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.

[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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