[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3402 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 3402
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.
_______________________________________________________________________
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 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.''.
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