IIB 
116TH CONGRESS 
1ST SESSION H. R. 1815 
IN THE SENATE OF THE UNITED STATES 
OCTOBER 21, 2019 
Received; read twice and referred to the Committee on Banking, Housing, and 
Urban Affairs 
AN ACT 
To require the Securities and Exchange Commission, when 
developing rules and regulations about disclosures to re-
tail investors, to conduct investor testing, including a 
survey and interviews of retail investors, and for other 
purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘SEC Disclosure Effec-
tiveness Testing Act’’. 
SEC. 2. DISCLOSURE TESTING. 
(a) IN GENERAL.—Section 23(a) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78w(a)) is amended by 
adding at the end the following: 
‘‘(4) INVESTOR TESTING.— 
‘‘(A) IN GENERAL.—The Commission shall 
engage in investor testing prior to issuing any 
rule or regulation which designates documents 
or information to be disclosed under the securi-
ties laws, if such documents or information are 
required to be delivered to, and are intended or 
substantially likely to be materially relied upon 
by, a retail investor when— 
‘‘(i) selecting a broker-dealer or in-
vestment adviser, evaluating their services 
and fees, or materially altering a brokerage 
or advisory relationship; 
‘‘(ii) 
assessing 
a 
securities 
rec-
ommendation or investment advice pro-
vided by a broker-dealer or investment ad-
viser; 
‘‘(iii) making a decision to purchase 
or sell a security; or 
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‘‘(iv) such other circumstances as the 
Commission may, with input from the In-
vestor Advocate, determine appropriate for 
the protection of retail investors. 
‘‘(B) EXEMPTION
FOR
CERTAIN
DISCLO-
SURES.—This section shall not apply to— 
‘‘(i) disclosures made pursuant to 
Regulations S–K and S–X (including In-
dustry Guides), Regulation 14A, Form N– 
PX, Form 10–K, Form 10–Q, Form 8–K, 
Form SD, Form N–PORT, Form PF, 
Regulation SBSR, disclosures mandated by 
or jointly with the Board of Governors of 
the Federal Reserve System or the Finan-
cial Stability Oversight Council, or succes-
sors thereto; or 
‘‘(ii) any other documents or informa-
tion that the Commission, with input from 
the Investor Advocate, determines are out-
side the intended scope and purposes of 
this Act. 
‘‘(C) COMMISSION
AUTHORITY
TO
CON-
DUCT ADDITIONAL TESTING.—This section shall 
not be construed to limit the Commission’s abil-
ity to conduct any investor testing on any other 
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documents or information not subject to this 
section 23(a), provided that any such investor 
testing shall not be subject to the requirements 
of this section 23(a). 
‘‘(D) CONTENTS.—Investor testing con-
ducted pursuant to subparagraph (A) shall in-
clude the following: 
‘‘(i) Qualitative testing in the form of 
one-on-one cognitive interviews of retail in-
vestors about documents or information, or 
samples of such documents or information, 
to be provided. 
‘‘(ii) Such other forms of testing that 
the Commission, with input from the In-
vestor Advocate, deems appropriate for 
evaluating the effectiveness of retail disclo-
sures. 
‘‘(iii) Analysis and publication in the 
Federal Register of the results of the test-
ing. 
‘‘(iv) An opportunity for the public to 
comment on such results published in the 
Federal Register. 
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‘‘(v) A consideration of unique chal-
lenges faced by retail investors age 65 or 
older. 
‘‘(E) 
SUBSTANTIVE
CHANGES.—If 
the 
Commission, in the period between engaging in 
investor testing and publishing a final rule, 
makes substantive changes to such rule that the 
Commission determines would have a signifi-
cant impact on retail investors, and such 
changes were not already investor tested, the 
Commission shall again engage in investor test-
ing related to such changes. 
‘‘(F) PUBLIC
AVAILABILITY
OF
RETAIL 
TESTING
RESULTS.—The Commission shall 
make the data and results of any investor test-
ing performed pursuant to this paragraph avail-
able to the public. 
‘‘(G) RULES OF CONSTRUCTION.— 
‘‘(i) The determination that some or 
all of a document or information is deemed 
to be subject to this paragraph shall not 
forestall the determination that such docu-
ment or information may also be used or 
relied upon by the public, market partici-
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pants other than retail investors, or gov-
ernment agencies. 
‘‘(ii) The Commission may, in con-
sultation with the Investor Advocate, deter-
mine which, if any, components of such 
document or information are substantially 
likely to be relied on by retail investors for 
the purposes outlined in paragraph (4)(A) 
above and focus testing under this para-
graph on those components of the disclo-
sure. 
‘‘(iii) 
Notwithstanding 
clause 
(ii) 
above, where any information subject to 
testing under this paragraph may be used 
or relied upon by the public, market par-
ticipants other than retail investors, or 
government agencies, the results of testing 
made pursuant to this paragraph shall not 
provide grounds for reducing or elimi-
nating (including any undermining of reli-
ability of and accountability for) the infor-
mation that existing or proposed regulation 
requires or would require be made avail-
able to the public, market participants 
other than retail investors, and government 
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agencies, whether or not such information 
is delivered to retail investors. 
‘‘(H) RETAIL
INVESTOR
DEFINED.—For 
the purposes of this paragraph, the term ‘retail 
investor’ means any investor that is not an in-
stitutional investor.’’. 
(b) PARTICIPATION OF INVESTOR ADVOCATE.—Sec-
tion 4(g) of the Securities Exchange Act of 1934 (15 
U.S.C. 78d(g)) is amended— 
(1) in paragraph (4)— 
(A) in subparagraph (D)(ii), by striking 
‘‘and’’ at the end; 
(B) by redesignating subparagraph (E) as 
subparagraph (F); and 
(C) by inserting after subparagraph (D) 
the following: 
‘‘(E) engage in investor testing— 
‘‘(i) to carry out the functions of the 
Office; and 
‘‘(ii) pursuant to section 23(a)(4), as 
appropriate; and’’; 
(2) by adding at the end the following: 
‘‘(9) PUBLICATION OF DATA AND RESULTS OF 
INVESTOR TESTING.—With respect to any investor 
testing carried out by the Investor Advocate pursu-
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ant to paragraph (4)(E), the Investor Advocate may 
make the data and results of such investor testing 
available to the public, without further review or ed-
iting by the Commission. 
‘‘(10) PERSONNEL.—If the Investor Advocate 
decides, within its sole discretion, to conduct testing 
under this section, the Investor Advocate may do so 
and the Commission shall provide the Office of the 
Investor Advocate with sufficient personnel and 
funding necessary to carry out such testing. Such 
testing may qualify as the testing covered by this 
section, provided that all requirements of the section 
are met.’’. 
(c) PRIOR RULES.— 
(1) IN GENERAL.—For any final rule or regula-
tion issued by the Securities and Exchange Commis-
sion (in this subsection referred to as the ‘‘Commis-
sion’’) before the date of the enactment of this Act 
that would be subject to investor testing under sec-
tion 23(a)(4) of the Securities Exchange Act of 
1934, had such rule been issued on or after the date 
of enactment of this Act, the Commission shall per-
form investor testing with respect to such rule or 
regulation that includes the contents described in 
such section 23(a)(4). 
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(2) SCHEDULE.—The Commission shall, not 
later than 6 months after the date of the enactment 
of this Act, with input from the Investor Advocate, 
establish a schedule for completing any investor test-
ing required under paragraph (1) that prioritizes 
testing of any final rules and regulations that des-
ignate documents or information central to retail in-
vestor decision making, and in particular prioritize 
the testing of documents or information required to 
be delivered to retail investors in the form of sum-
mary documents or summary sections of documents 
including for the purpose of determining whether 
and how such summary documents can achieve the 
goals of informed investor decision-making in the 
circumstances set forth in section 23(a)(4) of the 
Securities Exchange Act of 1934 while maintaining 
full accessibility by retail investors, the public, other 
market participants, and government regulators to 
the full range of documents and information that 
they may utilize or rely on, whether or not such doc-
uments or information are required to be delivered 
to retail investors. 
(3) REPORT.—The Commission shall, with 
input from the Investor Advocate, issue a report to 
Congress each year containing the following: 
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(A) The status of any investor testing re-
quired under paragraph (1) initiated within the 
last year or otherwise ongoing. 
(B) The results of any investor testing 
completed under paragraph (1) within the last 
year. 
(C) Any priorities the Commission has, 
based on results of investor testing required by 
paragraph (1), for— 
(i) revising any proposed or final rule 
or regulation based on the results of test-
ing; 
(ii) initiating any rulemaking or ac-
tions arising from the results of the test-
ing; and 
(iii) the Investor Advocate’s views on 
the above priorities and any such other 
matters arising from the testing or results 
of testing. 
Passed the House of Representatives October 17, 
2019. 
Attest: 
CHERYL L. JOHNSON, 
Clerk. 
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