,,ib ,union ,cal5d> ,no4 #fah #aai? ,,congress #b;d ,session ,h4 ,r4 #hbhf ,report ,no4 #aai-gab ,,9 ,,! ,,h\se ,,( ,,repres5tatives ,april #ae1 #bjbf,mr4 ,/eil 7= himself & ,mrs4 ,wagn]7 introduc$ ! foll[+ bill2 :i* 0 ref]r$ to ! ,committee on ,f9ancial ,s]vices ,june #bd1 #bjbf;,additional sponsor3 ,mr4 ,meus] ,june #bd1 #bjbf,report$ ) an am5dm5t1 committ$ to ! ,committee ( ! ,:ole ,h\se on ! ,/ate ( ! ,union1 & ord]$ to be printed,strike out all aft] ! enact+ clause & ins]t ! "p pr9t$ 9 italic,for text ( introduc$ bill1 see copy ( bill z introduc$ on ,april #ae1 #bjbf ,a ,,bill ,to am5d ! ,f$]al securities laws ) respect to ! mat]iality ( disclosure requirem5ts1 to e/abli% ! ,public ,company ,advisory ,committee1 & = o!r purposes4 #a4 ,%ort title2 table ( cont5ts 7a7 ,%ort title ,?is ,act may be cit$ z ! ,protect+ ,am]icans' ,retirem5t ,sav+s ,f ,politics ,act4 7b7 ,table ( cont5ts ,! table ( cont5ts = ?is ,act is z foll[s3 ,sec4 #a4 ,%ort title2 table ( cont5ts4,title ,i--,m&atory ,mat]iality ,requirement,sec4 #aja4 ,limitation on disclosure requirem5ts4,title ,,ii--,public ,company ,advisory ,committee,sec4 #bja4 ,public ,company ,advisory ,committee4,title ,,iii--,protect+ ,u4,s4 ,bus9ess ,sovereignty,sec4 #cja4 ,/udy on detrim5tal impact ( ! ,corporate ,su/a9ability ,due ,dilig5ce ,directive & ,corporate ,su/a9ability ,report+ ,directive4,title ,,iv--,corporate ,gov]nance ,examination,sec4 #dja4 ,/udy ( c]ta9 issues ) respect to proxy advisory firms & ! proxy process4,title ,v--,regi/ration ( proxy advisory firms,sec4 #eja4 ,regi/ration ( proxy advisory firms4,title ,,vi--,liability = c]ta9 failures to disclose mat]ial in=mation or mak+ ( mat]ial misstatements,sec4 #fja4 ,liability = c]ta9 failures to disclose mat]ial in=mation or mak+ ( mat]ial mis/atem5ts4,title ,,vii--,duties ( inve/m5t advis]s1 asset manag]s1 & p5sion funds,sec4 #gja4 ,duties ( inve/m5t advis]s1 asset manag]s1 & p5sion funds4,title ,,viii--,protect+ ,am]icans' ,savings,sec4 #hja4 ,requirem5ts relat$ to proxy vot+4,title ,,ix--,emp[]+ ,shareholders,sec4 #ija4 ,proxy vot+ ( passively manag$ funds4,title ,x--,be/ ,int]e/ ,bas$ ,on ,pecuni>y ,factors ,sec4 #ajja4 ,protect+ retail inve/ors' sav+s4 ,i ,m&atory ,mat]iality ,requirem5t #aja4 ,limitation on disclosure requirem5ts 7a7 ,securities ,act ( #aicc ,section #b7;b7 ( ! ,securities ,act ( #aicc 7#ae ,u4,s4,c4 #gg;b7b77 is am5d$-- 7#a7 9 ! subsection head+1 by ins]t+ 2 ,limitation on ,disclosure ,requirem5ts aft] ,=mation2 7#b7 by /rik+ ,:5ev] & ins]t+ ! foll[+3 7#a7 ,9 g5]al ,:5ev] 2 & 7#c7 by add+ at ! end ! foll[+3 7#b7 ,limitation 7,a7 ,9 g5]al ,:5ev] pursuant to ?is title ! ,commission is engag$ 9 rulemak+ reg>d+ disclosure obligations ( issu]s1 ! ,commission %all expressly provide t an issu] is only requir$ to disclose in=mation 9 response to su* disclosure obligations to ! ext5t ! issu] has det]m9$ t su* in=mation is mat]ial ) respect to a vot+ or inve/m5t decision reg>d+ ! securities ( su* issu]4 7,b7 ,applicability ,subp>agraph 7,a7 %all n apply ) respect to ! removal ( any disclosure requirem5t ) respect to an issu]4 7,c7 ,rule ( con/ruction ,= ! purposes ( ?is p>agraph1 in=mation is consid]$ mat]ial ) respect to a vot+ or inve/m5t decision reg>d+ ! securities ( an issu] if !re is a sub/antial likelihood t a reasonable inve/or w\ld view ! failure to disclose t in=mation z hav+ significantly alt]$ ! total mix ( in=mation made available to ! inve/or4 4 7b7 ,securities ,ex*ange ,act ( #aicd ,section #c7;f7 ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #gh;c7f77 is am5d$-- 7#a7 9 ! subsection head+1 by ins]t+ 2 ,limitation on ,disclosure ,requirem5ts aft] ,=mation2 7#b7 by /rik+ ,:5ev] & ins]t+ ! foll[+3 7#a7 ,9 g5]al ,:5ev] 2 & 7#c7 by add+ at ! end ! foll[+3 7#b7 ,limitation 7,a7 ,9 g5]al ,:5ev] pursuant to ?is title ! ,commission is engag$ 9 rulemak+ reg>d+ disclosure obligations ( issu]s1 ! ,commission %all expressly provide t an issu] is only requir$ to disclose in=mation 9 response to su* disclosure obligations to ! ext5t ! issu] has det]m9$ t su* in=mation is mat]ial ) respect to a vot+ or inve/m5t decision reg>d+ ! securities ( su* issu]4 7,b7 ,applicability ,subp>agraph 7,a7 %all n apply ) respect to ! removal ( any disclosure requirem5t ) respect to an issu]4 7,c7 ,rule ( con/ruction ,= ! purposes ( ?is p>agraph1 in=mation is consid]$ mat]ial ) respect to a vot+ or inve/m5t decision reg>d+ ! securities ( an issu] if !re is a sub/antial likelihood t a reasonable inve/or w\ld view ! failure to disclose t in=mation z hav+ significantly alt]$ ! total mix ( in=mation made available to ! inve/or4 4 ,,ii ,public ,company ,advisory ,committee #bja4 ,public ,company ,advisory ,committee ,! ,securities ,ex*ange ,act ( #aicd is am5d$ by ins]t+ aft] section #dj 7#ae ,u4,s4,c4 #ghqq7 ! foll[+3 #dj;,a4 ,public ,company ,advisory ,committee 7a7 ,e/abli%m5t & purpose 7#a7 ,e/abli%m5t ,!re is e/abli%$ )9 ! ,commission ! ,public ,company ,advisory ,committee 7ref]r$ to 9 ?is section z ! ,committee74 7#b7 ,purpose ,! ,committee %all-- 7,a7 provide ! ,commission ) advice on ! rules1 regulations1 & policies ( ! ,commission ) reg>d to ! ,commission's mission ( protect+ inve/ors1 ma9ta9+ fair1 ord]ly1 & effici5t m>kets1 & facilitat+ capital =mation1 z !y relate to-- 7i7 exi/+ & em]g+ regulatory priorities ( ! ,commission2 7ii7 issues relat+ to ! public report+ & corporate gov]nance ( public companies2 7iii7 issues relat+ to ! proxy process = %>ehold] meet+s held by public companies2 7iv7 issues relat+ to trad+ 9 ! securities ( public companies2 & 7v7 issues relat+ to capital =mation2 7,b7 n provide any advice ) respect to any policies1 practices1 actions1 or decisions conc]n+ ! ,commission's en=cem5t program2 & 7,c7 submit to ! ,commission su* f9d+s & recomm5dations z ! ,committee det]m9es are appropriate1 includ+ recomm5dations = propos$ regulatory & legislative *anges4 7b7 ,memb]%ip 7#a7 ,9 g5]al ,! memb]%ip ( ! ,committee %all be n few] ?an #aj1 & n m ?an #bj1 memb]s appo9t$ by ! ,commission f among individuals :o-- 7,a7 are (fic]s1 directors1 or s5ior (ficials ( public companies regi/]$ ) ! ,commission "u ! ,securities ,act ( #aicc & ?is ,act1 except = ^? public companies t own asset managem5t1 fix$ income1 inve/m5t advisory1 brok]-deal]1 or proxy s]vices bus9esses2 7,b7 are executives or o!r individuals ) s5ior manag]ial responsibility 9 bus9ess1 pr(essional1 trade1 & indu/ry associations t repres5t ! int]e/s ( su* public companies2 & 7,c7 are pr(essional advis]s & s]vice provid]s to su* public companies 7includ+ attorneys1 acc\ntants1 inve/m5t bank]s1 & f9ancial advis]s74 7#b7 ,qualifications ,at lea/ #ej p]c5t ( ! ,committee memb]%ip %all be drawn f individuals :o w\ld qualify = memb]%ip "u p>agraph 7#a77;,a74 7#c7 ,t]m ,ea* memb] ( ! ,committee appo9t$ "u p>agraph 7#a7 %all s]ve = a t]m ( #d ye>s4 ,vacancies among ! memb]s1 :e!r caus$ by ! resignation1 dea?1 removal1 expiration ( a t]m1 or o!rwise1 %all be fill$ consi/5t ) ! ,commission's proc$ures !n 9 effect4 7#d7 ,/agg]$ t]ms ,! memb]s ( ! ,committee %all s]ve /agg]$ t]ms1 ) half ( ! initial memb]s ( ! ,committee ea* s]v+ = #b ye>s & half s]v+ = #d ye>s4 7#e7 ,memb]s n on o!r advisory committees ,public companies & o!r organizations t are curr5tly repres5t$ on any o!r ,commission ,advisory ,committee are n eligible to h repres5tatives also s]ve on ! ,public ,company ,advisory ,committee4 7#f7 ,memb]s n ,commission employees ,memb]s appo9t$ "u p>agraph 7#a7 %all n be consid]$ to be employees or ag5ts ( ! ,commission solely because ( memb]%ip on ! ,committee4 7c7 ,*air2 ,vice ,*air2 ,secret>y2 ,assi/ant ,secret>y 7#a7 ,9 g5]al ,! memb]s ( ! ,committee %all elect1 f among ! memb]s ( ! ,committee-- 7,a7 a ,*air2 7,b7 a ,vice ,*air2 7,c7 a ,secret>y2 & 7,d7 an ,assi/ant ,secret>y4 7#b7 ,t]m ,ea* memb] elect$ "u p>agraph 7#a7 %all s]ve = a t]m ( #b ye>s 9 ! capacity ! memb] 0 elect$ "u p>agraph 7#a74 7#c7 ,subcommittees ,! ,*air may create subcommittees t hold public or non-public meet+s & provide recomm5dations to ! full ,committee4 7d7 ,meet+s 7#a7 ,frequ5cy ( meet+s ,! ,committee %all meet-- 7,a7 n less frequ5tly ?an twice annually1 at ! call ( ! *air ( ! ,committee2 & 7,b7 f "t to "t1 at ! call ( ! ,commission4 7#b7 ,notice ,! ,*air ( ! ,committee %all give ! memb]s ( ! ,committee writt5 notice ( ea* meet+1 n lat] ?an #b weeks be=e ! date ( ! meet+4 7e7 ,/aff ,! ,commission %all make available to ! ,committee su* /aff z ! ,*air ( ! ,committee det]m9es are necess>y to c>ry out ?is section4 7f7 ,review by ,commission ,! ,commission %all-- 7#a7 review ! f9d+s & recomm5dations ( ! ,committee2 & 7#b7 ea* "t ! ,committee submits a f9d+ or recomm5dation to ! ,commission1 promptly issue a public /atem5t-- 7,a7 assess+ ! f9d+ or recomm5dation ( ! ,committee2 & 7,b7 disclos+ ! action1 if any1 ! ,commission int5ds to take ) respect to ! f9d+ or recomm5dation4 7g7 ,committee f9d+s ,no?+ 9 ?is section %all require ! ,commission to agree to or act ^u any f9d+ or recomm5dation ( ! ,committee4 7h7 ,nonapplicability ( ! ,f$]al ,advisory ,committee ,act ,*apt] #aj ( "p ,i ( title #e1 ,unit$ ,/ates ,code1 %all n apply to ! ,committee & ! activities ( ! ,committee4 4 ,,iii ,protect+ ,u4,s4 ,bus9ess ,sov]eignty #cja4 ,/udy on detrim5tal impact ( ! ,corporate ,su/a9ability ,due ,dilig5ce ,directive & ,corporate ,su/a9ability ,report+ ,directive 7a7 ,/udy ,! ,securities & ,ex*ange ,commission %all conduct a /udy to exam9e & evaluate-- 7#a7 ! detrim5tal impact & pot5tial detrim5tal impact ( ea* ( ! ,directives on-- 7,a7 ,unit$ ,/ates companies1 consum]s1 & inve/ors2 & 7,b7 ! economy ( ! ,unit$ ,/ates2 7#b7 ! ext5t to :i* ea* ( ! ,directives aligns ) int]national conv5tions & decl>ations on human rights & environm5tal obligations2 & 7#c7 ! legal basis = ! extrat]ritorial rea* ( ea* ( ! ,directives4 7b7 ,report ,n lat] ?an #a ye> aft] ! date ( ! enactm5t ( ?is ,act1 ! ,securities & ,ex*ange ,commission %all submit to ! ,committee on ,bank+1 ,h\s+1 & ,urban ,affairs ( ! ,s5ate1 ! ,committee on ,f9ancial ,s]vices ( ! ,h\se ( ,repres5tatives1 ! ,secret>y ( ,/ate1 ! ,secret>y ( ,comm]ce1 & ! ,unit$ ,/ates ,trade ,repres5tative a report t includes-- 7#a7 ! results ( ! /udy conduct$ "u ?is section2 & 7#b7 recomm5dations = policymak]s & relevant /akehold]s on pot5tial mitigat+ measures1 alt]native approa*es1 or modifications to ea* ( ! ,directives t w\ld address any conc]ns id5tifi$ 9 ! /udy4 7c7 ,access to in=mation ,! ,securities & ,ex*ange ,commission may reque/ f private entities su* relevant data & in=mation z ! ,securities & ,ex*ange ,commission det]m9es necess>y to c>ry out ! /udy requir$ "u ?is section & su* private entities %all provide su* reque/$ data & in=mation to ! ,securities & ,ex*ange ,commission4 7d7 ,directives def9$ ,9 ?is section1 ! t]m ,directives means-- 7#a7 ,directive 7,,eu7 #bjbd_/agfj ( ! ,european ,p>liam5t & ( ! ,c\ncil ( #ac ,june #bjbd on corporate su/a9ability due dilig5ce2 7#b7 ,directive 7,,eu7 #bjbb_/bdfd ( ! ,european ,p>liam5t & ( ! ,c\ncil ( #ad ,decemb] #bjbb on corporate su/a9ability report+2 & 7#c7 any directive ( ! ,european ,p>liam5t & ( ! ,c\ncil t am5ds1 supplem5ts1 replaces1 or o!rwise modifies a directive describ$ 9 p>agraph 7#a7 or 7#b71 includ+ ,directive 7,,eu7 #bjbf_/dgj ( ! ,european ,p>liam5t & ( ! ,c\ncil ( #bf ,febru>y #bjbf4 ,,iv ,corporate ,gov]nance ,exam9ation #dja4 ,/udy ( c]ta9 issues ) respect to proxy advisory firms & ! proxy process ,section #d ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #gh;d7 is am5d$ by add+ at ! end ! foll[+3 7k7 ,/udy ( c]ta9 issues ) respect to proxy advisory firms & ! proxy process 7#a7 ,9 g5]al ,n lat] ?an #ahj days aft] ! date ( ! enactm5t ( ?is subsection1 & e #e ye>s !reaft]1 ! ,commission %all conduct a compreh5sive /udy on proxy advisory firms & ! proxy process4 7#b7 ,scope ( /udy ,! /udies requir$ "u p>agraph 7#a7 %all cov]-- 7,a7 ! previ\s #aj ye>s1 ) respect to ! initial /udy2 & 7,b7 ! previ\s #e ye>s1 ) respect to ea* o!r /udy4 7#c7 ,cont5ts ,ea* /udy requir$ "u p>agraph 7#a7 %all address ! foll[+ issues3 7,a7 ,! f9ancial & o!r inc5tives & obligations ( all gr\ps involv$ 9 ! proxy process4 7,b7 ,a consid]ation ( :e!r f9ancial & o!r inc5tives h creat$ a process t no long] s]ves ! economic int]e/s ( retail inve/ors4 7,c7 ,an analysis ( :e!r regulations & f9ancial inc5tives h creat$ & protect$ ! outsiz$ influ5ce ( proxy advisors or a duopoly 9 proxy advice1 & if s1 :at are ! b5efits & co/s ( t outsiz$ influ5ce or duopoly4 7,d7 ,! co/s incurr$ by issu]s 9 respond+ to politically-1 environm5tally-1 or socially-motivat$ %>ehold] proposals4 7,e7 ,an analysis ( ! impact t %>ehold] proposals h on disc\rag+ private companies f go+ public4 7,f7 ,a ?or\gh assessm5t ( ! economic analysis1 if any1 conduct$ by proxy advisory firms & in/itutional %>ehold]s :5 recomm5d+ or vot+ 9 favor ( %>ehold] proposals4 7,g7 ,a review ( ! ext5t to :i* in/itutional inve/ors1 :o owe fiduci>y duties1 rely on proxy advisory firm recomm5dations4 7,h7 ,an assessm5t ( :e!r1 9 light ( _! significant influ5ce on corporate actions & vote outcomes1 proxy advisors are subject to suffici5t & effective regulation to ensure t _! policies & recomm5dations are accurate1 free ( conflicts1 & b5efit ! be/ economic int]e/ ( %>ehold]s at l>ge4 7#d7 ,report ,at ! completion ( ea* /udy requir$ "u p>agraph 7#a71 ! ,commission %all issue a report to ! ,committee on ,bank+1 ,h\s+1 & ,urban ,affairs ( ! ,s5ate & ! ,committee on ,f9ancial ,s]vices ( ! ,h\se ( ,repres5tatives t includes ! results ( ! /udy4 4 ,v ,regi/ration ( proxy advisory firms #eja4 ,regi/ration ( proxy advisory firms 7a7 ,am5dm5t ,! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #gh;a et seq47 is am5d$ by ins]t+ aft] section #ae;,g ! foll[+ new section3 #ae;,h4 ,regi/ration ( proxy advisory firms 7a7 ,conduct prohibit$ ,x %all be unlawful = a proxy advisory firm to make use ( ! mails or any means or in/rum5tality ( int]/ate comm]ce to provide proxy vot+ advice1 rese>*1 analysis1 rat+s or recomm5dations to any cli5t1 unless su* proxy advisory firm is regi/]$ "u ?is section4 7b7 ,regi/ration proc$ures 7#a7 ,application = regi/ration 7,a7 ,9 g5]al ,a proxy advisory firm %all file ) ! ,commission an application = regi/ration1 9 su* =m z ! ,commission %all require1 by rule1 & conta9+ ! in=mation describ$ 9 subp>agraph 7,b74 7,b7 ,requir$ in=mation ,an application = regi/ration "u ?is section %all conta9-- 7i7 a c]tification t ! applicant is able to consi/5tly provide proxy advice bas$ on accurate in=mation2 7ii7 ) respect to cli5ts ( ! applicant t vote %>es held on behalf ( %>ehold]s1 a c]tification t ! applicant-- 7,i7 w provide proxy vot+ advice only 9 ! be/ economic int]e/ ( ^? %>ehold]s2 7,,ii7 has ! requisite exp]tise to ensure t vot+ recomm5dations are 9 ! be/ economic int]e/ ( ^? %>ehold]s unless o!rwise specifi$2 & 7,,iii7 does n violate ,/ate or ,f$]al law2 7iii7 in=mation on ! proc$ures & me?odologies t ! applicant uses to ensure t proxy vot+ recomm5dations are 9 ! be/ economic int]e/ ( ! ultimate %>ehold]s2 7iv7 in=mation on ! organizational /ructure ( ! applicant2 7v7 an explanation ( :e!r or n ! applicant has 9 effect a code ( e?ics1 & if n1 ! reasons !re=2 7vi7 a description ( any pot5tial or actual conflict ( int]e/ relat+ to ! provision ( proxy advisory s]vices1 includ+ ^? aris+ out ( or result+ f ! own]%ip /ructure ( ! applicant or ! provision ( o!r s]vices by ! applicant or any p]son associat$ ) ! applicant2 7vii7 ! policies & proc$ures 9 place to publicly disclose & manage conflicts ( int]e/ "u subsection 7f72 7viii7 in=mation relat$ to ! pr(essional & academic qualifications ( /aff task$ ) provid+ proxy advisory s]vices2 & 7ix7 any o!r in=mation & docum5ts conc]n+ ! applicant & any p]son associat$ ) su* applicant z ! ,commission1 by rule1 may prescribe z necess>y or appropriate 9 ! public int]e/ or = ! protection ( inve/ors4 7#b7 ,review ( application 7,a7 ,initial det]m9ation ,n lat] ?an #ij days aft] ! date on :i* ! application = regi/ration is fil$ ) ! ,commission "u p>agraph 7#a7 7or )9 su* long] p]iod z to :i* ! applicant cons5ts7 ! ,commission %all-- 7i7 by ord]1 grant regi/ration2 or 7ii7 in/itute proce$+s to det]m9e :e!r regi/ration %\ld be d5i$4 7,b7 ,conduct ( proce$+s 7i7 ,cont5t ,proce$+s ref]r$ to 9 subp>agraph 7,a77ii7 %all-- 7,i7 include notice ( ! gr\nds = d5ial "u consid]ation & an opportunity = he>+2 & 7,,ii7 be conclud$ n lat] ?an #abj days aft] ! date on :i* ! application = regi/ration is fil$ ) ! ,commission "u p>agraph 7#a74 7ii7 ,det]m9ation ,at ! conclusion ( su* proce$+s1 ! ,commission1 by ord]1 %all grant or d5y su* application = regi/ration4 7iii7 ,ext5sion au?oriz$ ,! ,commission may ext5d ! "t = conclusion ( su* proce$+s = n long] ?an #ij days1 if ! ,commission f9ds good cause = su* ext5sion & publi%es its reasons = s f9d+1 or = su* long] p]iod z to :i* ! applicant cons5ts4 7,c7 ,gr\nds = decision ,! ,commission %all grant regi/ration "u ?is subsection-- 7i7 if ! ,commission f9ds t ! requirem5ts ( ?is section are satisfi$2 & 7ii7 unless ! ,commission f9ds 79 :i* case ! ,commission %all d5y su* regi/ration7 t-- 7,i7 ! applicant has fail$ to c]tify to ! ,commission's satisfaction t x is able to consi/5tly provide proxy advice bas$ on accurate in=mation & to mat]ially comply ) ! proc$ures & me?odologies disclos$ "u p>agraph 7#a77;,b7 & ) subsections 7f7 & 7g72 or 7,,ii7 if ! applicant 7 s regi/]$1 its regi/ration w\ld be subject to susp5sion or revocation "u subsection 7d74 7#c7 ,public availability ( in=mation ,subject to section #bd1 ! ,commission %all make ! in=mation & docum5ts submitt$ to ! ,commission by a proxy advisory firm 9 its complet$ application = regi/ration1 or 9 any am5dm5t submitt$ "u p>agraph 7#a7 or 7#b7 ( subsection 7c71 publicly available on ! ,commission's website1 or ?r\gh ano!r comp>able1 readily accessible means4 7c7 ,update ( regi/ration 7#a7 ,update ,ea* regi/]$ proxy advisory firm %all promptly am5d & update its application = regi/ration "u ?is section if any in=mation or docum5t provid$ !re9 becomes mat]ially inaccurate1 except t a regi/]$ proxy advisory firm is n requir$ to am5d ! in=mation requir$ to be fil$ "u subsection 7b77#a77;,b77i7 by fil+ in=mation "u ?is p>agraph1 b %all am5d su* in=mation 9 ! annual submission ( ! organization "u p>agraph 7#b7 ( ?is subsection4 7#b7 ,c]tification ,n lat] ?an #ij cal5d> days aft] ! end ( ea* cal5d> ye>1 ea* regi/]$ proxy advisory firm %all file ) ! ,commission an am5dm5t to its regi/ration1 9 su* =m z ! ,commission1 by rule1 may prescribe z necess>y or appropriate 9 ! public int]e/ or = ! protection ( inve/ors-- 7,a7 c]tify+ t ! in=mation & docum5ts 9 ! application = regi/ration ( su* regi/]$ proxy advisory firm cont9ue to be accurate 9 all mat]ial respects2 & 7,b7 li/+ any mat]ial *ange t occurr$ to su* in=mation or docum5ts dur+ ! previ\s cal5d> ye>4 7d7 ,c5sure1 d5ial1 or susp5sion ( regi/ration2 notice & he>+ ,! ,commission1 by ord]1 %all c5sure1 place limitations on ! activities1 functions1 or op]ations (1 susp5d = a p]iod n exce$+ #ab mon?s1 or revoke ! regi/ration ( any regi/]$ proxy advisory firm if ! ,commission f9ds1 on ! record aft] notice & opportunity = he>+1 t su* c5sure1 plac+ ( limitations1 susp5sion1 or revocation is necess>y = ! protection ( inve/ors & 9 ! public int]e/ & t su* regi/]$ proxy advisory firm1 or any p]son associat$ ) su* firm1 :e!r prior to or subsequ5t to becom+ s associat$-- 7#a7 has committ$ or omitt$ any act1 or is subject to an ord] or f9d+1 enum]at$ 9 subp>agraph 7,a71 7,d71 7,e71 7,h71 or 7,g7 ( section #ae7;b77#d71 has be5 convict$ ( any (f5se specifi$ 9 section #ae7;b77#d77;,b71 or is enjo9$ f any action1 conduct1 or practice specifi$ 9 subp>agraph 7,c7 ( section #ae7;b77#d71 dur+ ! #aj-ye> p]iod prec$+ ! date ( comm5cem5t ( ! proce$+s "u ?is subsection1 or at any "t !reaft]2 7#b7 has be5 convict$ dur+ ! #aj-ye> p]iod prec$+ ! date on :i* an application = regi/ration is fil$ ) ! ,commission "u ?is section1 or at any "t !reaft]1 (-- 7,a7 any crime t is puni%able by imprisonm5t = #a or m ye>s1 & t is n describ$ 9 section #ae7;b77#d77;,b72 or 7,b7 a sub/antially equival5t crime by a =eign c\rt ( compet5t jurisdiction2 7#c7 is subject to any ord] ( ! ,commission b>r+ or susp5d+ ! "r ( ! p]son to be associat$ ) a regi/]$ proxy advisory firm2 7#d7 fails to furni% ! c]tifications requir$ "u subsections 7b77#b77;,c77ii77,i7 & 7c77#b72 7#e7 has engag$ 9 "o or m prohibit$ acts enum]at$ 9 p>agraph 7#a72 7#f7 fails to ma9ta9 adequate f9ancial & manag]ial res\rces to consi/5tly (f] advisory s]vices to cli5ts t vote %>es held on behalf ( %>ehold]s consi/5t ) ! be/ economic int]e/ ( ^? %>ehold]s1 includ+ by fail+ to comply ) subsections 7f7 or 7g72 7#g7 fails to ma9ta9 adequate exp]tise to ensure t proxy advisory s]vices = cli5ts t vote %>es held on behalf ( %>ehold]s are ti$ to ! be/ economic int]e/ ( ^? %>ehold]s2 or 7#h7 engages 9 a prohibit$ act enum]at$ 9 subsection 7j74 7e7 ,t]m9ation ( regi/ration 7#a7 ,volunt>y )drawal ,a regi/]$ proxy advisory firm may1 ^u su* t]ms & conditions z ! ,commission may e/abli% z necess>y 9 ! public int]e/ or = ! protection ( inve/ors1 :i* t]ms & conditions %all include at a m9imum t ! regi/]$ proxy advisory firm w no long] conduct su* activities z to br+ x )9 ! def9ition ( proxy advisory firm 9 section #c7;a77#hb71 )draw f regi/ration by fil+ a writt5 notice ( )drawal to ! ,commission4 7#b7 ,commission au?ority ,9 addition to any o!r au?ority ( ! ,commission "u ?is title1 if ! ,commission f9ds t a regi/]$ proxy advisory firm is no long] 9 exi/5ce or has ceas$ to d bus9ess z a proxy advisory firm1 ! ,commission1 by ord]1 %all cancel ! regi/ration "u ?is section ( su* regi/]$ proxy advisory firm4 7f7 ,managem5t ( conflicts ( int]e/ 7#a7 ,organization policies & proc$ures ,ea* regi/]$ proxy advisory firm %all e/abli%1 ma9ta91 & en=ce writt5 policies & proc$ures reasonably design$1 tak+ into consid]ation ! nature ( ! bus9ess ( su* regi/]$ proxy advisory firm & associat$ p]sons1 to publicly disclose & manage any conflicts ( int]e/ t arise or w\ld reasonably be expect$ to arise f su* bus9ess4 7#b7 ,commission au?ority ,! ,commission %all1 )9 "o ye> ( ! date ( enactm5t ( ?is section1 issue f9al rules to prohibit1 or require ! managem5t & public disclosure (1 any conflicts ( int]e/ relat+ to ! (f]+ ( proxy advisory s]vices by a regi/]$ proxy advisory firm1 includ+1 )\t limitation1 conflicts ( int]e/ relat+ to-- 7,a7 ! mann] 9 :i* a regi/]$ proxy advisory firm is comp5sat$ by ! cli5t1 any affiliate ( ! cli5t1 or any o!r p]son = provid+ proxy advisory s]vices2 7,b7 bus9ess relation%ips1 own]%ip int]e/s1 or any o!r f9ancial or p]sonal int]e/s betwe5 a regi/]$ proxy advisory firm1 or any p]son associat$ ) su* regi/]$ proxy advisory firm1 & any cli5t1 or any affiliate ( su* cli5t2 7,c7 ! =mulation ( proxy vot+ policies2 7,d7 ! execution1 or assi/ance ) ! execution1 ( proxy votes if su* votes are bas$ ^u recomm5dations made by ! proxy advisory firm 9 :i* a p]son o!r ?an ! issu] is a propon5t2 & 7,e7 any o!r pot5tial conflict ( int]e/1 z ! ,commission deems necess>y or appropriate 9 ! public int]e/ or = ! protection ( inve/ors4 7#c7 ,disclosure on factors influ5c+ recomm5dations ,ea* regi/]$ proxy advisory firm %all annually disclose to ! ,commission & make publicly available ! economic & o!r factors t a reasonable inve/or w\ld expect to influ5ce ! recomm5dations ( su* proxy advisory firm1 includ+ ! own]%ip composition ( su* proxy advisory firm & any meet+s )1 or fe$back receiv$ f1 outside entities4 7g7 ,reliability ( proxy advisory firm s]vices 7#a7 ,9 g5]al ,ea* regi/]$ proxy advisory firm %all-- 7,a7 h /aff & o!r res\rces suffici5t to produce proxy vot+ recomm5dations t are bas$ on accurate & curr5t in=mation & design$ = cli5ts t vote %>es held on behalf ( %>ehold]s to advance ! be/ economic int]e/ ( ^? %>ehold]s unless o!rwise specifi$2 7,b7 implem5t proc$ures t p]mit issu]s t are ! subject ( proxy vot+ recomm5dations-- 7i7 access 9 a reasonable "t to data & in=mation us$ to make recomm5dations2 & 7ii7 a reasonable opportunity to provide mean+ful comm5t & corrections to su* data & in=mation1 includ+ ! opportunity to pres5t 79 p]son or telephonically7 details to ! p]son responsible = develop+ su* data & in=mation prior to ! publication ( proxy vot+ recomm5dations to cli5ts2 7,c7 employ an ombudsman to receive compla9ts ab\t ! accuracy ( in=mation us$ 9 mak+ recomm5dations f ! companies t are ! subject ( ! proxy advisory firm's vot+ recomm5dations & seek to resolve ^? compla9ts 9 a timely fa%ion & prior to ! publication ( proxy vot+ recomm5dations to cli5ts2 & 7,d7 if ! ombudsman is unable to resolve a compla9t to a company's satisfaction prior to ! publication ( proxy vot+ recomm5dations to cli5ts1 include 9 ! f9al report ( ! firm to cli5ts-- 7i7 a /atem5t detail+ ! company's compla9ts1 if reque/$ 9 writ+ by ! company2 & 7ii7 a /atem5t expla9+ :y ! proxy vot+ recomm5dation is 9 ! be/ economic int]e/ ( %>ehold]s4 7#b7 ,def9itions ,9 ?is subsection3 7,a7 ,data & in=mation us$ to make recomm5dations ,! t]m data & in=mation us$ to make vot+ recomm5dations-- 7i7 means ! f9ancial1 op]ational1 or descriptive data & in=mation on an issu] us$ by proxy advisory firms & any contextual or sub/antive analysis impact+ ! recomm5dation2 & 7ii7 does n include ! entirety ( ! proxy advisory firm's f9al report to its cli5ts4 7,b7 ,reasonable "t ,! t]m reasonable "t-- 7i7 means n less ?an #a week be=e ! publication ( proxy vot+ recomm5dations = cli5ts2 & 7ii7 %all n o!rwise int]f]e ) a proxy advisory firm's ability to provide its cli5ts ) timely access to accurate proxy vot+ rese>*1 analysis1 or recomm5dations4 7h7 ,private "r ( action ) respect to illegal recomm5dations ,any proxy advisory firm t endorses a proposal t is n support$ by ! issu] b is approv$ & subsequ5tly f\nd by a c\rt ( compet5t jurisdiction to violate ,/ate or ,f$]al law %all be liable to ! applicable issu] = ! co/s associat$ ) ! approval ( su* proposal1 includ+ implem5tation co/s & any p5alties incurr$ by ! issu]1 & any issu] seek+ to en=ce su* liability may sue at law or 9 equity 9 any c\rt ( compet5t jurisdiction4 7i7 ,designation ( compliance (fic] ,ea* regi/]$ proxy advisory firm %all designate an individual :o reports directly to s5ior managem5t z responsible = adm9i/]+ ! policies & proc$ures t are requir$ to be e/abli%$ pursuant to subsections 7f7 & 7g71 & = ensur+ compliance ) ! securities laws & ! rules & regulations !reund]1 includ+ ^? promulgat$ by ! ,commission pursuant to ?is section4 7j7 ,prohibit$ conduct 7#a7 ,prohibit$ acts & practices ,n lat] ?an "o ye> aft] ! date ( enactm5t ( ?is section1 ! ,commission %all issue f9al rules to prohibit any act or practice relat+ to ! (f]+ ( proxy advisory s]vices by a regi/]$ proxy advisory firm t ! ,commission det]m9es to be unfair1 co]cive1 or abusive1 includ+ any act or practice relat+ to-- 7,a7 advisory or consult+ s]vices 7(f]$ directly or indirectly1 includ+ ?r\gh an affiliate7 relat$ to corporate gov]nance issues2 or 7,b7 modify+ a vot+ recomm5dation or o!rwise dep>t+ f its adopt$ sy/ematic proc$ures & me?odologies 9 ! provision ( proxy advisory s]vices1 bas$ on :e!r an issu]1 or affiliate !re(1 subscribes or w subscribe to o!r s]vices or product ( ! regi/]$ proxy advisory firm or any p]son associat$ ) su* organization4 7#b7 ,rule ( con/ruction ,no?+ 9 p>agraph 7#a71 or 9 any rules or regulations adopt$ !reund]1 may be con/ru$ to modify1 impair1 or sup]s$e ! op]ation ( any ( ! antitru/ laws 7z def9$ 9 ! fir/ section ( ! ,clayton ,act1 except t su* t]m includes section #e ( ! ,f$]al ,trade ,commission ,act1 to ! ext5t t su* section #e applies to unfair me?ods ( competition74 7k7 ,annual report 7#a7 ,9 g5]al ,ea* regi/]$ proxy advisory firm %all1 n lat] ?an #ij cal5d> days aft] ! end ( ea* fiscal ye>1 file ) ! ,commission & make publicly available an annual report 9 su* =m z ! ,commission1 by rule1 may prescribe z necess>y or appropriate 9 ! public int]e/ or = ! protection ( inve/ors4 7#b7 ,cont5ts ,ea* annual report requir$ "u p>agraph 7#a7 %all include1 at a m9imum1 disclosure by ! regi/]$ proxy advisory firm ( ! foll[+3 7,a7 ,a li/ ( %>ehold] proposals ! /aff ( ! regi/]$ proxy advisory firm review$ 9 ! prior fiscal ye>4 7,b7 ,a li/ ( ! recomm5dations made 9 ! prior fiscal ye>4 7,c7 ,! economic analysis conduct$ to det]m9e t f9al recomm5dations provid$ 9 ! prior fiscal ye> 7o!r ?an recomm5dations relat+ to an issu]-sponsor$ proposal or recomm5dations consi/5t ) t ( a bo>d ( directors compos$ ( a majority ( indep5d5t directors7 deliv]$ to cli5ts t vote %>es held on behalf ( %>ehold]s 7 9 ! be/ economic int]e/ ( ^? %>ehold]s4 7,d7 ,! /aff :o review$ & made recomm5dations on su* proposals 9 ! prior fiscal ye>4 7,e7 ,! qualifications ( su* /aff to ensure t ea* ( ! recomm5dations = cli5ts t vote %>es held on behalf ( %>ehold]s 7 ti$ to ! be/ economic int]e/ ( ^? %>ehold]s4 7,f7 ,! recomm5dations made 9 ! prior fiscal ye> :]e ! propon5t ( su* recomm5dation 0 a cli5t ( or receiv$ s]vices f ! proxy advisory firm4 7,g7 ,a c]tification by ! *ief executive (fic]1 *ief f9ancial (fic]1 & ! prim>y executive responsible = ov]see+ ! compilation & dissem9ation ( proxy vot+ advice t ! f9al recomm5dations 7o!r ?an recomm5dations relat+ to an issu]-sponsor$ proposal or recomm5dations consi/5t ) t ( a bo>d ( directors compos$ ( a majority ( indep5d5t directors7 deliv]$ to cli5ts t vote %>es held on behalf ( %>ehold]s 9 ! la/ fiscal ye>-- 7i7 7 bas$ on int]nal controls & proc$ures t are design$ to ensure accurate in=mation & t su* int]nal controls & proc$ures are effective2 & 7ii7 7 bas$ on ! be/ economic int]e/ ( ^? %>ehold]s unless o!rwise specifi$4 7,h7 ,! economic & o!r factors t a reasonable inve/or w\ld expect to influ5ce ! recomm5dations ( su* proxy advisory firm1 includ+ ! own]%ip composition ( su* proxy advisory firm4 7#c7 ,report =mat ,ea* annual report requir$ "u p>agraph 7#a7 %all be made available 9 a /ructur$1 ma*9e-readable =mat1 consi/5t ) exi/+ electronic report+ /&>ds4 7l7 ,transp>5t policies ,ea* regi/]$ proxy advisory firm %all file ) ! ,commission & make publicly available its me?odology = ! =mulation ( proxy vot+ policies & vot+ recomm5dations to cli5ts t vote %>es held on behalf ( %>ehold]s & h[ t me?odology ensures t ! firm's vot+ recomm5dations are 9 ! be/ economic int]e/ ( ^? %>ehold]s unless o!rwise specifi$4 7m7 ,rules ( con/ruction ,regi/ration "u & compliance ) ?is section does n con/itute a waiv] (1 or o!rwise dim9i%1 any "r1 privilege1 or def5se t a regi/]$ proxy advisory firm may o!rwise h "u any provision ( ,/ate or ,f$]al law1 includ+ any rule1 regulation1 or ord] !reund]4 7n7 ,regulations 7#a7 ,new provisions ,su* rules & regulations z are requir$ by ?is section or are o!rwise necess>y to c>ry out ?is section1 includ+ ! application =m requir$ "u subsection 7a7-- 7,a7 %all be issu$ by ! ,commission1 n lat] ?an #ahj days aft] ! date ( enactm5t ( ?is section2 & 7,b7 %all become effective n lat] ?an #a ye> aft] ! date ( enactm5t ( ?is section4 7#b7 ,review ( exi/+ regulations ,n lat] ?an #bgj days aft] ! date ( enactm5t ( ?is section1 ! ,commission %all-- 7,a7 review its exi/+ rules & regulations :i* affect ! op]ations ( proxy advisory firms2 & 7,b7 am5d or revise su* rules & regulations 9 accordance ) ! purposes ( ?is section1 & issue su* guidance z ! ,commission may prescribe z necess>y or appropriate 9 ! public int]e/ or = ! protection ( inve/ors4 7o7 ,applicability ,?is section1 o!r ?an subsection 7m71 :i* %all apply on ! date ( enactm5t ( ?is section1 %all apply on ! e>li] (-- 7#a7 ! date on :i* regulations are issu$ 9 f9al =m "u subsection 7n77#a72 or 7#b7 #bgj days aft] ! date ( enactm5t ( ?is section4 7p7 ,be/ economic int]e/ def9$ ,9 ?is section1 ! t]m be/ economic int]e/ means decisions t seek to maximize inve/m5t returns ov] a "t horizon consi/5t ) ! inve/m5t objectives & risk managem5t pr(ile ( ! fund 9 :i* ! %>ehold]s are inve/$4 4 7b7 ,con=m+ am5dm5t ,section #ag7;a77#a7 ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #ghq7a77#a77 is am5d$ by ins]t+ proxy advisory firm1 aft] nationally recogniz$ /ati/ical rat+ organization14 7c7 ,proxy advisory firm def9itions ,section #c7;a7 ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #gh;c7a77 is am5d$-- 7#a7 by r$esignat+ ! second p>agraph 7#hj7 7relat+ to fund+ portal7 z p>agraph 7#ha72 & 7#b7 by add+ at ! end ! foll[+3 7#hb7 ,proxy advisory firm ,! t]m proxy advisory firm-- 7,a7 means any p]son t-- 7i7 makes a recomm5dation to a security hold] z to ! security hold]'s vote1 cons5t1 or au?orization on a specific matt] = :i* security hold] approval is solicit$2 7ii7 m>kets ! p]son's exp]tise z a provid] ( su* proxy vot+ advice sep>ately f o!r =ms ( inve/m5t advice2 & 7iii7 sells su* proxy vot+ advice = a fee2 & 7,b7 does n include-- 7i7 a regi/]$ inve/m5t advis]2 or 7ii7 any p]son t is exempt "u law or regulation f ! requirem5ts o!rwise applicable to p]sons engag$ 9 su* a solicitation4 7#hc7 ,p]son associat$ ) a proxy advisory firm ,) respect to a proxy advisory firm-- 7,a7 a p]son is associat$ ) ! proxy advisory firm if ! p]son is-- 7i7 a p>tn]1 (fic]1 or director ( ! proxy advisory firm 7or any p]son occupy+ a simil> /atus or p]=m+ simil> functions72 7ii7 a p]son directly or indirectly controll+1 controll$ by1 or "u common control ) ! proxy advisory firm2 7iii7 an employee ( ! proxy advisory firm2 or 7iv7 a p]son ! ,commission det]m9es by rule is controll$ by ! proxy advisory firm2 & 7,b7 a p]son is n associat$ ) ! proxy advisory firm if ! p]son only p]=ms cl]ical or m9i/]ial functions ) respect to a proxy advisory firm4 4 ,,vi ,liability = c]ta9 failures to disclose mat]ial in=mation or mak+ ( mat]ial mis/atem5ts #fja4 ,liability = c]ta9 failures to disclose mat]ial in=mation or mak+ ( mat]ial mis/atem5ts ,section #ad ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #ghn7 is am5d$ by add+ at ! end ! foll[+3 7l7 ,false or mislead+ /atem5ts ,= purposes ( subsection 7a7 & ,rule #ad;a-#i 7#ag ,,cfr #bdj4ad;a-#i7 & any successor rule1 ! failure to disclose mat]ial in=mation 7su* z a proxy vot+ advice bus9ess's me?odology1 s\rces ( in=mation1 or conflicts ( int]e/7 or ! mak+ ( a mat]ial mis/atem5t reg>d+ proxy vot+ advice t makes a recomm5dation to a security hold] z to ! security hold]'s vote1 cons5t1 or au?orization on a specific matt] = :i* security hold] approval is solicit$1 & t is furni%$ by a p]son t m>kets ! p]son's exp]tise z a provid] ( su* proxy vot+ advice sep>ately f o!r =ms ( inve/m5t advice1 & sells su* proxy vot+ advice = a fee1 %all be consid]$ to be false or mislead+ ) respect to a mat]ial fact4 4 ,,vii ,duties ( inve/m5t advis]s1 asset manag]s1 & p5sion funds #gja4 ,duties ( inve/m5t advis]s1 asset manag]s1 & p5sion funds ,section #ac7;f7 ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #ghm7f77 is am5d$ by add+ at ! end ! foll[+3 7#g7 ,disclosures by in/itutional inve/m5t manag]s 9 connection ) proxy advisory firms 7,a7 ,9 g5]al ,e in/itutional inve/m5t manag] :i* uses ! mails1 or any means or in/rum5tality ( int]/ate comm]ce 9 ! c\rse ( its bus9ess z an in/itutional inve/m5t manag]1 :i* engages a proxy advisory firm1 & :i* ex]cises vot+ p[] ) respect to acc\nts hold+ equity securities ( a class describ$ 9 subsection 7d77#a7 or o!rwise becomes or is deem$ to become a b5eficial own] ( any security ( a class describ$ 9 subsection 7d77#a7 ^u ! pur*ase or sale ( a security-bas$ swap t ! ,commission may def9e by rule1 %all file an annual report ) ! ,commission conta9+-- 7i7 an explanation ( h[ ! in/itutional inve/m5t manag] vot$ ) respect to ea* %>ehold] proposal2 7ii7 ! p]c5tage ( votes ca/ on %>ehold] proposals t 7 consi/5t ) proxy advisory firm recomm5dations1 = ea* proxy advisory firm reta9$ by ! in/itutional inve/m5t manag]2 7iii7 an explanation (-- 7,i7 h[ ! in/itutional inve/m5t manag] took into consid]ation proxy advisory firm recomm5dations 9 mak+ vot+ decisions1 includ+ ! degree to :i* ! in/itutional inve/m5t manag] us$ ^? recomm5dations 9 mak+ vot+ decisions2 7,,ii7 h[ (t5 ! in/itutional inve/m5t manag] vot$ consi/5t ) a recomm5dation made by a proxy advisory firm1 express$ z a p]c5tage2 7,,iii7 h[ su* votes are reconcil$ ) ! fiduci>y duty ( ! in/itutional inve/m5t manag] to vote 9 ! be/ economic int]e/s ( %>ehold]s2 7,,iv7 h[ frequ5tly votes 7 *ang$ :5 an error occurr$ or due to new in=mation f issu]s2 & 7,v7 ! degree to :i* inve/m5t pr(essionals ( ! in/itutional inve/m5t manag] 7 involv$ 9 proxy vot+ decisions2 & 7iv7 a c]tification t ! vot+ decisions ( ! in/itutional inve/m5t manag] 7 bas$ solely on ! be/ economic int]e/ ( ! %>ehold]s on behalf ( :om ! in/itutional inve/m5t manag] holds %>es4 7,b7 ,requirem5ts = l>g] in/itutional inve/m5t manag]s ,e in/itutional inve/m5t manag] describ$ 9 subp>agraph 7,a7 t has regulatory assets "u managem5t ) an aggregate fair m>ket value on ! la/ trad+ day 9 any ( ! prec$+ twelve mon?s ( at lea/ #ajj1jjj1jjj1jjj %all-- 7i7 9 any mat]ials provid$ to cu/om]s & relat$ to cu/om]s vot+ _! %>es1 cl>ify t %>ehold]s are n requir$ to vote on e proposal2 7ii7 ) respect to ea* %>ehold] proposal = :i* ! in/itutional inve/m5t manag] votes 7o!r ?an votes consi/5t ) ! recomm5dation ( a bo>d ( directors compos$ ( a majority ( indep5d5t directors7 p]=m an economic analysis be=e mak+ su* vote1 to det]m9e t ! vote is 9 ! be/ economic int]e/ ( ! %>ehold]s on behalf ( :om ! in/itutional inve/m5t manag] holds %>es2 & 7iii7 include ea* economic analysis requir$ "u clause 7ii7 9 ! annual report requir$ "u subp>agraph 7,a74 7,c7 ,be/ economic int]e/ def9$ ,9 ?is p>agraph1 ! t]m be/ economic int]e/ means decisions t seek to maximize inve/m5t returns ov] a "t horizon consi/5t ) ! inve/m5t objectives & risk managem5t pr(ile ( ! fund 9 :i* %>ehold]s are inve/$4 4 ,,viii ,protect+ ,am]icans' ,sav+s #hja4 ,requirem5ts relat$ to proxy vot+ ,section #ad ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #ghn71 z am5d$ by section #fja1 is fur!r am5d$ by add+ at ! end ! foll[+3 7m7 ,prohibition on robovot+ 7#a7 ,9 g5]al ,! ,commission %all issue f9al rules prohibit+ ! use ( robovot+ ) respect to votes relat$ to proxy or cons5t solicitation mat]ials4 7#b7 ,robovot+ def9$ ,9 ?is subsection1 ! t]m robovot+ means ! practice ( automatically vot+ 9 a mann] consi/5t ) ! recomm5dations ( a proxy advisory firm or on a proxy advisory firm's electronic vot+ plat=m ) ! proxy advisory firm's recomm5dations1 9 ei!r case1 )\t indep5d5t review & analysis4 7n7 ,prohibition on outs\rc+ vot+ decisions by in/itutional inve/ors ,) respect to votes relat$ to proxy or cons5t solicitation mat]ials1 an in/itutional inve/or may n outs\rce vot+ decisions to any p]son o!r ?an an inve/m5t advis] or a brok] or deal] t is regi/]$ ) ! ,commission1 or is exempt f su* regi/ration1 & has a fiduci>y or be/ int]e/ duty to ! in/itutional inve/or4 7o7 ,no requirem5t to vote ,no p]son may be requir$ to ca/ votes relat$ to proxy or cons5t solicitation mat]ials1 unless obligat$ by _! fiduci>y duty or ,rule #bjf7d7-f 7#ag ,,cfr #bge4bjf7d7-f74 4 ,,ix ,emp[]+ ,%>ehold]s #ija4 ,proxy vot+ ( passively manag$ funds 7a7 ,9 g5]al ,! ,inve/m5t ,advis]s ,act ( #aidj 7#ae ,u4,s4,c4 #hj;b-#a et seq47 is am5d$ by ins]t+ aft] section #bjh 7#ae ,u4,s4,c4 #hj;b-#h7 ! foll[+3 #bjh;,a4 ,proxy vot+ ( passively manag$ funds 7a7 ,inve/m5t advis] proxy vot+ 7#a7 ,9 g5]al ,an inve/m5t advis] t holds au?ority to vote a proxy solicit$ by an issu] pursuant to section #ad ( ! ,securities ,ex*ange ,act ( #aicd 7#ae ,u4,s4,c4 #ghn7 9 connection ) any vote ( cov]$ securities held by a passively manag$ fund %all-- 7,a7 vote 9 accordance ) ! in/ructions 7:i* may include ! selection or default *oice ( a publi%$ vot+ policy7 ( ! b5eficial own] 7or fiduci>y or o!r designee ) inve/m5t & proxy vot+ au?ority on _! behalf7 ( a vot+ security ( ! passively manag$ fund2 7,b7 vote 9 accordance ) ! vot+ recomm5dations ( ! bo>d ( directors 7or simil> gov]n+ body7 ( su* issu]2 7,c7 ab/a9 f vot+ su* securities b make reasonable ef=ts to be consid]$ pres5t = purposes ( e/abli%+ a quorum2 or 7,d7 pursuant to rules issu$ by ! ,commission1 in/ruct vote tabulators to make a reasonable ef=t to mirror vote %>es to reflect ! elections ( ! o!r %>ehold]s 9 ! cov]$ security4 7#b7 ,exception ,p>agraph 7#a7 %all n apply ) respect to a vote on a r\t9e matt]4 7b7 ,safe h>bor ,) respect to a r\t9e or non-r\t9e vote1 vot$ 9 ! mann] requir$ by subsection 7a77#a71 an inve/m5t advis] %all n be liable to any p]son "u any law or regulation ( ! ,unit$ ,/ates1 any con/itution1 law1 or regulation ( any ,/ate or political subdivision !re(1 or "u any contract or o!r legally en=ceable agreem5t 7includ+ any arbitration agreem5t71 = any ( ! foll[+3 7#a7 ,vot+ 9 accordance ) ! in/ructions ( ! b5eficial own] 7or t b5eficial own]'s designee ) inve/m5t & proxy vot+ au?ority7 ( a vot+ security ( ! passively manag$ fund4 7#b7 ,n solicit+ vot+ in/ructions f any p]son4 7#c7 ,vot+ 9 accordance ) ! vot+ recomm5dations ( an issu] "u subsection 7a77#a77;,b7 ) respect to su* vote4 7#d7 ,ab/a9+ f vot+ 9 accordance ) subsection 7a77#a77;,c7 ) respect to su* vote4 7#e7 ,in/ruct+ vote tabulators to make a reasonable ef=t to mirror vote %>es to reflect ! elections ( ! o!r %>ehold]s 9 a cov]$ security1 pursuant to rules issu$ by ! ,commission describ$ 9 subsection 7a77#a77;,d74 7c7 ,=eign private issu]s exemption ,subsection 7a7 %all n apply ) respect to a =eign private issu] if ! publi%$ vot+ policy ( ! inve/m5t advisor ) respect to su* =eign private issu] is fully & fairly disclos$ to b5eficial own]s1 includ+ ! ext5t to :i* su* policy diff]s f ! publi%$ vot+ policy = non-exempt issu]s4 7d7 ,dissem9ation ( in=mation 7#a7 ,9 g5]al ,any inve/m5t advis] subject to ! requirem5ts ( subsection 7a77#a7 %all1 ) respect to ! dissem9ation ( in=mation & o!r mat]ial to a vot+ p]son1 comply ) ! foll[+ requirem5ts1 unless ! vot+ p]son affirmatively decl9es to receive t in=mation & o!r mat]ial3 7,a7 ,provide ! vot+ p]son 7or ! relevant int]m$i>y ) :om ! inve/m5t advis] has access7 ) a =m to select a publi%$ vot+ policy4 7,b7 ,provide ! vot+ p]son ) n less ?an #e bus9ess days aft] ! date on :i* ! vot+ p]son receives ! =m describ$ "u subp>agraph 7,a7 to return t =m to ! inve/m5t advis]4 7#b7 ,electronic deliv]y ,all1 or any portion1 ( ! mat]ials t an inve/m5t advis] is requir$ to provide "u p>agraph 7#a77;,a7 may be provid$ electronically1 includ+ ?r\gh-- 7,a7 an int]net website2 7,b7 ano!r digital1 int]net1 or electronic-bas$ in=mation repository2 or 7,c7 a mobile application4 7e7 ,def9itions ,9 ?is section3 7#a7 ,cov]$ security ,! t]m cov]$ security-- 7,a7 means a vot+ security1 z t t]m is def9$ 9 section #b7;a7 ( ! ,inve/m5t ,company ,act ( #aidj 7#ae ,u4,s4,c4 #hj;a-#b7;a771 9 :i* a qualifi$ fund is inve/$2 & 7,b7 does n include any vot+ security 7z def9$ 9 subp>agraph 7,a77 ( an issu] regi/]$ ) ! ,commission z an inve/m5t company "u section #h ( ! ,inve/m5t ,company ,act ( #aidj 7#ae ,u4,s4,c4 #hj;a-#h74 7#b7 ,passively manag$ fund ,! t]m passively manag$ fund means a qualifi$ fund-- 7,a7 t-- 7i7 is design$ to track1 or is d]iv$ f1 an index ( securities or a portion ( su* an index2 7ii7 discloses t ! qualifi$ fund is a passive index fund2 or 7iii7 allocates n less ?an #fj p]c5t ( ! total assets ( ! qualifi$ fund to an inve/m5t /rategy t is design$ to track1 or is d]iv$ f1 an index ( securities or a portion ( su* an index fund2 & 7,b7 t commits to refra9 f ex]cis+ control ov] an issu] ?r\gh vot+ or inve/m5t au?ority4 7#c7 ,publi%$ vot+ policy ,! t]m publi%$ vot+ policy means-- 7,a7 a policy t-- 7i7 articulates h[ proportionate %>es w\ld be expect$ to be vot$ 9 anticipat$ proxy vot+ matt]s2 & 7ii7 is made available to inve/ors1 includ+ via website or o!r electronic means2 & 7,b7 9 ! case ( a policy ( a passively manag$ fund or an inve/m5t advis]1 a policy t does n-- 7i7 seek to set ! /rategy or day-to-day managem5t decisions ( ! issu]2 7ii7 involve submitt+ %>ehold] proposals2 7iii7 seek to nom9ate directors2 & 7iv7 coord9ate votes ) o!r index manag]s4 7#d7 ,qualifi$ fund ,! t]m qualifi$ fund means-- 7,a7 an inve/m5t company2 7,b7 a private fund2 7,c7 an eligible def]r$ comp5sation plan1 z t t]m is def9$ 9 section #deg7;b7 ( ! ,int]nal ,rev5ue ,code ( #aihf2 7,d7 a tru/1 plan1 acc\nt1 or o!r entity describ$ 9 section #c7;c77#aa7 ( ! ,inve/m5t ,company ,act ( #aidj 7#ae ,u4,s4,c4 #hj;a-#c7;c77#aa772 7,e7 a plan ma9ta9$ by an employ] describ$ 9 clause 7i71 7ii71 or 7iii7 ( section #djc7;b77#a77;,a7 ( ! ,int]nal ,rev5ue ,code ( #aihf to provide annuity contracts describ$ 9 section #djc7;b7 ( su* ,code2 7,f7 a common tru/ fund1 or simil> fund1 ma9ta9$ by a bank2 7,g7 any fund e/abli%$ "u section #hdch7;b77#a7 ( title #e1 ,unit$ ,/ates ,code2 or 7,h7 any sep>ate manag$ acc\nt ( a cli5t ( an inve/m5t advis]4 7#e7 ,r\t9e matt] ,! t]m r\t9e matt]-- 7,a7 includes a proposal t relates to-- 7i7 an election ) respect to ! bo>d ( directors ( a regi/rant2 7ii7 ! comp5sation ( managem5t or ! bo>d ( directors ( a regi/rant2 7iii7 ! selection ( auditors2 or 7iv7 declassification2 & 7,b7 does n include-- 7i7 a proposal t is n submitt$ to a hold] ( cov]$ securities by means ( a proxy /atem5t comp>able to t describ$ 9 section #bdj4ad;a-#aja ( title #ag1 ,code ( ,f$]al ,regulations1 or any successor regulation2 or 7ii7 a proposal t is-- 7,i7 ! subject ( a c\nt]-solicitation2 or 7,,ii7 "p ( a proposal made by a p]son o!r ?an ! applicable regi/rant4 4 7b7 ,effective date ,! am5dm5t made by ?is section %all take effect #a ye> aft] ! date ( enactm5t ( ?is ,act4 ,x ,be/ ,int]e/ ,bas$ ,on ,pecuni>y ,factors #ajja4 ,protect+ retail inve/ors' sav+s 7a7 ,be/ int]e/ bas$ on pecuni>y factors ,section #baa7;g7 ( ! ,inve/m5t ,advis]s ,act ( #aidj 7#ae ,u4,s4,c4 #hj;b-#aa7;g77 is am5d$ by add+ at ! end ! foll[+3 7#c7 ,be/ int]e/ bas$ on pecuni>y factors 7,a7 ,9 g5]al ,= purposes ( p>agraph 7#a71 :5 provid+ p]sonaliz$ inve/m5t advice1 ! be/ int]e/ ( a cu/om] %all be det]m9$ us+ pecuni>y factors1 :i*1 subject to applicable law1 may n be subord9at$ to or limit$ by non-pecuni>y factors1 unless-- 7i7 ! cu/om] provides in=m$ cons5t1 :e!r by e-deliv]y or e-sign1 t su* non-pecuni>y factors be consid]$2 or 7ii7 ! p]sonaliz$ inve/m5t advice is consi/5t ) ! cu/om]'s writt5 inve/m5t pr(ile in=mation4 7,b7 ,disclosure ( pecuni>y effects ,if a cu/om] provides a brok]1 deal]1 or inve/m5t advis] ) ! in=m$ cons5t to consid] non-pecuni>y factors describ$ "u subp>agraph 7,a71 ! brok]1 deal]1 or inve/m5t advis] %all provide qualitative disclosure ( ! pot5tial pecuni>y effects to ! cu/om] ( prioritiz+ non-pecuni>y factors ov] pecuni>y factors 9 mak+ inve/m5t decisions4 7,c7 ,pecuni>y factor def9$ ,9 ?is p>agraph1 ! t]m pecuni>y factor means a factor t a fiduci>y prud5tly det]m9es is expect$ to h a mat]ial effect on ! risk or return ( an inve/m5t bas$ on inve/m5t objectives1 risk tol]ance1 & "t horizon4 4 7b7 ,rulemak+ ,n lat] ?an ! end ( ! #ab-mon? p]iod beg9n+ on ! date ( enactm5t ( ?is ,act1 ! ,securities & ,ex*ange ,commission %all revise or issue su* rules z may be necess>y to implem5t ! am5dm5t made by p>agraph 7#a74 7c7 ,applicability ,! am5dm5t made by p>agraph 7#a7 %all apply to a recomm5dation made by a brok] or deal] & inve/m5t advice provid$ by an inve/m5t advis] beg9n+ on ! date t is #ab mon?s aft] ! date ( enactm5t ( ?is ,act4 ,june #bd1 #bjbf,report$ ) an am5dm5t1 committ$ to ! ,committee ( ! ,:ole ,h\se on ! ,/ate ( ! ,union1 & ord]$ to be pr9t$