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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3055 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 3055
To amend the Investment Advisers Act of 1940 to require proxy advisory
firms to register as investment advisers under that Act, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
October 23, 2025
Mr. Reed (for himself and Mr. Tillis) introduced the following bill;
which was read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
_______________________________________________________________________
A BILL
To amend the Investment Advisers Act of 1940 to require proxy advisory
firms to register as investment advisers under that Act, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Corporate Governance Fairness Act''.
SEC. 2. PROXY ADVISORY FIRMS.
The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is
amended--
(1) in section 202(a) (15 U.S.C. 80b-2(a))--
(A) in paragraph (11)--
(i) in the matter preceding subparagraph
(A), by inserting ``, and includes a proxy
advisory firm'' after ``promulgates analyses or
reports concerning securities''; and
(ii) in subparagraph (F), by striking ``on
behalf of others;;'' and inserting ``on behalf
of others or acts as a proxy advisory firm;'';
(B) by redesignating the second paragraph (29)
(relating to ``commodity pool'' and other terms) as
paragraph (31); and
(C) by adding at the end the following:
``(32)(A) The term `proxy advisory firm'--
``(i) subject to clause (ii), means any person that
is engaged in the business of providing proxy voting
research, analysis, ratings, or recommendations to
investors in issuers by means of written or oral
statements that are reasonably designed to meet the
objectives or needs of specific clients, investors, or
their accounts, including proxy voting research,
analysis, ratings, or recommendations that are tailored
to or reflect particular proxy voting guidelines
developed or selected by investors; and
``(ii) does not include any person described in
clause (i) that, together with the parent,
subsidiaries, and affiliates of the person, receives on
a consolidated basis in a fiscal year gross receipts
from the clients of the person in an amount that is not
more than $5,000,000, as adjusted annually by the
Commission to reflect the percentage change for the
previous calendar year in the gross domestic product of
the United States, as calculated by the Bureau of
Economic Analysis of the Department of Commerce, except
that a person described in this clause may choose to be
considered a proxy advisory firm for the purposes of
this Act.
``(B) Notwithstanding any other provision of law or
regulation--
``(i) for the purposes of this Act, a proxy
advisory firm may not be considered to be excluded from
the definition of the term `investment adviser' under
paragraph (11) because of the application of
subparagraph (D) of that paragraph; and
``(ii) only the Commission, under subparagraph (H)
of paragraph (11), may designate a proxy advisory firm
as a person described in that subparagraph, except that
the Commission may not make such a designation if the
proxy advisory firm is described in any of paragraphs
(1) through (9) of section 203(e).'';
(2) in section 203 (15 U.S.C. 80b-3), by adding at the end
the following:
``(o) Rule of Construction.--Nothing in subsections (b) through (n)
may be construed to exempt a proxy advisory firm from the application
of the provisions of subsection (a).'';
(3) in section 203A(a)(1) (15 U.S.C. 80b-3a(a)(1))--
(A) in subparagraph (A), by striking ``or'' at the
end;
(B) in subparagraph (B), by striking the period at
the end and inserting ``; or''; and
(C) by adding at the end the following:
``(C) is a proxy advisory firm.'';
(4) in section 204 (15 U.S.C. 80b-4), by adding at the end
the following:
``(g) Examination of Records of Proxy Advisory Firms.--
``(1) Periodic and special examinations.--The Commission--
``(A) shall--
``(i) beginning not later than 1 year after
the date of enactment of this subsection,
conduct periodic inspections of the records of
proxy advisory firms in accordance with a
schedule established by the Commission; and
``(ii) when conducting each inspection
under clause (i), review--
``(I) whether any proxy advisory
firm, with respect to any statement
made by the firm to a client of the
proxy advisory firm, knowingly--
``(aa) made any false
statement to the client; or
``(bb) omitted to state a
material fact that would be
necessary to make the statement
to the client not misleading;
and
``(II) policies and programs
regarding conflicts of interest at
proxy advisory firms; and
``(B) may conduct, in addition to the inspections
conducted under subparagraph (A), at any time and from
time to time, such additional, special, and other
examinations of proxy advisory firms and the records of
proxy advisory firms as the Commission may prescribe as
necessary and appropriate in the public interest and
for the protection of investors.
``(2) Availability of records.--A proxy advisory firm shall
make available to the Commission any copies or extracts from
the records described in subparagraph (A)(i) or (B) of
paragraph (1), as applicable, as may be prepared without undue
effort, expense, or delay, as the Commission or the
representatives of the Commission may reasonably request.'';
and
(5) in section 211(h) (15 U.S.C. 80b-11(h))--
(A) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively, and adjusting
the margins accordingly;
(B) in the matter preceding subparagraph (A), as so
redesignated, by striking ``The Commission'' and
inserting the following:
``(1) In general.--The Commission'';
(C) in paragraph (1), as so redesignated--
(i) in subparagraph (A), as so
redesignated, by striking ``and'' at the end;
(ii) in subparagraph (B), as so
redesignated, by striking the period at the end
and inserting ``; and''; and
(iii) by adding at the end the following:
``(C) not later than 2 years after the date of
enactment of the Corporate Governance Fairness Act, and
after consulting with all relevant stakeholders, submit
to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services
of the House of Representatives a report that--
``(i) evaluates existing, as of the date on
which the report is submitted--
``(I) policies and programs
regarding conflicts of interest at
proxy advisory firms; and
``(II) policies and procedures at
proxy advisory firms that are designed
to avoid knowingly making any false
statement, or omitting to state a
material fact, that would be necessary
to make a statement to a client of the
proxy advisory firm not misleading; and
``(ii) examines whether any additional
protection to investors under subparagraph (B)
would be helpful to those investors, including
policies and procedures that allow investors to
consider, in a reasonably timely manner,
material information that is necessary for the
investors to--
``(I) make informed investment
decisions; and
``(II) exercise any of the rights
of the investors that are conferred by
securities held by the investors.'';
and
(D) by adding at the end the following:
``(2) Updates of proxy advisory firms report.--Not less
frequently than once every 5 years, beginning on the date on
which the Commission submits the report required under
paragraph (1)(C), the Commission shall submit to the
congressional committees described in that paragraph an updated
version of that report, which shall evaluate whether the
existing rules of the Commission, as of the date on which the
applicable updated report is submitted, sufficiently protect
investors, including the ability of investors to consider, in a
reasonably timely manner, material information that is
necessary for the investors to--
``(A) make informed investment decisions; and
``(B) exercise any of the rights of the investors
that are conferred by securities held by the
investors.''.
<all>
Introduced in Senate
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs. (Sponsor introductory remarks on measure: CR S7731-7732)
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