,,iib #aafth ,,congress #ast ,session ,h4 ,r4 #ahae ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,october #ba1 #bjai,received2 read twice and referred to the ,committee on ,banking1 ,housing1 and ,urban ,affairs ,,an ,,act ,to require the ,securities and ,exchange ,commission1 when developing rules and regulations about disclosures to retail investors1 to conduct investor testing1 including a survey and interviews of retail investors1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,,sec ,disclosure ,effectiveness ,testing ,act4 #b4 ,disclosure testing 7a7 ,in general ,section #bc7;a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #ghw7a77 is amended by adding at the end the following3 7#d7 ,investor testing 7,a7 ,in general ,the ,commission shall engage in investor testing prior to issuing any rule or regulation which designates documents or information to be disclosed under the securities laws1 if such documents or information are required to be delivered to1 and are intended or substantially likely to be materially relied upon by1 a retail investor when-- 7i7 selecting a broker-dealer or investment adviser1 evaluating their services and fees1 or materially altering a brokerage or advisory relationship2 7ii7 assessing a securities recommendation or investment advice provided by a broker-dealer or investment adviser2 7iii7 making a decision to purchase or sell a security2 or 7iv7 such other circumstances as the ,commission may1 with input from the ,investor ,advocate1 determine appropriate for the protection of retail investors4 7,b7 ,exemption for certain disclosures ,this section shall not apply to-- 7i7 disclosures made pursuant to ,regulations ,s-,k and ,s-,x 7including ,industry ,guides71 ,regulation #ad;,a1 ,form ,n-,,px1 ,form #aj-,k1 ,form #aj-,q1 ,form #h-,k1 ,form ,,sd1 ,form ,n-,,port1 ,form ,,pf1 ,regulation ,,sbsr1 disclosures mandated by or jointly with the ,board of ,governors of the ,federal ,reserve ,system or the ,financial ,stability ,oversight ,council1 or successors thereto2 or 7ii7 any other documents or information that the ,commission1 with input from the ,investor ,advocate1 determines are outside the intended scope and purposes of this ,act4 7,c7 ,commission authority to conduct additional testing ,this section shall not be construed to limit the ,commission's ability to conduct any investor testing on any other documents or information not subject to this section #bc7;a71 provided that any such investor testing shall not be subject to the requirements of this section #bc7;a74 7,d7 ,contents ,investor testing conducted pursuant to subparagraph 7,a7 shall include the following3 7i7 ,qualitative testing in the form of one-on-one cognitive interviews of retail investors about documents or information1 or samples of such documents or information1 to be provided4 7ii7 ,such other forms of testing that the ,commission1 with input from the ,investor ,advocate1 deems appropriate for evaluating the effectiveness of retail disclosures4 7iii7 ,analysis and publication in the ,federal ,register of the results of the testing4 7iv7 ,an opportunity for the public to comment on such results published in the ,federal ,register4 7v7 ,a consideration of unique challenges faced by retail investors age #fe or older4 7,e7 ,substantive changes ,if the ,commission1 in the period between engaging in investor testing and publishing a final rule1 makes substantive changes to such rule that the ,commission determines would have a significant impact on retail investors1 and such changes were not already investor tested1 the ,commission shall again engage in investor testing related to such changes4 7,f7 ,public availability of retail testing results ,the ,commission shall make the data and results of any investor testing performed pursuant to this paragraph available to the public4 7,g7 ,rules of construction 7i7 ,the determination that some or all of a document or information is deemed to be subject to this paragraph shall not forestall the determination that such document or information may also be used or relied upon by the public1 market participants other than retail investors1 or government agencies4 7ii7 ,the ,commission may1 in consultation with the ,investor ,advocate1 determine which1 if any1 components of such document or information are substantially likely to be relied on by retail investors for the purposes outlined in paragraph 7#d77;,a7 above and focus testing under this paragraph on those components of the disclosure4 7iii7 ,notwithstanding clause 7ii7 above1 where any information subject to testing under this paragraph may be used or relied upon by the public1 market participants other than retail investors1 or government agencies1 the results of testing made pursuant to this paragraph shall not provide grounds for reducing or eliminating 7including any undermining of reliability of and accountability for7 the information that existing or proposed regulation requires or would require be made available to the public1 market participants other than retail investors1 and government agencies1 whether or not such information is delivered to retail investors4 7,h7 ,retail investor defined ,for the purposes of this paragraph1 the term retail investor means any investor that is not an institutional investor4 4 7b7 ,participation of investor advocate ,section #d7;g7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gh;d7g77 is amended-- 7#a7 in paragraph 7#d7-- 7,a7 in subparagraph 7,d77ii71 by striking and at the end2 7,b7 by redesignating subparagraph 7,e7 as subparagraph 7,f72 and 7,c7 by inserting after subparagraph 7,d7 the following3 7,e7 engage in investor testing-- 7i7 to carry out the functions of the ,office2 and 7ii7 pursuant to section #bc7;a77#d71 as appropriate2 and 2 7#b7 by adding at the end the following3 7#i7 ,publication of data and results of investor testing ,with respect to any investor testing carried out by the ,investor ,advocate pursuant to paragraph 7#d77;,e71 the ,investor ,advocate may make the data and results of such investor testing available to the public1 without further review or editing by the ,commission4 7#aj7 ,personnel ,if the ,investor ,advocate decides1 within its sole discretion1 to conduct testing under this section1 the ,investor ,advocate may do so and the ,commission shall provide the ,office of the ,investor ,advocate with sufficient personnel and funding necessary to carry out such testing4 ,such testing may qualify as the testing covered by this section1 provided that all requirements of the section are met4 4 7c7 ,prior rules 7#a7 ,in general ,for any final rule or regulation issued by the ,securities and ,exchange ,commission 7in this subsection referred to as the ,commission7 before the date of the enactment of this ,act that would be subject to investor testing under section #bc7;a77#d7 of the ,securities ,exchange ,act of #aicd1 had such rule been issued on or after the date of enactment of this ,act1 the ,commission shall perform investor testing with respect to such rule or regulation that includes the contents described in such section #bc7;a77#d74 7#b7 ,schedule ,the ,commission shall1 not later than #f months after the date of the enactment of this ,act1 with input from the ,investor ,advocate1 establish a schedule for completing any investor testing required under paragraph 7#a7 that prioritizes testing of any final rules and regulations that designate documents or information central to retail investor decision making1 and in particular prioritize the testing of documents or information required to be delivered to retail investors in the form of summary documents or summary sections of documents including for the purpose of determining whether and how such summary documents can achieve the goals of informed investor decision-making in the circumstances set forth in section #bc7;a77#d7 of the ,securities ,exchange ,act of #aicd while maintaining full accessibility by retail investors1 the public1 other market participants1 and government regulators to the full range of documents and information that they may utilize or rely on1 whether or not such documents or information are required to be delivered to retail investors4 7#c7 ,report ,the ,commission shall1 with input from the ,investor ,advocate1 issue a report to ,congress each year containing the following3 7,a7 ,the status of any investor testing required under paragraph 7#a7 initiated within the last year or otherwise ongoing4 7,b7 ,the results of any investor testing completed under paragraph 7#a7 within the last year4 7,c7 ,any priorities the ,commission has1 based on results of investor testing required by paragraph 7#a71 for-- 7i7 revising any proposed or final rule or regulation based on the results of testing2 7ii7 initiating any rulemaking or actions arising from the results of the testing2 and 7iii7 the ,investor ,advocate's views on the above priorities and any such other matters arising from the testing or results of testing4 ,passed the ,house of ,representatives ,october #ag1 #bjai4;,cheryl ,l4 ,johnson1,clerk