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S. 1670 IS – Investment Advisers Act of 1940 Amendments
This bill is a proposed legislation in the United States Congress that aims to update the regulations for investment advisers.
SEC. 208A. IMPROVED DISCLOSURE AND VOTING REQUIREMENTS FOR INVESTMENT ADVISERS
Section 208A of the Investment Advisers Act of 1940 is amended to require investment advisers to provide voting instructions from security holders.
(a) SHORT TITLE;
This section may be cited as “Section 208A of the Investment Advisers Act of 1940.”
(b) FINDINGS AND PURPOSES
The Congress finds that investment advisers have a fiduciary duty to their clients and that this section will help ensure that advisers act in the best interests of their clients.
(c) DISCLOSURE REQUIREMENTS
- Any investment adviser shall provide to any security holder, upon request, the following information:
- A proxy statement, other proxy soliciting material, or an information statement;
- An annual report from the applicable registrant;
- A form of voting instruction to return to the investment adviser; and
- Any control or identification number that the security holder needs to return the voting instruction provided under subparagraph (B).
(d) RETURN DEADLINE
The investment adviser shall provide to any security holder not less than 5 business days after the date on which such security holder receives the materials required under subsection (c)(1) of this section a return envelope and instructions on how to return those materials.
(e) ELECTRONIC DELIVERY
The investment adviser may provide the materials required under subsection (c)(1) of this section, or any part thereof, by electronic means, including an internet website address provided by the applicable registrant or a third party.
(f) OPTION FOR INVESTMENT ADVISERS
The investment adviser may provide recommendations to voting persons with the material provided under subsection (c)(1) of this section, or after providing the material under that subsection, if the investment adviser permits voting recommendations to be provided to voting persons by third parties on a nondiscriminatory basis and on a wide range of views.
(g) SATISFACTION OF REQUIREMENTS BY PAS-SIVELY MANAGED FUND
For purposes of subsections (d)(2) and (e), any requirements applicable to an investment adviser under this section may be satisfied by the applicable passively managed fund.
(h) RULE OF CONSTRUCTION REGARDING DUTIES
Nothing in this section shall be construed to impose a duty on an investment adviser to vote the securities of its clients.
(i) EFFECTIVE DATE
This section shall take effect on the first August 1 that occurs after the date that is 2 years after the date of enactment of this Act.
SEC. 3. VOTING INSTRUCTIONS FROM CUSTOMERS
This section amends Section 14(b)(1) of the Securities Exchange Act of 1934 to require investment advisers to obtain voting instructions from security holders.
(a) SEC. 14(B)(1) AMENDMENT
Section 14(b)(1) of the Securities Exchange Act of 1934 is amended to include “voting instruction” in the list of matters subject to approval by a majority of outstanding securities.
(b) EFFECTIVE DATE
This section shall take effect on the date that is 18 months after the date of enactment of this Act.
Related Provisions
The following provisions may be of interest:
- S. 1670 IS – Investment Advisers Act of 1940 Amendments
- Investment Advisers Act of 1940, as amended by S. 1670 IS
Please note that this is a proposed legislation and may be subject to change.
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