To amend the Investment Advisers Act of 1940 to codify certain Securities and Exchange Commission no-action letters that exclude brokers and dealers compensated for certain research services from the definition of investment adviser, and for other purposes.

Madam Speaker, I move to suspend the rules and pass the bill (H.R. 2622) to amend the Investment Advisers Act of 1940 to codify certain Securities and Exchange Commission no-action letters that exclude brokers and dealers compensated for certain research services from the definition of investment adviser, and for other purposes, as amended.

Madam 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.

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

I rise in support of H.R. 2622, a bill that would ensure broker- dealers can continue to provide investment research to Europe. This research is incredibly important for smaller and midsize public companies that rely on our capital markets.

I thank my colleagues from both sides of the aisle, Representatives Sessions and Gottheimer, for finding common ground and coming to a sensible agreement to ensure that policies enacted by the European Union's Markets in Financial Instruments Directive, MiFID, do not needlessly burden U.S. broker-dealers.

H.R. 2622 extends an SEC no-action letter originally issued in 2017, and extended again in 2019, for another 6 months, granting U.S. broker- dealers much-needed relief and giving the SEC time to properly study the impact of the no-action letter's expiration.

Widespread dissemination of research by U.S. broker-dealers to investment managers is critical to capital formation and to maintaining the competitiveness and efficiency of the U.S. capital markets. Moreover, non-U.S. and global investment managers rely on the excellent research conducted and provided by U.S. broker-dealers to inform their decisionmaking and fulfill their fiduciary duties to U.S. investors.

Unfortunately, the EU's MiFID II threatens to disrupt the current

broker-dealer research market by requiring separate payments for research services and trade execution. This small change would capture U.S. broker-dealers receiving unbundled payments for research services and put them under the Investment Advisers Act, subjecting them to an entirely new regulatory regime.

The SEC no-action letter, which H.R. 2622 extends, permits broker- dealers to accept separate cash payments from investment advisers without adding new, burdensome regulatory requirements.

Studies have shown that since MiFID II was introduced, there has been a reduction in the availability of research. Many broker-dealers have said that they will significantly curtail or eliminate their research services altogether if this no-action letter expires. Plus, as of last month, several European Union member states are seeking to reverse MiFID II.

Madam Speaker, to ensure the continued availability of investment research and better understand the consequences of allowing the SEC no- action letter to expire, I urge my colleagues to support H.R. 2622, and I reserve the balance of my time.

Madam Speaker, I yield such time as he may consume to the gentleman from Texas (Mr. Sessions), the author of this piece of legislation and my friend and colleague.

Madam Speaker, I would just simply urge my colleagues to support H.R. 2622, and I yield back the balance of my time.

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

I rise in support of H.R. 2622, sponsored by the gentleman from Texas. To put this in context, we have one regulatory scheme to deal with broker-dealers and another to deal with registered investment advisers.

Traditionally in the United States, a broker-dealer is only registered as a broker-dealer, subject to that regulatory scheme, and the broker-dealer not only executes transactions but also gives advice and does research.

Our friends in Europe have required that under certain circumstances, a broker-dealer must charge separately for the research and advice on the one hand and for the execution of the transaction on the other.

Following that pattern would ordinarily cause that broker-dealer to be subject to that second regulatory scheme, the regulatory scheme for registered investment advisers. It is appropriate that since 2017 the SEC has had a no-action letter, saying that if broker-dealers under these circumstances do not register as investment advisers, the staff of the SEC will recommend to the board that it take no action, no enforcement action. Basically, it is a pass for the broker-dealer to follow the European rules but not register as a registered investment adviser, continuing to be subject to regulation only as a broker- dealer.

Now, this bill in its original form would have made this no-action letter, this pass permanent, but several investor groups expressed concerns about that original version of the bill. For example, a joint letter from the Council of Institutional Investors, the CFA Institute, and others argued against taking that approach without further thought.

During the committee markup, the gentleman from New Jersey (Mr. Gottheimer) offered an amendment to change this bill from the permanent exemption to instead only relief for 6 months. It requires the SEC to study the impact of letting the no-action letter expire, something that the Financial Services Committee is very interested in understanding.

The bill would also review other tangential issues, including conflicts of interest and the provision of financial services by middle-market financial intermediaries.

With Mr. Gottheimer's amendment adopted, I think this bill is a reasonable compromise, and I urge all of my colleagues to support the bill.

Madam Speaker, I reserve the balance of my time.

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

There is an image in the country that nothing is getting done in Washington, that we are tied up in partisan knots. As the gentleman from Texas points out, this bill passed our committee 45-2. Congress continues to function, although it is much more exciting for the press to cover the fights than the progress.

The amended version of H.R. 2622 being considered on the floor today represents a bipartisan compromise. It gives the SEC the time to address potential concerns laid out by stockholders related to the no- action letter for broker-dealers that offer research services from needing to register as investment advisers.

It is a well-thought-out response to our current situation. I urge my colleagues to support this bill and yield back the balance of my time.

Madam Speaker, I rise to speak in support of H.R. 2622, a bill to amend the Investment Advisers Act of 1940 to codify certain Securities and Exchange Commission no-action letters that exclude brokers and dealers compensated for certain research services from the definition of investment adviser.

This bill provides statutory authority for specified Securities and Exchange Commission (SEC) guidance allowing broker-dealers to receive payments for research services provided to investment managers.

Under current law, broker-dealers that receive payments for performing this service must register as investment advisors.

However, the SEC currently waives enforcement against these broker- dealers.

The current no-action relief, which was temporarily granted in 2017 by the Securities and Exchange Commission (SEC), has received multiple complaints from investors and advocacy groups who have expressed reservations about the current no-action relief.

This bill helps to address these concerns, correct the defects of the current no-action relief, and resolve issues regarding the potential expiration of the current relief.

H.R. 2622 helps to strengthen American capital markets by providing U.S. brokers and dealers relief from undue external security market regulations and prevent a reduction in investment research that can potentially harm investment managers and the retail investor customers that they serve.

This bill also helps to further strengthen the standard conduct of investment advisory by ensuring that the best interests of customers are protected without regard to the financial and other private interests of brokers and dealers.

H.R. 2622 ensure that the SEC provides secure framework of rules and regulations that help to enhance investors' confidence in the system and safeguards their investment by ensuring transparency of the records.

This bill provides more concrete measures for the over 15,000 Registered Investment Advisors (RIAs) to effectively carry out their primary duties of providing tailored financial advice to their clients, management of investment portfolios, and other services to the public.

Madam Speaker, I thank the chairwoman for the time, and I appreciate the gentleman from California standing in support of this bill, H.R. 2622.

In fact, this was a bipartisan agreement that we came to. The gentleman from New Jersey (Mr. Gottheimer), and I worked on this, and he included some language he felt was very important.

The bottom line is that the SEC will be required to extend MiFID II relief and study its effects as part of long overdue and larger review of the regulatory framework for investment research.

I believe this agreement that we passed in the House Financial Services Committee on May 24 by a vote of 45-2 represents not just the thinking and thought process, but it really meets the needs of the investor community. For that reason, we believe that we are on the floor today.

I thank the chairman of the committee, Mr. McHenry, for not only bringing this but also for his leadership in a series of bills that we will have on the floor today. Mr. McHenry has served well, and I appreciate his service.