I 117th CONGRESS 2d Session H. R. 7151 IN THE HOUSE OF REPRESENTATIVES March 18, 2022 Mr. Barr (for himself and Mr. Allen ) introduced the following bill; which was referred to the Committee on Education and Labor , and in addition to the Committee on Financial Services , for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To amend the Investment Advisers Act of 1940 and the Employment Retirement Income Security Act of 1974 to specify that only pecuniary factors are to be taken into account in determining best interest, and for other purposes.

1. Short title This Act may be cited as the Ensuring Sound Guidance Act . 2. Investment Advisors Act of 1940 amendment (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 For purposes of paragraph (1), the best interest of a customer shall be determined using only pecuniary factors, unless the customer specifically requests that non-pecuniary factors be considered. . (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 or issue such rules as may be necessary to implement the amendment made by subsection (a). 3. Employee Retirement Income Security Act of 1974 amendment Section 404(a) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1104(a) ) is amended by adding at the end the following: (3) Interest based on pecuniary factors (A) In general For purposes of paragraph (1), a fiduciary of a plan shall be considered to act solely in the interest of the participants and beneficiaries of the plan with respect to a plan investment or investment course of action only if the fiduciary’s action with respect to such investment is based only on pecuniary factors. The fiduciary may not subordinate the interests of the participants and beneficiaries in their retirement income or financial benefits under the plan to other objectives and may not sacrifice investment return or take on additional investment risk to promote non-pecuniary benefits or goals. The weight given to any pecuniary factor by a fiduciary should appropriately reflect a prudent assessment of the impact of such factor on risk-return. (B) Investment alternatives for participant-directed individual account plans In selecting investment options for a pension plan described in subsection (c)(1)(A), a fiduciary is not prohibited from considering or including an investment option on the basis that such investment option promotes non-pecuniary benefits or goals, provided that the fiduciary— (i) satisfies the requirements of paragraph (1) and subparagraph (A) in considering or including any such investment option; and (ii) does not consider or include such investment option as a default investment (as defined in the regulations issued by the Secretary under subsection (c)(5)(A)), or a component thereof. (C) Pecuniary factor defined For the purposes of this paragraph, the term pecuniary factor means a factor that a fiduciary prudently determines is expected to have a material effect on the risk and return of an investment based on appropriate investment horizons consistent with the plan’s investment objectives and the funding policy established pursuant to section 402(b)(1). . 4. Prohibition of rule related to fiduciary prudence and loyalty The Secretary of Labor may not finalize, implement, administer, or enforce the proposed rule entitled “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights” (86 Fed. Reg. 57272) and dated October 14, 2021.