I 
114TH CONGRESS 
1ST SESSION H. R. 4166 
To amend the Securities Exchange Act of 1934 to provide specific credit 
risk retention requirements to certain qualifying collateralized loan obligations. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 3, 2015 
Mr. BARR (for himself and Mr. DAVID SCOTT of Georgia) introduced the 
following bill; which was referred to the Committee on Financial Services 
A BILL 
To amend the Securities Exchange Act of 1934 to provide 
specific credit risk retention requirements to certain 
qualifying collateralized loan obligations. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Expanding Proven Fi-
nancing for American Employers Act’’. 
SEC. 2. RISK RETENTION REQUIREMENT FOR QUALIFIED 
COLLATERALIZED LOAN OBLIGATIONS. 
Section 15G(e) of the Securities Exchange Act of 
1934 (15 U.S.C. 780–11(e)) is amended by inserting after 
paragraph 6 the following new paragraphs: 
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‘‘(7) 
REQUIREMENTS
FOR
QUALIFIED 
COLLATERALIZED LOAN OBLIGATIONS.— 
‘‘(A) RISK
RETENTION
REQUIREMENT.— 
Notwithstanding any other provision of this sec-
tion, as of the effective date set forth in sub-
section (i)(2), the risk retention requirement for 
qualified collateralized loan obligations may be 
met by the purchase and, during the applicable 
duration of risk retention specified by the rules 
of the Federal banking agencies under sub-
section (c)(1)(C)(ii), holding (without hedging 
or otherwise transferring the credit risk), of no 
less than five percent of the equity of the 
collateralized loan obligation by the manager of 
the qualified collateralized loan obligation or 
one or more of the majority-owned affiliates of 
the manager or its knowledgeable employees 
and other employees. 
‘‘(B) QUALIFIED
COLLATERALIZED
LOAN 
OBLIGATIONS.—For purposes of this paragraph, 
a qualified collateralized loan obligation is a 
collateralized loan obligation that meets all of 
the following requirements: 
‘‘(i) ASSET QUALITY PROTECTIONS.— 
The collateralized loan obligation shall— 
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‘‘(I) have at least 90 percent of 
its assets comprised of senior secured 
loans and cash equivalents; 
‘‘(II) have 100 percent of its loan 
assets issued by companies; 
‘‘(III) have no assets that are 
asset-backed securities or derivatives, 
except that this limitation shall not 
prohibit a qualified collateralized loan 
obligation from acquiring a loan par-
ticipation or any interest related to or 
in a letter of credit, or entering into 
derivative transactions to hedge inter-
est rate or currency rate mismatches; 
‘‘(IV) not purchase assets in de-
fault, margin stock, or equity convert-
ible securities; 
‘‘(V) acquire only loans held or 
acquired by three or more investors or 
lenders unaffiliated with the manager; 
‘‘(VI) hold only loans to bor-
rowers whose financial statements are 
subject to an annual audit from an 
independent, 
accredited 
accounting 
firm; 
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‘‘(VII) have no more than 60 
percent of its assets comprised of cov-
enant lite loans; and 
‘‘(VIII) at the time of purchase 
of any asset, comply with the require-
ments of subclauses (I) and (VII) and 
clause (ii) of this subparagraph, or, if 
not in compliance with any such re-
quirement, maintain or improve the 
level of compliance after giving effect 
to such purchase. 
‘‘(ii) 
ASSET
PORTFOLIO
PROTEC-
TIONS.— 
‘‘(I) No more than 3.5 percent of 
the assets of the collateralized loan 
obligation may relate to any single 
borrower. 
‘‘(II) No more than 15 percent of 
the assets of the collateralized loan 
obligation may relate to any single in-
dustry. 
‘‘(iii) STRUCTURAL PROTECTIONS.— 
‘‘(I) The collateralized loan obli-
gation’s equity shall be at least 8 per-
cent of the value of its assets. 
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‘‘(II) The governing transaction 
documents of the collateralized loan 
obligation specify over-collateralization 
and interest coverage tests, and if any 
such test falls below the required level 
specified for the collateralized loan ob-
ligation in such documents, available 
interest collections (and if necessary, 
available principal collections) must be 
applied to repay the collateralized loan 
obligation’s debt in order of seniority 
until compliance with the applicable 
test is restored. 
‘‘(iv) REQUIREMENT
TO
MAINTAIN 
ALIGNMENT OF MANAGER AND INVESTOR 
INTERESTS.— 
‘‘(I) The collateralized loan obli-
gation shall be an open market 
collateralized loan obligation. 
‘‘(II) The holders of the equity of 
the collateralized loan obligation (ex-
cluding the risk retention equity held 
as required by subparagraph (A)) 
shall have the right to remove by vote 
the manager for cause. 
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‘‘(III) A majority of the man-
ager’s fees, including any incentive 
fee, shall be subordinated to payments 
then 
due 
in 
relation 
to 
the 
collateralized loan obligation’s debt se-
curities. 
‘‘(IV) 
The 
manager’s 
discre-
tionary sales of assets on behalf of the 
issuer of the collateralized loan obliga-
tion shall be limited each year to not 
more than 30 percent of the principal 
amount 
of 
the 
assets 
of 
the 
collateralized loan obligation (other 
than sales of defaulted or credit-dete-
riorated, 
credit-risk, 
or 
credit-im-
proved loans). 
‘‘(V) The risk retention equity 
requirement set forth in subparagraph 
(A) is met. 
‘‘(VI) All holders of collateralized 
loan obligation securities that are 
U.S. persons within the meaning of 
Regulation S (17 C.F.R. 230; 249) 
under the Securities Act of 1933, are 
qualified investors. 
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