H. R. 6139
IN THE SENATE OF THE UNITED STATES
July 11, 2018
Received; read twice and referred to the Committee on Banking, Housing, and Urban Affairs
To require the Securities and Exchange Commission to carry out a study to evaluate the issues affecting the provision of and reliance upon investment research into small issuers.
This Act may be cited as the
Improving Investment Research for Small and Emerging Issuers Act.
The Securities and Exchange Commission shall conduct a study to evaluate the issues affecting the provision of and reliance upon investment research into small issuers, including emerging growth companies and companies considering initial public offerings.
Contents of study
The study required under subsection (a) shall consider—
factors related to the demand for such research by institutional and retail investors;
the availability of such research, including—
the number and types of firms who provide such research;
the volume of such research over time; and
competition in the research market;
conflicts of interest relating to the production and distribution of investment research;
the costs of such research;
the impacts of different payment mechanisms for investment research into small issuers, including whether such research is paid for by—
hard-dollar payments from research clients;
payments directed from the client’s commission income (i.e.,
soft dollars); or
payments from the issuer that is the subject of such research;
any unique challenges faced by minority-owned, women-owned, and veteran-owned small issuers in obtaining research coverage; and
the impact on the availability of research coverage for small issuers due to—
investment adviser concentration and consolidation, including any potential impacts of fund-size on demand for investment research of small issuers;
broker and dealer concentration and consolidation, including any relationships between the size of the firm and allocation of resources for investment research into small issuers;
Securities and Exchange Commission rules;
registered national securities association rules;
State and Federal liability concerns;
the settlement agreements referenced in Securities and Exchange Commission Litigation Release No. 18438 (i.e., the
Global Research Analyst Settlement); and
Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU, as implemented by the European Union (
EU) member states (
Not later than 180 days after the date of the enactment of this Act, the Securities and Exchange Commission shall submit to Congress a report that includes—
the results of the study required by subsection (a); and
recommendations to increase the demand for, volume of, and quality of investment research into small issuers, including emerging growth companies and companies considering initial public offerings.
Passed the House of Representatives July 10, 2018.
Karen L. Haas,