H.R. 3402

[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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