IB Union Calendar No. 105 118th CONGRESS 1st Session H. R. 2622 [Report No. 118–134] IN THE HOUSE OF REPRESENTATIVES April 13, 2023 Mr. Sessions (for himself and Mrs. Wagner ) introduced the following bill; which was referred to the Committee on Financial Services July 11, 2023 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed Strike out all after the enacting clause and insert the part printed in italic For text of introduced bill, see copy of bill as introduced on April 13, 2023 A BILL To amend the Investment Advisers Act of 1940 to codify certain Securities and Exchange Commission no-action letters that exclude brokers and dealers compensated for certain research services from the definition of investment adviser, and for other purposes.

1. Extension of no-action letter; study (a) Findings Congress finds the following: (1) The Securities and Exchange Commission staff first granted temporary no-action relief in 2017, prior to the implementation of European rules designed to protect European investors from excessive costs and conflicts of interest. (2) The Commission staff did not engage in any meaningful cost-benefit analysis of the issues raised by the no-action relief requested either prior to or following the granting of no-action relief in 2017. (3) The Commission staff revised and extended the temporary no-action relief in 2019, again without any meaningful cost-benefit analysis of the issues raised by the no-action relief requested prior to or following the granting of the relief. (4) There are currently approximately 15,300 registered investment advisers, including affiliates that provide the vast majority of investment research. (5) The Commission has received complaints from investors and investor advocacy groups expressing concerns with the no-action relief, as it currently exists. (6) The Commission has received concerns from broker-dealers related to the potential expiration of the no-action relief. (b) Extension of no-action letter The Commission shall provide an additional 6-month extension of the October 26, 2017, Securities Industry and Financial Markets Association, SEC Staff No-Action Letter, set to expire on July 3, 2023. (c) Study required After the announcement extending the expiration date of the no-action letter under subsection (b), the Commission shall conduct, through notice and comment, a study of the impact of allowing the no-action letter’s expiration or maintenance of the no-action letter, and give due regard to any comments received in conducting the study. The Commission or delegated staff shall report their findings and conclusions, including findings related to the expiration of the no-action relief, to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate. (d) Contents of study The study required under subsection (c) shall include potential impacts on the research market for smaller issuers, including— (1) the availability of such research, including— (A) the number and types of firms who provide such research; (B) the volume of such research over time; and (C) competition in the research market; (2) any unique challenges faced by minority-owned, women-owned, and veteran owned small issuers in obtaining research coverage; (3) the impact on the availability of research coverage for small issuers due to Commission rules; (4) a cost-benefit analysis of regulatory options that will support research coverage of small entities and increase transparency in the cost of research provided by broker-dealers; (5) the impact of the no-action relief on investors in registered investment companies and exempt investment funds, pension funds, endowments, and other asset owners, investment advisers, broker-dealers that provide both investment research and trading services, independent investment advisers that do not provide trading services, broker-dealers that do not provide investment research, and other market participants, including issuers of securities; and (6) the potential impacts of the expiration of the no-action relief on investors in registered investment companies and exempt investment funds, pension funds, endowments, investment advisers, and other asset owners, broker-dealers that provide both investment research and trading services, independent investment advisers that do not provide trading services, broker-dealers that do not provide investment research, and other market participants, including issuers of securities.

July 11, 2023 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed