,,ib ,union ,calendar ,no4 #hfe #aaeth ,,congress #b;d ,session ,h4 ,r4 #cheg ,report ,no4 #aae-hid1 ,part ,i ,,in ,,the ,,house ,,of ,,representatives ,september #bg1 #bjag ,mrs4 ,wagner 7for herself1 ,mr4 ,barr1 ,mr4 ,messer1 ,mr4 ,trott1 ,mr4 ,posey1 ,mr4 ,williams1 ,mr4 ,budd1 ,mr4 ,hollingsworth1 and ,mr4 ,kustoff of ,tennessee7 introduced the following bill2 which was referred to the ,committee on ,financial ,services1 and in addition to the ,committees on ,ways and ,means1 and ,education and the ,workforce1 for a period to be subsequently determined by the ,speaker1 in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned ,august #aj1 #bjah ,reported from the ,committee on ,financial ,services ,august #aj1 #bjah,referral to the ,committees on ,ways and ,means and ,education and the ,workforce extended for a period ending not later than ,november #af1 #bjah ,november #af1 #bjah,referral to the ,committees on ,ways and ,means and ,education and the ,workforce extended for a period ending not later than ,december #bh1 #bjah ,december #bh1 #bjah;,additional sponsors3 ,mr4 ,luetkemeyer1 ,mr4 ,hill1 ,mr4 ,hultgren1 ,ms4 ,tenney1 ,ms4 ,mc,sally1 ,mr4 ,rothfus1 and ,mr4 ,sessions ,december #bh1 #bjah;,committees on ,ways and ,means and ,education and the ,workforce discharged2 committed to the ,committee of the ,whole ,house on the ,state of the ,union and ordered to be printed ,a ,,bill ,to amend the ,securities ,exchange ,act of #aicd to establish standards of conduct for brokers and dealers that are in the best interest of their retail customers4 #a4 ,short title ,this ,act may be cited as the ,protecting ,advice for ,small ,savers ,act of #bjag or the ,,pass ,act of #bjag4 #b4 ,repeal of ,department of ,labor ,fiduciary ,rule ,the final rule of the ,department of ,labor titled ,definition of the ,term ,fiduciary ,conflict of ,interest ,rule--,retirement ,investment ,advice and related prohibited transaction exemptions published ,april #h1 #bjaf 7#ha ,fed4 ,reg4 #bjidf71 shall have no force or effect4 #c4 ,standards of conduct for brokers and dealers 7a7 ,standard of conduct for brokers and dealers when making recommendations to retail customers 7#a7 ,in general ,the second subsection 7k7 of section #ae of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho7k77 7relating to standards of conduct7 is amended to read as follows3 7k7 ,standard of conduct for recommendations to retail customers 7#a7 ,in general ,the standard of conduct for a broker or dealer 7or registered representative7 when providing recommendations to a retail customer is as follows3 7,a7 ,recommendation to retail customer ,when a broker or dealer 7or registered representative7 makes a recommendation to a retail customer1 the recommendation shall be in the retail customer's best interest at the time it is made by-- 7i7 reflecting reasonable diligence2 and 7ii7 reflecting the reasonable care1 skill1 and prudence that a broker or dealer 7or registered representative7 would exercise based on the customer's investment profile4 7,b7 ,disclosure to retail customer 7i7 ,in general ,before a broker or dealer 7or registered representative7 executes a transaction for the first time for each retail customer based on a recommendation to such retail customer1 such broker or dealer 7or registered representative7 shall disclose prior to the point of sale to such customer1 in a clear and concise manner-- 7,i7 the type and scope of services the broker or dealer 7or registered representative7 provides2 7,,ii7 the standard of conduct that applies to the relationship2 7,,iii7 the types of compensation the broker or dealer 7or registered representative7 receives2 and 7,,iv7 any material conflict of interest4 7ii7 ,content of disclosure ,the ,commission may issue regulations determining the content of the disclosure required in clause 7i74 ,such regulations may provide for a disclosure of fees received by the broker or dealer1 whether from the retail customer or a third party1 prior to the execution of the transaction4 7,c7 ,material conflict of interest ,a broker or dealer 7or registered representative7 shall avoid1 disclose1 or otherwise reasonably manage any material conflict of interest with a retail customer4 7#b7 ,nonviolation of standard of conduct ,the following is not1 by itself1 a violation of the standard of conduct described in paragraph 7#a73 7,a7 ,the receipt of compensation1 including transaction-based compensation1 by a broker or dealer 7or registered representative7 or any affiliate of such broker or dealer 7or registered representative74 7,b7 ,the recommendation by a broker or dealer 7or registered representative7 to a retail customer of principal transactions 7including cross transactions71 or the recommendation of affiliated1 unaffiliated1 or proprietary products or services1 or a limited range of products or services4 7#c7 ,no requirement to recommend least expensive product ,nothing in this subsection shall require a broker or dealer 7or registered representative7 to recommend the least expensive security or investment strategy 7however quantified7 or to analyze all possible securities1 other products1 or investment strategies before making a recommendation4 7#d7 ,definitions ,in this subsection3 7,a7 ,compensation ,the term compensation includes commissions or sales charges1 or other fees or variable compensation1 for or related to the sale of securities or for the servicing of customer accounts1 whether paid by the retail customer or received from a third party4 7,b7 ,customer's investment profile ,the term customer's investment profile has the meaning of such term as described in ,rule #baaa of the ,financial ,industry ,regulatory ,authority as of the date of the enactment of this subsection4 7,c7 ,institutional account ,the term institutional account has the same meaning given such term in ,rule #deab of the ,financial ,industry ,regulatory ,authority as of the date of the enactment of this subsection4 7,d7 ,material conflict of interest ,the term material conflict of interest means a financial interest of a broker or dealer 7or registered representative7 that a reasonable person would expect to affect the impartiality of a recommendation4 7,e7 ,reasonable diligence ,the term reasonable diligence has the meaning of such term as described in ,rule #baaa of the ,financial ,industry ,regulatory ,authority as of the date of the enactment of this subsection4 7,f7 ,recommendation ,the term recommendation means either of the following recommendations 7under the meaning ascribed to such term in ,rule #baaa of the ,financial ,industry ,regulatory ,authority7 for which the broker or dealer 7or registered representative7 making the recommendation receives or will receive compensation3 7i7 ,a non-discretionary recommendation to buy1 hold1 or sell securities1 or to follow an investment strategy involving securities1 for taxable or non-taxable accounts4 7ii7 ,a non-discretionary recommendation to rollover or transfer assets in an employer-sponsored retirement plan to an individual retirement account4 7,g7 ,retail customer ,the term retail customer means a natural person or legal entity1 or the legal representative of such natural person or legal entity1 in each case other than an institutional account1 who-- 7i7 receives a recommendation from a broker or dealer 7or registered representative72 and 7ii7 implements such recommendation with such broker or dealer primarily for personal1 family1 retirement1 or household purposes4 7#e7 ,supersession ,the provisions of this subsection shall supersede and preempt ,state law1 other than a ,state law that regulates insurance products that are not securities1 insofar as they may now or hereafter relate to a broker or dealer1 or registered representative of a broker or dealer4 7#f7 ,fiduciary status under ,,erisa1 the ,internal ,revenue ,code1 the ,investment ,advisers ,act of #aidj1 or other fiduciary regimes ,the fact that a person may owe1 or may in fact comply with1 the standard of conduct under this subsection shall not mean or create any presumption that such person is a fiduciary under the ,employee ,retirement ,income ,security ,act of #aigd 7#bi ,u4,s4,c4 #ajja et seq471 section #dige of the ,internal ,revenue ,code of #aihf1 the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b et seq471 or any other ,federal1 ,state1 or local statutory or regulatory fiduciary regime4 4 7#b7 ,application ,the amendment made by paragraph 7#a7 shall apply to brokers and dealers 7or registered representative7 on the date that is #ah months after the date of the enactment of this ,act4 7b7 ,rulemaking authority ,section #iac of the ,dodd-,frank ,wall ,street ,reform and ,consumer ,protection ,act is amended to read as follows3 #iac4 ,obligations of brokers and dealers and other persons and entities 7a7 ,rulemaking 7#a7 ,rulemaking by the ,commission ,the ,commission may issue regulations as the ,commission determines is necessary to facilitate compliance by brokers and dealers 7including their registered representative7 with the obligations of such brokers and dealers 7and their registered representative7 under the second subsection 7k7 of section #ae of the ,securities ,exchange ,act of #aicd only if such rulemaking does not impose any obligation related to standard of care on a broker or dealer 7or its registered representative7 that is in addition to1 duplicative of1 or inconsistent with1 the obligations set forth in such subsection4 7#b7 ,rulemaking by the ,secretary of ,labor and the ,secretary of the ,treasury ,after the date of the enactment of the ,,pass ,act of #bjag1 the ,secretary of ,labor and the ,secretary of the ,treasury shall not promulgate any regulation under the ,employee ,retirement ,income ,security ,act of #aigd 7#bi ,u4,s4,c4 #ajja et seq47 or section #dige of the ,internal ,revenue ,code of #aihf1 respectively1 defining the circumstances under which a person is considered a fiduciary that would impose any obligation on a broker or dealer 7or its registered representative7 or on a life insurer fulfilling the term insurance company as defined in section #c7;a77#b7 of the ,securities ,act of #aicc 7or its agents or distributors7 that is in addition to1 duplicative of1 or inconsistent with1 the obligations set forth in such subsection 7k7 of section #ae of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho74 7b7 ,exemption available to certain persons with respect to manufacture or sale of annuities 7#a7 ,exemption ,with respect to the manufacture or sale of annuities within paragraphs 7#b7 or 7#h7 of section #c7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;c7a77 or section #ihi;,j of the ,dodd-,frank ,wall ,street ,reform and ,consumer ,protection ,act 7#ae ,u4,s4,c4 #gg;c note71 a person regulated by a ,state insurance regulator may rely on the exemptions in section #djh7;b77#ba7 of the ,employee ,retirement ,income ,security ,act of #aigd 7#bi ,u4,s4,c4 #aajh7;b77#ba77 and section #dige7;d77#bd7 of the ,internal ,revenue ,code of #aihf 7as added by the ,,pass ,act of #bjag7 only if-- 7,a7 such person adopts and implements practices on a nationwide basis for the sale of annuity contracts that meet or exceed the minimum requirements set forth in the second subsection 7k7 of section #ae of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho7 and such person is subject to regulation or examination by a ,state insurance regulator for purposes of assessing market conduct2 or 7,b7 such person complies with a standard substantially similar to such subsection 7k7 and is regulated by a ,state insurance regulator with respect to annuities within paragraphs 7#b7 or 7#h7 of section #c7;a7 of the ,securities ,act of #aicc 7#ae ,u4,s4,c4 #gg;c7a77 or section #ihi;,j of the ,dodd-,frank ,wall ,street ,reform and ,consumer ,protection ,act 7#ae ,u4,s4,c4 #gg;c note74 7#b7 ,coordination and cooperation ,upon the request of any ,state insurance regulator1 the ,commission or the ,financial ,industry ,regulatory ,authority shall provide such reasonable assistance to the requesting ,authority as needed in connection with the coordination or implementation of this section4 7#c7 ,definition of ,state insurance regulator ,as used in this subsection1 the term ,state insurance regulator means the principal insurance regulatory authority of a ,state1 the ,district of ,columbia1 any territory of the ,united ,states1 ,puerto ,rico1 ,guam1 ,american ,samoa1 the ,trust ,territory of the ,pacific ,islands1 the ,virgin ,islands1 and the ,northern ,mariana ,islands4 7c7 ,additional exemptions ,a person who complies with a standard substantially similar to the second subsection 7k7 of section #ae of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho7 may rely on the exemptions in section #djh7;b77#ba7 of the ,employee ,retirement ,income ,security ,act of #aigd 7#bi ,u4,s4,c4 #aajh7;b77#ba77 and section #dige7;d77#bd7 of the ,internal ,revenue ,code of #aihf 7as added by the ,,pass ,act of #bjag7 only if such person is-- 7#a7 registered as an investment adviser under the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#a et seq47 or under the laws of the ,state in which the person maintains its principal office and place of business2 or 7#b7 a bank or similar financial institution supervised by the ,united ,states or a ,state1 or a savings association 7as defined in section #c7;b77#a7 of the ,federal ,deposit ,insurance ,act 7#ab ,u4,s4,c4 #ahac7;b77#a774 4 7c7 ,exemption from prohibited transactions for brokers and dealers1 and other persons and entities1 when making recommendations to retail customers 7#a7 ,section #djh7;b7 of the ,employee ,retirement ,income ,security ,act of #aigd 7#bi ,u4,s4,c4 #aajh7;b77 is amended by adding at the end the following3 7#ba7 ,any transaction involving a recommendation made by a broker or dealer 7including its registered representative71 or other persons or entities1 that is subject to the requirements of the second subsection 7k7 of section #ae of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho7k774 4 7#b7 ,section #dige7;d7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following3 7#bd7 any transaction involving a recommendation made by a broker or dealer 7including its registered representatives71 or other persons or entities1 that is subject to the requirements of the second subsection 7k7 of section #ae of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho7k774 4 7d7 ,repeal of certain provisions ,the following provisions are hereby repealed3 7#a7 ,the second subsection 7l7 and subsection 7m7 of section #ae of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho74 7#b7 ,subsections 7g71 7h71 and 7i7 of section #baa of the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#aa74 ,december #bh1 #bjah ,committees on ,ways and ,means and ,education and the ,workforce discharged2 committed to the ,committee of the ,whole ,house on the ,state of the ,union and ordered to be printed