Fair Access to Investment Research Act of 2017

Mr. Speaker, the value of companies doesn't always go up. It is not true that the stock market always goes up and only goes up. It would be nice if Methuselahs at Google and every other company in America could get stock options and end up millionaires, but the truth is the world doesn't work that way. That is why disclosure is very important. That is why there is nothing wrong and no one objects to employees being compensated with stock options, but those employees ought to at least know the value of those stock options.

If you give me a check and it has a monetary value, I can read it and I know how much it is. If you give me stock options and you don't tell me because you don't have to disclose how much they are worth, then that is not fair, and that is what we object to.

This bill simply allows companies to avoid disclosure to employees of what those stock options are worth. That is wrong, and that is why we oppose it.

Let me just start in terms of the context, Mr. Speaker. Today we consider yet another bill in favor of the moneyed interests. Today we consider another bill that basically helps out people who have a lot while so many Americans are struggling to get by and problems abound almost everywhere.

I have got to wonder, of all the things the American public want, why is a revision to the SEC's rule--section 701, to be precise--the priority for this week?

We have been here for about 3 months now. The Republicans have set

the agenda. They are in the majority. They get to decide which bills come up. Why do they keep on bringing up bills that only the moneyed interests want?

Mr. Speaker, in the past few months, congressional Republicans--I almost called them corporate Republicans--who decide which bills are the priority, have brought forth a hodgepodge of pieces of legislation. I will just review a few.

Republicans made it easier to drug test people receiving unemployment compensation.

Do you think the unemployed want that?

I doubt it.

Republicans have passed and the President even signed a law to protect corporate firms from having to disclose labor violations like wage theft before winning government contracts. I have got a feeling the employees were not calling for that.

House and Senate Republicans passed laws that allow internet service providers to sell your browser history. I don't think most folks on the internet today were clamoring for that gem, which I was proud to vote ``no'' on.

Republicans enacted a new law making it easier to dump coal debris near rivers and streams.

Republicans stopped efforts to help governments around the world avoid corruption.

H.J. Res. 41 removed the requirement that corporations disclose resource payments to foreign governments, which is a crushing blow to democracy activists working in fragile nations.

Mr. Speaker, this particular piece of legislation comes within a certain kind of context--a context where we are not talking about increase in pay, making people safer, making water cleaner, making foreign governments more honest. It is quite the opposite.

In the 3 months that we have been back in Congress, these laws removing competition, removing disclosure, and removing consumer privacy are all priorities of Republicans, who set the agenda.

Mr. Speaker, people who might be clued into this broadcast today need to know what the majority has been up to. It has not been up to business.

These are all multinational corporate interests that don't punish people for polluting, allow them to sell your internet browser's history, allow them to make money off of testing laid-off workers receiving employment compensation that is due them, and don't make corporate interests disclose payments to foreign governments when they drill for oil and minerals.

I just want the American people and Members to understand what is going on here, what is the larger context of this piece of legislation that we look at today.

When I talk to my constituents, they don't bring up any of this stuff. Mr. Speaker, they want to know: Where is the jobs bill? When are we going to get back to work? Somebody said we were going to work on real infrastructure, real fair trade. When is that going to happen?

Well, the people who are in charge around here, I guess they are going to get around to it at some point.

My constituents say: Can't we raise the minimum wage from something higher than $7.25 an hour, which is the Federal minimum wage? When is that bill coming up? Or, what about reconstructing our roads and our bridges and allowing us to raise a gas tax to invest in our Nation's infrastructure?

They say they want to increase skills. Let's invest in preschool, Pell grants, and community college. Let's put the people, not the corporate wish list, first.

Today we are asked to vote on a bill that basically makes it easier for private companies to provide options, like stocks, rather than compensation to their employees. As I have said, fundamentally, this may not be a bad thing if disclosure is made. This bill makes it not required. This bill makes it easier for firms to offload some of their options to employees without disclosing financial information to them.

While I am glad to see employers reward employees with stock and other compensation in addition to salaries, workers should be told the value of the compensation they receive. I don't think that is asking too much, Mr. Speaker.

With this bill, H.R. 1343, it is possible that employees would be promised stock options which could be worth less than promised or even completely worthless.

Employees could decide to forego a salary increase and accept lower pay in order to receive more stock options; yet, those stock options could be worth way less than they expected.

Why should employees receive less information than any other minority shareholder?

If an employee is trusted enough to run day-to-day aspects of the business, they should be trusted enough to receive full disclosure about the stock. Employees should be able to receive information on the financial position of the company so they can make an educated decision.

It is not difficult to allow participating employees to sign nondisclosure agreements, and it can't be because these disclosures are an additional burden on the firm. These firms prepare these types of disclosures to receive rule 701 exemption from the SEC in the first place.

So I am also concerned about the mismatch of power between corporations and their employees, and I am very concerned that employees can be susceptible to pressure. Let me do a quick example.

George Maddox was one of 21,000 people who worked for Enron. After working at Enron for 30 years, he had 14,000 shares of company stock valued at $1.3 million. When Enron collapsed, he had literally nothing, Mr. Speaker. All of his retirement was Enron stocks. If you haven't watched the movie ``Enron: The Smartest Guys in the Room'' recently, I would urge you to watch it again. You could also read Bethany McLean's book by the same name.

One image consistently stuck with me: a staff rally where leaders extolled the virtues of the firm. Just as we heard on the other side of the aisle a moment ago, leaders whipped employees into a frenzy to buy Enron stock, even as leaders knew it was worthless. In fact, corporate leaders had already sold their stock while urging employees to buy. Enron had a strategy of buying companies and then pressuring new employees to buy Enron stock to keep the stock price inflated. Since Enron usually fired 10 percent of the workers every year, workers felt pressured to buy stock to show commitment to the firm.

I can't just support a bill that gives employees fewer protections than investors. I can't support a bill that encourages employees to possibly forgo cash in their paychecks in exchange for some unverified investment option. It is not right.

Mr. Speaker, I see you reaching for the gavel. I will include the rest of my comments in the Record. I urge a ``no'' vote on this particular piece of legislation until it allows for disclosures.

Today we consider another bill requested by corporations.

But, I got to wonder, of all the things the American public want, why is a revision to the Securities and Exchange Commission rules--Section 701 to be precise--the priority for this week?

We've been here for three months now.

House Republicans set the agenda.

They lead this governing body.

Why do they keep bringing us bills that corporate America wants?

In the past few months, Congressional Republicans, who decide which bills are priorities have brought forward a hodgepodge of corporate requests.

Here are some of the bills that are now law.

Republicans made it easier to drug test people receiving unemployment compensation (H.J. Res. 42).

Republicans passed--and the President signed--a law to protect corporate firms from having to disclose labor violations--like wage theft--before winning government contracts (H.J. Res. 37).

House and Senate Republicans passed laws that allow internet services providers to sell your browser history.

Republicans enacted a new law making it easier to dump coal debris near rivers and streams (H.J. Res. 38).

Republicans stopped efforts to help governments around the world avoid corruption.

H.J. Res. 41 removed the requirement that corporations disclose resource payments to foreign governments.

Which is a crushing blow to democracy activists working in fragile nations.

And, a law preventing State governments from setting up retirement plans for residents who do not have a work-based plan.

So, in the three months we've been back, these laws--removing competition, disclosure, and consumer privacy--are the priorities of Republicans who set the agenda.

These are all asks of corporate America--don't punish us for polluting streams; let us sell your internet browser history; let us make money drug testing laid off workers receiving unemployment due them, and; don't make us disclose our payments to foreign governments when we drill for oil or minerals.

When I talk to my constituents, they don't ask for any of these.

They say, ``Where's the jobs bill?''

My constituents say, can't we raise the minimum wage from $7.25 an hour?

They say, our roads and bridges need work. Let's raise the gas tax a skoch and invest in infrastructure?

They say, we want to increase our skills; let's invest in pre-school, Pell grants and community colleges.

Let's put people, not corporate wish lists--first.

But, nope, today we are asked to vote on a bill that makes it easier for private companies to provide options--like stocks--rather than compensation to their employees.

This bill makes it easier for firms to offload some of their options to their employees without disclosing financial information to them.

While I'm glad to see companies reward employees with stock and other compensation in addition to salaries, workers should be told the value of the compensation they receive.

With this bill--H.R. 1343--it is possible that employees would be promised stock options which could be worth less than promised, or even, completely worthless.

So, employees could decide to forego a salary increase--or accept lower pay--in order to receive more stock options, yet, those stock options could be worth way less than expected.

Why should employees receive less information than that of any other minority shareholder?

If an employee is trusted enough to run the day-to-day aspects of the business, they should be trusted enough to receive full disclosure about the stock.

Employees should be able to receive information on the financial position of the company so they can make an educated decision.

It's not difficult to allow participating employees to sign non- disclosure agreements.

And it can't be because these disclosures are an additional burden on the firm.

Because these companies prepared these types of disclosures to receive the Rule 701 exemption from the SEC in the first place.

I'm also concerned about the mismatch in power between the corporations and their employees.

I am very concerned that employees can be more susceptible to pressure to take options instead of salary increases.

For example, we could ask George Maddox.

George was one of the 21,000 people who worked at ENRON.

After working at ENRON for 30 years, he had 14,000 shares of company stock. It was valued at $1.3 million.

Then ENRON collapsed, and he had literally nothing.

All his retirement was in ENRON stocks.

If you haven't watched the movie ENRON: The Smartest Guys in the Room recently, I'd urge you to watch it again.

You could also read Bethany McLean's book by the same name.

One image has consistently stuck with me.

A staff rally where leadership extolled the virtues of the firm.

Leaders whipped employees into a frenzy to buy ENRON stock even as the leaders knew it was worthless.

In fact, corporate leaders had already sold their stock while urging employees to buy.

ENRON had a strategy of buying companies and then pressuring the new employees to buy ENRON stock to keep the stock price inflated.

And since ENRON usually fired 10% of workers every year, workers felt pressured to buy stock to show a commitment to the firm.

I just can't support a bill that gives employees fewer protections than investors.

I can't support a bill that encourages employees to possibly forego cash in their paychecks in exchange for some unverified investment option.

I don't think the supporters of this bill are doing this for nefarious reasons.

I'm sure they find my reference to Enron hyperbolic.

They might also say that it's irrelevant since Enron was a public company and we are talking about private companies.

So, let's talk about Palantir Technologies.

This $20 billion company convinced top-tier engineers to accept below-market salaries by promising them generous stock options.

But some employees who accepted this bargain, hoping to make money on selling their shares, cannot sell them.

The only buyer of their stocks is Palantir Technologies themselves-- or a buyer approved by Palantir Technologies.

Palantir is not a small firm.

Palantir is the third biggest American tech startup, behind only Uber and AIR B-N-B.

It was also founded in 2004, which makes Palantir as old as Facebook--which is a long time to wait to cash in your options.

Pushing employees to own more of employer's stock exposes workers-- like George Maddox--to put all their retirement eggs in one basket-- what we call ``concentration risk.''

I ask this Congress to stop doing the bidding of corporate America until we address the priorities of American families and workers.

We should increase wages and access to affordable housing, provide clean air and clean water, and protect our privacy.

We should not make it easier for employers to pressure workers to choose options over salary without adequate disclosures. Vote no on

Mr. Speaker, I yield myself such time as I may consume.

H.R. 1343, Encouraging Employee Ownership Act of 2017, eliminates important disclosures that private companies must provide to their employees in the event they are compensating those employees with stock.

This bill would limit transparency. If companies want to pay their employees in stocks, they should have to simply disclose to their workers the risks associated with those investments.

Currently, private companies can provide up to $5 million worth of stock compensation annually to their employees and are not required to provide any financial disclosure. This bill would lift that cap to $10 million.

If companies choose to provide an employee with stock compensation, they should be required to inform that employee of the appropriate financial information, benefits, and the risks associated with that investment, including 2 years of company financial statements. All of this information is commonly available to typical investors.

Let's be clear: this stock is compensation for their work. Employees deserve to understand the value of their compensation prior to accepting it. They deserve the same protections that other investors would get.

I agree with Professor Mercer Bullard, who is a professor of law at the University of Mississippi School of Law, who testified before the Capital Markets, Securities, and Investments Subcommittee voicing his concerns about the bill. In his testimony, he noted that to take advantage of the terms of this legislation, an issuer would have to have at least $34 million in total assets. Surely, such minimal disclosures are not too burdensome for those sort of companies.

I do also understand that some proponents of this legislation argue that such an exemption is needed because disclosure of company information to employees runs the risk that confidential information could be leaked to competitors.

Employees with access to such information could simply be subject to nondisclosure agreements, which are typical today. Indeed, nondisclosure agreements are a simple solution that protects the company, but does not deny the employees the right to understand the worth of, or the risks associated with, the compensation they are receiving. Unfortunately, this bill would limit that transparency and those protections.

Mr. Speaker, I oppose this legislation, and I reserve the balance of my time.

Mr. Speaker, I yield 6 minutes to the gentleman from Minnesota (Mr. Ellison), a member of the Financial Services Committee.

Mr. Speaker, I yield an additional 2 minutes to the gentleman from Minnesota.

Mr. Speaker, I yield 4 minutes to the gentleman from Maryland (Mr. Delaney), a member of the Committee on Financial Services, my classmate, and a cosponsor of this legislation.

Mr. Speaker, I yield an additional 1 minute to the gentleman from Maryland.

Mr. Speaker, I yield myself such time as I may consume.

I appreciate the comments of my colleague and friend. I do, however, disagree that the question here derives from a lack of understanding of the legislation. I think it is entirely possible--in fact, I would suggest that it is likely--that members of a body such as this, from 435 distinct districts and different experiences, can look at the same information, fully understand it, and come to different conclusions as to what sort of policy ought to be in place, and that is where I have landed on this particular subject. I fully understand.

I also think it is important to note that we can't on one hand say that this is not about disclosure and on the other hand mention that these disclosure requirements could have a negative impact and encourage or discourage companies from engaging in the practice of awarding employees with stock as a part of their compensation.

It is a question of disclosure. This legislation is about the disclosure requirements that should be applied in this case. That is really what we have heard from both sides of this argument: where should that disclosure requirement be, and at what level should it be incurred?

What I would say is--and I think this is important to note, speaking for myself--I know many other members of the Financial Services Committee and Members of this body that may oppose this legislation feel strongly that the direction toward awarding employees with stock ownership is a positive direction. It is something that my friend, Mr. Delaney, has not only advocated for, but has practiced in his own private sector experience. It is a positive thing for a company and it is a positive thing for the employees.

The only point that I continue to drive home and that others have reiterated is that it is important that employees understand the nature of the stock that is being awarded to them and that the disclosure requirements make clear employees are aware of the compensation and its true value. That is really the point of my objection.

Mr. Speaker, I include in the Record a letter I received from Public Citizen, which articulates some of these same arguments.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 2 minutes to the distinguished gentleman from Colorado (Mr. Polis), a member of the Committee on Rules and the Committee on Education and the Workforce.

Mr. Speaker, I yield myself such time as I may consume.

I would just point out again that the position many of us are taking does not contradict the principles that are being articulated. In fact, the law does not preclude any company from awarding stock as compensation at any level. It simply requires that information be provided so that those individuals who are receiving that compensation have the information and have the resources to understand the value of that compensation. I just want to reiterate that because it is important that the position not be mischaracterized as one that wants to dampen the ability of companies to reward their employees with stock or use that as a form of compensation. It is just important that they have transparency in that process so people who are receiving that compensation understand its true value.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I continue to reserve the balance of my time.

Mr. Speaker, I yield myself the balance of my time to close.

I have heard a number of my colleagues point to the red tape and the unnecessary burdens that are placed on a company that wishes to provide stock compensation.

Let me be clear about what it is that we would require. This is what is required for a company that exceeds the threshold: That they provide a copy of the compensation plan or a contract, if they disclose that; a copy of a summary plan description, if it is an ERISA retirement plan or, if not, a summary of the plan's material terms; risk factors associated with the stock; and the company's most recent financial statements from the last 2 years, which don't need to be audited.

This is important information for anyone receiving stock as compensation in order to understand the value of that stock and not a burdensome requirement on a company, particularly a company of the size that would be required under the increased threshold that is being proposed by this law.

If there is any aspect of this debate which is common sense, it is common sense that a person receiving compensation ought to have information that tells them the value of that compensation.

Mr. Speaker, I think this is an important debate and discussion. It is one that this body is well-served by taking on.

I do agree, as I said, that this is an important direction for us to take as a nation. And it certainly makes sense that, in order for us to fully all participate in the economy, employee ownership is a value. It creates more productive companies, more competitive companies. It provides better compensation, and, as has been pointed out, it creates more stable organizations less likely to lay people off, more likely to be sustainable companies. That is all good, and that is important.

It comes down to the question of transparency. Employees deserve to know the state of their employer's finances, if they are to accept stock in lieu of monetary compensation. They deserve no less protection than other investors in the company.

We shouldn't fear that kind of transparency. A company that wants its employees to accept stock instead of monetary compensation should embrace this sort of compensation. If they want to empower those employees and they want to make them a part of the company, they should provide them with

the information that helps them understand the value of that ownership.

Transparency is important for individuals to make informed choices, not informed choices coming from a dictate from Washington but information that they have the right to have. It empowers them with knowledge that allows them to make choices about the form of compensation that they would accept.

That is what this legislation really is about, and that is why I oppose the legislation and encourage my colleagues to join me in that.

I yield back the balance of my time.

Mr. Speaker, I yield myself such time as I may consume, and I thank the chairman for his leadership on this particular issue.

Mr. Speaker, small businesses and entrepreneurs are what drive the American economy. I meet with them in my district, the Second District of Michigan, all the time. I know my colleagues do as well back in their districts.

We see them firsthand. We see firsthand the benefits that their dreams, their innovations, their inspiration, and their hard work provide to our communities.

These innovators, entrepreneurs, and risk-takers are critical for our country's economic growth and prosperity. In fact, small businesses are responsible for 60 percent of the Nation's net new jobs over the past two decades. Not 2 years, not 10 years, but over the last 20 years, the last two decades.

If our Nation is going to have an economy that provides opportunity for every American, then we must promote and encourage success and growth in our small businesses and our startups. It is this notion that brings us this legislation we are discussing today.

H.R. 1343, Encouraging Employee Ownership Act, would simply level the playing field for small companies by updating Federal rules that allow small businesses to better compensate their employees with ownership in their own businesses.

Currently, Securities and Exchange Commission rule 701 permits private companies to offer their securities as part of written compensation agreements to employees, directors, general partners, trustees, officers, or certain consultants without having to comply with rigid Federal securities registration requirements. SEC rule 701, therefore, allows small companies to reward its employees.

Despite the SEC having the authority to increase the $5 million threshold disclosure via rulemaking, the SEC has once again chosen to prioritize highly politicized regulatory undertakings instead of focusing on its core mission. That mission includes facilitating capital formation. If the SEC cannot or will not focus its priorities, Congress will.

It is imperative that small businesses in west Michigan, all of Michigan, and across America have the ability to compete. A critical element of competition and success is for those small businesses to be able to offer compensation packages that attract and retain top-tier talent.

In today's world, that includes rewarding employees in stock options. To me, this just makes common sense. Small-business employees have a clear and vested interest in the success of their employer.

By increasing the rule 701 threshold to $10 million, it will give private companies more flexibility to attract, reward, and retain those highly valuable employees. This simple change will allow companies to offer twice as much stock to their employers annually, as they currently can, without having to trigger additional disclosure information to investors about compensation packages that include these security offerings.

By reforming this regulatory burden, startups, small businesses, and emerging growth companies will be better equipped to attract highly talented individuals from companies that are better capitalized and able to maybe provide some additional cash compensation.

By incentivizing employees with stock options, small businesses will now be able to compete on a more level playing field with older, larger, and maybe more established companies. They are going to be able to retain their invaluable employees as well.

This bill is an example of the positive bipartisan results that can be achieved when Republicans and Democrats reach across the aisle. I commend the sponsors of the bill, Representatives Hultgren, Delaney, Higgins, MacArthur, Sinema, and Stivers for their leadership on this issue. I encourage my colleagues to support H.R. 1343.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 2 minutes to the gentleman from Missouri (Mr. Luetkemeyer), my fellow subcommittee chairman.

Mr. Speaker, I yield such time as he may consume to the gentleman from Illinois (Mr. Hultgren), the author of this legislation.

Mr. Speaker, I yield such time as he may consume to the distinguished gentleman from Arkansas (Mr. Hill).

Mr. Speaker, may I inquire as to the balance of time remaining on each side?

Mr. Speaker, I yield 3 minutes to the gentleman from Georgia (Mr. Loudermilk).

Mr. Speaker, I yield 2 minutes to the gentleman from Michigan (Mr. Trott), my fellow Michiganian.

Mr. Speaker, I yield 2 minutes to the gentleman from New York (Mr. Zeldin).

Mr. Speaker, I yield 2 minutes to the gentlewoman from New York (Ms. Tenney).

Mr. Speaker, I yield myself the balance of my time to close.

My colleague on the other side is trying to maybe split some hairs. We heard some rhetoric earlier on the floor here which, I think, shows why many on both sides of the aisle scratch their heads in opposition to this bill. We heard about monied interests. We heard about corporate wish lists. We heard about Enron which is, by the way, a publicly traded company which has absolutely nothing to do with this bill. Now, that all might play really well on a leftwing political base, but that is detached from the realities of what our economy is about.

As we have talked, 60 percent of all new job creation happens in small businesses. These are not corporations. These are LLCs, limited liability corporations. These are subchapter S sole proprietorships. These are small entrepreneurs and innovators.

By the way, I looked up the definition of innovator. It is a person who introduces new methods, ideas, or products. Those are the kind of dynamic elements that we are seeing here. And I think this confusion between corporations and Enron and what we are trying to do here is really a disservice to the American people.

This is about making sure that we update basically an inflation escalator from 1988. We update a rule that the SEC could have the power to do, which it has not done, that benefits employees and benefits those owner-employer's workers who oftentimes, more often than not, work alongside their employees. So they are the ones who are seeing this on a daily basis.

I can just say to you that, as was pointed out by my colleague from across the aisle from Maryland, if we don't do this, what most of those small businesses are going to do is say: You know what, it is just not worth the effort; I am not going to do it. And we will see that lack of upside going to those employees.

As was pointed out by my fellow colleague from Michigan, this is beyond their salary, this is beyond bonuses. This is an additional way to make sure that those relationships get cemented in.

So, at a minimum, all you would be doing is voting to confirm the inflation escalator from 1988. It is not a radical change to the law. This is a commonsense, I believe, innovative way of trying to make sure that this next generation of workers has the ability to really reap the benefits of success here in the United States.

I yield back the balance of my time.

Mr. Speaker, I claim the time in opposition to the motion.

Mr. Speaker, I just want to point out a couple of things.

The Senate Banking Committee has moved an identical bill forward, unanimously, recently.

Regarding the subject matter that the gentleman from California was throwing out, this bill is not about anything other than providing hardworking Americans an opportunity to succeed. It is not about relitigating the last election or even about Susan Rice illegally unmasking American citizens. This is about an underlying bill that will help American citizens.

I urge my colleagues to vote ``no'' on this motion to recommit, and I urge them to vote ``yes'' on the underlying bill.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 910) to direct the Securities and Exchange Commission to provide a safe harbor related to certain investment fund research reports, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and include extraneous material on this bill.

Mr. Speaker, I yield myself such time as I may consume.

Today I rise in support of H.R. 910, the Fair Access to Investment Research Act, which I have had the pleasure of working on with my friend from Illinois (Mr. Foster) in this Congress and now-Governor Carney in the last Congress.

Mr. Foster, I had the pleasure to speak with Governor Carney this weekend and tell him of our great collaboration in this Congress, and he sends his warmest regards for the process.

This bill, Mr. Speaker, is a commonsense, bipartisan, bicameral effort to increase access to research and information on exchange- traded funds, or ETFs, an important and rapidly growing investment vehicle in the United States and around the world.

Before coming to Congress, I worked in the banking and investment industry for nearly three decades, and I have witnessed firsthand the explosive growth in the ETF industry. Since I started my latest firm in the late 1990s, I have seen the exchange-traded fund selection grow from about 100 funds with about $100 billion in total assets to today's 2,000 funds with about $2.4 trillion in investment assets.

However, despite this rapid growth in the popularity in the ETF market and their increasing importance to retail investors, most broker-dealers do not publish research on ETFs due to anomalies in our securities laws and regulations.

The SEC has implemented safe harbors for research in support of various asset classes, including listed stocks, corporate debt, and closed-ended funds, and Congress has provided explicit safe harbors for research related to the offerings of emerging growth company securities. However, despite their similarities to those asset classes, ETFs do not benefit from similar safe harbors.

An ETF safe harbor is also not a novel concept to the Commission, and there is bipartisan consensus that this is something that the SEC should have done years ago. In addition to providing feedback on this bill for the past 3 years, the SEC, itself, has looked at granting a safe harbor for ETF research on multiple occasions but never quite got around to it.

The Fair Access to Investment Research Act simply directs the SEC to provide a safe harbor for research reports that cover ETFs so that these reports are not considered offers under the Federal securities laws. Because ETFs are continuously brought to the market, a safe harbor is necessary for broker-dealers to publish this research.

It also holds the SEC accountable to Congress by providing an interim safe harbor if the SEC does not act within a 270-day period, which would be effective until the Commission finalizes its rules in this area.

Providing this safe harbor will increase access to investment information for consumers and improve the efficiency of our capital markets. Given the importance of ETFs to the market and to the 6 million or so U.S. households that hold ETFs, steps to facilitate research and allow investors access to this useful information are long overdue.

Mr. Speaker, we want more information for our consumers about how their investments work, how an ETF fits into their investment portfolio, how it is consistent with their time horizon and their goals, and what the transaction costs are. What are the unique strategies around that ETF? Does it, in fact, use leverage or not? All these kinds of details will help our consumers know more about these products.

As our Capital Markets Subcommittee ranking member, Mrs. Maloney, stated so eloquently at our markup earlier this year: It makes sense to get more research out there on ETFs. After all, if you are concerned with the growth of ETFs, then the last thing you want is less research.

True it is.

This bill in no way undermines or eliminates any investor protections in the Federal securities laws or the SEC's ability to oversee the registration and sale of ETF securities explicitly, containing a rule of construction that the applicability of the antifraud and antimanipulation provisions of the Federal securities laws are in no way limited by this legislation.

This safe harbor would also only apply to bona fide research and in no way limits FINRA, the Federal securities regulators, and the SEC's ability to regulate sales and marketing literature that is used for ETFs.

I would like to thank, again, my colleagues, Mr. Foster and Governor Carney, Senators Heller and Peters for their work in the United States Senate, my chairman, the ranking member, and Mrs. Maloney and the staff on both sides of the aisle for their hard work on this pro-consumer, commonsense proposal to make more information available to America's investing households.

In March, H.R. 910 passed the House Financial Services Committee by an overwhelmingly bipartisan vote of 56-2,

and a similar version of this legislation passed the House in the last Congress by a vote of 411-6.

I urge all my colleagues to support this bill today, and I reserve the balance of my time.

Mr. Speaker, I thank my friend from Illinois for his comments and his constructive help on designing and completing the legislative process on this bill.

Mr. Speaker, an integral process of getting this bill completed was certainly by our staff, and I want to pay particular attention to Holli Heiles of my personal staff, who, this day, leaves the world of the personal staff and moves to the Subcommittee on Capital Markets, Securities, and Investments of the House Financial Services Committee. I want to thank Holli Heiles for her outstanding work on this bill and for her outstanding work on behalf of the people of the Second Congressional District of Arkansas, as well as to congratulate her on her move to the committee.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I appreciate the work done together on this bill. I don't have any other speakers on this particular bill.

I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, pursuant to House Resolution 240, I call up the bill (H.R. 1343) to direct the Securities and Exchange Commission to revise its rules so as to increase the threshold amount for requiring issuers to provide certain disclosures relating to compensatory benefit plans, and ask for its immediate consideration in the House.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and submit extraneous materials on the bill under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 1343, the Encouraging Employee Ownership Act. I also want to commend the Republican and Democrat sponsors of this important bill: Mr. Hultgren of Illinois, Mr. Delaney of Maryland, Mr. Higgins of New York, Mr. MacArthur of New Jersey, Ms. Sinema of Arizona, and Mr. Stivers of Ohio.

Their bipartisan efforts resulted in a bipartisan bill that will help small businesses, including startups, to successfully reward their hardworking employees; and, while doing so, this bill will allow small businesses to effectively deploy their capital to grow and to create jobs on Main Streets all across our country.

We all know, Mr. Speaker, that small businesses are the heart and soul of the American economy. In fact, they helped create more than 60 percent of the Nation's net new jobs over the past two decades. So if our Nation is to have a healthier economy that offers more opportunity to more Americans, then we must encourage small-business growth and small-business startups, and this starts with ensuring they have access to the capital and credit they need to grow.

Yet as we have heard from countless witnesses who have appeared before the House Financial Services Committee, community banks and credit unions in particular--the primary source of our small-business loans--are simply drowning, Mr. Speaker, in a sea of complicated and costly regulations. The same occurs with the maze of burdensome securities regulations that are written with the largest public companies in mind but end up hurting smaller companies.

Although small companies are at the forefront of innovation and job creation, they often face significant obstacles in obtaining funding in our capital markets. These obstacles often result from the proportionately larger burden that securities regulations place on small companies when they seek to access capital both in the public and private markets.

These small companies also face difficult challenges on how best they can deploy their limited resources and capital--to grow and thrive or to be able to sufficiently compensate their workforce, which is a critical component of their success.

Currently, the SEC allows private companies to offer their own securities to employees as part of written compensation agreements without having to comply with burdensome Federal securities registration requirements under what is called SEC rule 701. Now, unfortunately, one of the rule's thresholds has not been adjusted in two decades. What the bipartisan supporters of this bill are proposing is simply to modernize this SEC rule with a modest increase in that threshold.

Increasing the rule 701 threshold gives private companies more flexibility to reward and retain employees and permits private companies to keep valuable, skilled employees without having to use other methods such as borrowing money or selling securities. Updating this rule can encourage more companies to offer more incentives to more employees.

As one witness who testified before Congress said, this bill ``would support a valuable compensation practice that allows small businesses to hire the most highly skilled workers'' and better enable small, emerging growth companies that are at a competitive disadvantage with bigger businesses to attract and retain employees.

Allowing employees to become owners in the company also benefits those employees. As startups and small companies reach success, we all want their employees to also reap the benefits of that success. That is what is happening with companies that are able to offer stock options as part of their employee compensation plans.

For example, when Google was in its early stages, it hired someone to be an in-house, part-time masseuse and compensated her with both cash and stock options. That masseuse is now worth millions today. Another example is from an ad-tech company, MoPub. Thirty-six of its 100 employees became millionaires when the company was acquired by Twitter because MoPub's CEO set his employees up for success by offering them performance-based stock-option grants.

So, Mr. Speaker, shouldn't we want more American workers to have the opportunities like at Google and MoPub? Don't we want more Americans to have an opportunity to obtain an ownership stake in the places that they work? That way the workers can earn the large financial upside that comes when the company performs well, and the company benefits by being able to attract talented workers.

Unfortunately, again, Mr. Speaker, too many companies right now shy away from offering employees greater ownership opportunities because an expensive, bureaucratic, burdensome, top-down regulation in Washington hasn't been updated in nearly 20 years. Mr. Speaker, we can fix that today. We can fix that by passing this commonsense, bipartisan bill, the Encouraging Employee Ownership Act.

We can provide American workers with more opportunities to share in the successes and profits of companies they work for. We can help to foster capital formation so more Americans can go back to work, have good careers, pay their mortgages, plan for a secure retirement, and ultimately give their families a better life.

Mr. Speaker, I urge all my colleagues to join me in supporting this commonsense bipartisan legislation, and I reserve the balance of my time.

Mr. Speaker, I yield the balance of my time to the gentleman from Michigan (Mr. Huizenga), and I ask unanimous consent that he may control that time.