-
tomers and related to customers voting 
their shares, clarify that shareholders are 
not required to vote on every proposal; 
‘‘(ii) with respect to each shareholder 
proposal for which the institutional invest-
ment manager votes (other than votes con-
sistent with the recommendation of a 
board of directors composed of a majority 
of independent directors) perform an eco-
nomic analysis before making such vote, to 
determine that the vote is in the best eco-
nomic interest of the shareholders on be-
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half of whom the institutional investment 
manager holds shares; and 
‘‘(iii) include each economic analysis 
required under clause (ii) in the annual re-
port required under subparagraph (A). 
‘‘(C) 
CERTIFICATION
REQUIREMENT.— 
Each report required under this paragraph 
shall be certified by the chief executive officer 
and chief financial officer of the institutional 
investment manager. 
‘‘(D) BEST
ECONOMIC
INTEREST
DE-
FINED.—In this paragraph, the term ‘best eco-
nomic interest’ means decisions that seek to 
maximize investment returns over a time hori-
zon consistent with the investment objectives 
and risk management profile of the fund in 
which shareholders are invested.’’. 
TITLE IX—PROTECTING 
AMERICANS’ SAVINGS 
SEC. 901. REQUIREMENTS RELATED TO PROXY VOTING. 
Section 14 of the Securities Exchange Act of 1934 
(15 U.S.C. 78n), as amended by section 701, is further 
amended by adding at the end the following: 
‘‘(m) PROHIBITION ON ROBOVOTING.— 
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‘‘(1) IN GENERAL.—The Commission shall issue 
final rules prohibiting the use of robovoting with re-
spect to votes related to proxy or consent solicitation 
materials. 
‘‘(2) ROBOVOTING
DEFINED.—In this sub-
section, the term ‘robovoting’ means the practice of 
automatically voting in a manner consistent with the 
recommendations of a proxy advisory firm or pre- 
populating votes on a proxy advisory firm’s elec-
tronic voting platform with the proxy advisory firm’s 
recommendations, in either case, without inde-
pendent review and analysis. 
‘‘(n) PROHIBITION ON OUTSOURCING VOTING DECI-
SIONS BY INSTITUTIONAL INVESTORS.—An institutional 
investor may not outsource voting decisions with respect 
to votes related to proxy or consent solicitation materials. 
‘‘(o) NO REQUIREMENT TO VOTE.—No person may 
be required to cast votes related to proxy or consent solici-
tation materials. 
‘‘(p) PROXY
ADVISORY
FIRM
CALCULATION
OF 
VOTES.—With respect to votes related to proxy or consent 
solicitation materials with respect to an issuer, a proxy 
advisor firm shall calculate the vote result consistent with 
the law of the State in which the issuer is incorporated.’’. 
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TITLE X—EMPOWERING 
SHAREHOLDERS 
SEC. 1001. PROXY VOTING OF PASSIVELY MANAGED FUNDS. 
(a) IN GENERAL.—The Investment Advisers Act of 
1940 (15 U.S.C. 80b–1 et seq.) is amended by inserting 
after section 208 (15 U.S.C. 80b–8) the following: 
‘‘SEC. 208A. PROXY VOTING OF PASSIVELY MANAGED 
FUNDS. 
‘‘(a) INVESTMENT ADVISER PROXY VOTING.— 
‘‘(1) IN GENERAL.—An investment adviser that 
holds authority to vote a proxy solicited by an issuer 
pursuant to section 14 of the Securities Exchange 
Act of 1934 (15 U.S.C. 78n) in connection with any 
vote of covered securities held by a passively man-
aged fund shall— 
‘‘(A) vote in accordance with the instruc-
tions of the beneficial owner of such covered se-
curities; 
‘‘(B) vote in accordance with the voting in-
structions of such issuer; or 
‘‘(C) abstain from voting. 
‘‘(2) EXCEPTION.—Paragraph (1) shall not 
apply with respect to a vote on a routine matter. 
‘‘(b) SAFE HARBOR.—With respect to a matter that 
is not a routine matter, in the case of a vote described 
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in subsection (a)(1), an investment adviser shall not be 
liable to any person under any law or regulation of the 
United States, any constitution, law, or regulation of any 
State or political subdivision thereof, or under any con-
tract or other legally enforceable agreement (including any 
arbitration agreement), for any of the following: 
‘‘(1) Not soliciting voting instructing from any 
person under subsection (a)(1) with respect to such 
vote. 
‘‘(2) Voting in accordance with the voting in-
structions of an issuer pursuant to subparagraph 
(B) of such subsection. 
‘‘(3) Abstaining from voting in accordance with 
subparagraph (C) of such subsection. 
‘‘(c) DEFINITIONS.—In this section: 
‘‘(1) COVERED SECURITY.—The term ‘covered 
security’— 
‘‘(A) means a voting security, as that term 
is defined in section 2(a) of the Investment 
Company Act of 1940 (15 U.S.C. 80a–2(a)), in 
which a qualified fund is invested; and 
‘‘(B) does not include any voting security 
(as defined in subparagraph (A)) of an issuer 
registered with the Commission as an invest-
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ment company under section 8 of the Invest-
ment Company Act of 1940 (15 U.S.C. 80a–8). 
‘‘(2) PASSIVELY
MANAGED
FUND.—The term 
‘passively managed fund’ means a qualified fund 
that— 
‘‘(A) is designed to track, or is derived 
from, an index of securities or a portion of such 
an index; 
‘‘(B) discloses that the qualified fund is a 
passive index fund; or 
‘‘(C) allocates not less than 40 percent of 
the total assets of the qualified fund to an in-
vestment strategy that is designed to track, or 
is derived from, an index of securities or a por-
tion of such an index fund. 
‘‘(3) QUALIFIED
FUND.—The term ‘qualified 
fund’ means— 
‘‘(A) an investment company, as that term 
is defined in section 3 of the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–3); 
‘‘(B) a private fund; 
‘‘(C) an eligible deferred compensation 
plan, as that term is defined in section 457(b) 
of the Internal Revenue Code of 1986; 
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‘‘(D) a trust, plan, account, or other entity 
described in section 3(c)(11) of the Investment 
Company Act of 1940 (15 U.S.C. 80a– 
3(c)(11)); 
‘‘(E) a plan maintained by an employer de-
scribed in clause (i), (ii), or (iii) of section 
403(b)(1)(A) of the Internal Revenue Code of 
1986 to provide annuity contracts described in 
section 403(b) of such Code; 
‘‘(F) a common trust fund, or similar 
fund, maintained by a bank; 
‘‘(G) any fund established under section 
8438(b)(1) of title 5, United States Code; or 
‘‘(H) any separate managed account of a 
client of an investment adviser. 
‘‘(4) 
REGISTRANT.—The 
term 
‘registrant’ 
means an issuer of covered securities. 
‘‘(5) ROUTINE
MATTER.—The term ‘routine 
matter’— 
‘‘(A) includes a proposal that relates to— 
‘‘(i) an election with respect to the 
board of directors of the registrant; 
‘‘(ii) the compensation of management 
or the board of directors of the registrant; 
‘‘(iii) the selection of auditors; 
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‘‘(iv) material conflicts; 
‘‘(v) declassification; or 
‘‘(vi) transactions that would trans-
form the structure of the registrant, in-
cluding— 
‘‘(I) a merger or consolidation; 
and 
‘‘(II) the sale, lease, or exchange 
of all, or substantially all, of the prop-
erty and assets of a registrant; and 
‘‘(B) does not include— 
‘‘(i) a proposal that is not submitted 
to a holder of covered securities by means 
of a proxy statement comparable to that 
described in section 240.14a–101 of title 
17, Code of Federal Regulations, or any 
successor regulation; 
‘‘(ii) a proposal that is— 
‘‘(I) the subject of a counter-so-
licitation; or 
‘‘(II) part of a proposal made by 
a person other than the applicable 
registrant; 
‘‘(iii) any other matter determined by 
the Commission or an exchange registered 
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under section 6 of the Securities Exchange 
Act of 1934 (15 U.S.C. 78f) to be not rou-
tine.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on the first August 1 that 
occurs after the date that is 2 years after the date of en-
actment of this Act. 
TITLE XI—PROTECTING RETAIL 
INVESTORS’ SAVINGS 
SEC. 1101. BEST INTEREST BASED ON PECUNIARY FAC-
TORS. 
(a) IN GENERAL.—Section 211(g) of the Investment 
Advisers Act of 1940 (15 U.S.C. 80b–11(g)) is amended 
by adding at the end the following: 
‘‘(3) BEST
INTEREST
BASED
ON
PECUNIARY 
FACTORS.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the best interest of a customer shall 
be determined using pecuniary factors, which 
may not be subordinated to or limited by non- 
pecuniary factors, unless the customer provides 
informed consent, in writing, that such non-pe-
cuniary factors be considered. 
‘‘(B) DISCLOSURE
OF
PECUNIARY
FAC-
TORS.—If a customer provides a broker, dealer, 
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or investment adviser with the informed consent 
to consider non-pecuniary factors described 
under subparagraph (A), the broker, dealer, or 
investment adviser shall— 
‘‘(i) disclose the expected pecuniary 
effects to the customer over a time period 
selected by the customer and not to exceed 
three years; and 
‘‘(ii) at the end of the time period de-
scribed in clause (i), disclose, by compari-
son to a reasonably comparable index or 
basket of securities selected by the cus-
tomer, the actual pecuniary effects of that 
time period, including all fees, costs, and 
other expenses incurred to consider non-pe-
cuniary factors. 
‘‘(C) PECUNIARY
FACTOR
DEFINED.—In 
this paragraph, the term ‘pecuniary factor’ 
means a factor that a fiduciary prudently deter-
mines is expected to have a material effect on 
the risk or return of an investment based on 
appropriate investment horizons.’’. 
(b) RULEMAKING.—Not later than the end of the 12- 
month period beginning on the date of enactment of this 
Act, the Securities and Exchange Commission shall revise 
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or issue such rules as may be necessary to implement the 
amendment made by subsection (a). 
(c) APPLICABILITY.—The amendment made by sub-
section (a) shall apply to actions taken by a broker, dealer, 
or investment adviser beginning on the date that is 12 
months after the date of enactment of this Act. 
SEC. 1102. STUDY ON CLIMATE CHANGE AND OTHER ENVI-
RONMENTAL DISCLOSURES IN MUNICIPAL 
BOND MARKET. 
(a) IN GENERAL.—The Securities and Exchange 
Commission shall— 
(1) conduct a study to determine the extent to 
which issuers of municipal securities (as such term 
is defined in section 3(a)(29) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)(29)) make 
disclosures to investors regarding climate change 
and other environmental matters; and 
(2) solicit public comment with respect to such 
study. 
(b) CONTENTS.—The study required under sub-
section (a) shall consider and analyze— 
(1) the frequency with which disclosures de-
scribed in subsection (a)(1) are made; 
(2) whether such disclosures made by issuers of 
municipal securities in connection with offerings of 
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securities align with such disclosures made by 
issuers of municipal securities in other contexts or to 
audiences other than investors; 
(3) any voluntary or mandatory disclosure 
standards observed by issuers of municipal securities 
in the course of making such disclosures; 
(4) the degree to which investors consider such 
disclosures in connection with making an investment 
decision; and 
(5) such other information as the Securities 
and Exchange Commission determines appropriate. 
(c) REPORT.—Not later than 1 year after the date 
of the enactment of this Act, the Securities and Exchange 
Commission shall submit to the Committee on Banking, 
Housing, and Urban Affairs of the Senate and the Com-
mittee on Financial Services of the House of Representa-
tives a report that includes— 
(1) the results of the study required under this 
section; 
(2) a detailed discussion of the financial risks 
to investors from investments in municipal securi-
ties; 
(3) whether such risks are adequately disclosed 
to investors; and 
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(4) recommended regulatory or legislative steps 
to address any concerns identified in the study. 
SEC. 1103. STUDY ON SOLICITATION OF MUNICIPAL SECU-
RITIES BUSINESS. 
(a) IN GENERAL.—The Securities and Exchange 
Commission shall— 
(1) conduct a study on the effectiveness of each 
covered rule in preventing the payment of funds to 
elected officials or candidates for elected office in ex-
change for the receipt of government business in 
connection with the offer or sale of municipal securi-
ties; and 
(2) solicit public comment with respect to such 
study. 
(b) CONTENTS.—The study required under sub-
section (a) shall consider and analyze— 
(1) the effectiveness of each covered rule, in-
cluding whether each covered rule accomplishes the 
intended effect of such covered rule and has any un-
intended adverse effects; 
(2) the frequency and scope of enforcement ac-
tions undertaken pursuant to each covered rule; 
(3) the degree to which— 
(A) persons subject to each covered rule— 
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(i) have in effect policies and proce-
dures intended to ensure compliance with 
each such covered rule; and 
(ii) are disadvantaged from partici-
pating in the political process generally 
and in relation to persons who solicit or re-
ceive government business or government 
licenses, permits, and approvals other than 
in connection with the offer or sale of mu-
nicipal securities; and 
(B) other State and Federal laws and reg-
ulations impact the solicitation of municipal se-
curities business; and 
(4) such other information as the Securities 
and Exchange Commission determines appropriate. 
(c) REPORT.—Not later than 1 year after the date 
of the enactment of this Act, the Securities and Exchange 
Commission shall submit to the Committee on Banking, 
Housing, and Urban Affairs of the Senate and the Com-
mittee on Financial Services of the House of Representa-
tives a report that includes— 
(1) the results of the study required under this 
section; 
(2) an analysis of the extent to which persons 
affiliated with small businesses, as well as persons 
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affiliated with minority and women opened busi-
nesses, have been affected by the covered rules; and 
(3) recommended regulatory or legislative steps 
to address any concerns identified in the study. 
(d) DEFINITIONS.—In this section: 
(1) COVERED RULE.—The term ‘‘covered rule’’ 
means— 
(A) Rule G–38 of the Municipal Securities 
Rulemaking Board; and 
(B) Rule 206(4)–5 (17 CFR 275.206(4)– 
5). 
(2) MUNICIPAL SECURITIES.—The term ‘‘mu-
nicipal securities’’ has the meaning given the term in 
section 3(a)(29) of the Securities Exchange Act of 
1934 (15 U.S.C. 78c(a)(29)). 
Æ 
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