I 119th CONGRESS 1st Session H. R. 3402 IN THE HOUSE OF REPRESENTATIVES May 14, 2025 Mr. Loudermilk introduced the following bill; which was referred to the Committee on Financial Services A BILL To amend the Securities Exchange Act of 1934 to require certain disclosures by institutional investment managers in connection with proxy advisory firms, and for other purposes.

1. Duties of investment advisors, asset managers, 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 investment managers in connection with proxy advisory firms (A) In general Every institutional investment manager which uses the mails, or any means or instrumentality of interstate commerce in the course of its business as an institutional 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 become 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 containing— (i) an explanation of how the institutional investment manager voted with respect 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 investment manager took into consideration proxy advisory firm recommendations in making voting decisions, including the degree to which the institutional investment manager used those recommendations in making voting decisions; (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 reconciled 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 investment professionals of the institutional investment manager were involved in proxy voting decisions; and (iv) a certification that the voting decisions of the institutional investment manager were based solely on the best economic interest of the shareholders on behalf of whom the institutional investment manager holds shares. (B) Requirements for larger institutional investment managers Every institutional investment manager described in subparagraph (A) that has assets under management with 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 customers 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 investment manager votes (other than votes consistent with the recommendation of a board of directors composed of a majority of independent directors) perform an economic analysis before making such vote, to determine that the vote is in the best economic interest of the shareholders on behalf of whom the institutional investment manager holds shares; and (iii) include each economic analysis required under clause (ii) in the annual report required under subparagraph (A). (C) Definitions In this paragraph: (i) Best economic interest The term best economic interest means decisions that seek to maximize investment returns over a time horizon consistent with the investment objectives and risk management profile of the fund in which shareholders are invested. (ii) Proxy advisory firm The term proxy advisory firm — (I) means any person who is primarily engaged in the business of providing proxy voting advice, research, analysis, ratings, or recommendations to clients, which conduct constitutes a solicitation within the meaning of section 14; and (II) does not include any person that is exempt under law or regulation from the requirements otherwise applicable to persons engaged in such a solicitation. .