,,ii  #aaith ,,congress  #ast ,session  
,s4 #cjhf  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,october #cj1  
#bjbe ,mr4 ,cassidy 7for himself and    
,mr4 ,banks7 introduced the following   
bill2 which was read twice and referred 
to the ,committee on ,health1           
,education1 ,labor1 and ,pensions  ,a   
,,bill  ,to amend the ,employee         
,retirement ,income ,security ,act of   
#aigd to clarify the criteria by which a
 fiduciary may evaluate and select      
investments based on nonpecuniary       
factors1 and to clarify the application 
of prudence and exclusive purpose duties
 to the exercise of shareholder rights4 
#a4  ,short title  ,this ,act may be    
cited as the ,restoring ,integrity in   
,fiduciary ,duty ,act4  #b4  ,exercise  
of fiduciary duty in evaluating and     
selecting investments  7a7  ,in general 
,section #djd7;a7 of the ,employee      
,retirement ,income ,security ,act of   
#aigd 7#bi ,u4,s4,c4 #aajd7;a771 is     
amended by adding at the end the        

following3  7#c7  ,investments based on 
pecuniary factors  7,a7  ,in general    
,for the purposes of paragraph 7#a71 a  
fiduciary-- 7i7 may evaluate an         
investment or investment course of      
action based only on pecuniary factors1 
except as provided in subparagraph 7,b72
  7ii7 may not subordinate the interests
 of the participants and beneficiaries  
in their retirement income or financial 
benefits under the plan to other        
objectives2  7iii7 may not sacrifice    
investment return or take on additional 
investment risk to promote nonpecuniary 
benefits or goals2 and  7iv7 shall      
weight each pecuniary factor in a manner
 that appropriately reflects a prudent  
assessment of the impact of the factor  
on risk and return4  7,b7  ,use of      
nonpecuniary factors for investment     
alternatives  ,notwithstanding          
subparagraph 7,a71 when choosing between
 or among investment alternatives1 if a 
fiduciary is unable to distinguish      
between or among investment alternatives

 or investment courses of action on the 
basis of pecuniary factors alone1 the   
fiduciary shall use the capita aut navia
 standard as the deciding factor in the 
investment decision1 provided that--    
7i7 the fiduciary documents detail--    
7,i7 why pecuniary factors were not     
sufficient to select the investment or  
investment course of action2  7,,ii7 how
 the selected investment compares to the
 alternative investments with regard to 
the composition of the portfolio with   
regard to diversification1 the          
liquidity1 current return of the        
portfolio relative to the anticipated   
cash flow requirements of the plan1 and 
the projected return of the portfolio   
relative to the funding objectives of   
the plan2 and  7,,iii7 how the selected 
investment is consistent with the       
interests of the participants and       
beneficiaries in their retirement income
 or financial benefits under the plan2  
and  7ii7 the fiduciary demonstrates    
that it did not expend any resources    

during the investment course of action  
on nonpecuniary factors that place      
weight between or among investment      
alternatives for the purpose of the     
investment decision4  7,c7  ,investment 
alternatives for participant-directed   
individual account plans  ,in selecting 
or retaining investment options for a   
pension plan described in subsection    
7c77#a77;,a71 a fiduciary may consider1 
select1 or retain an investment option  
on the basis that such investment option
 promotes1 seeks1 or supports #a or more
 nonpecuniary benefits or goals1 only   
if--  7i7 the fiduciary satisfies the   
requirements of paragraph 7#a7 and      
subparagraphs 7,a7 and 7,b7 of this     
paragraph in selecting or retaining any 
such investment option2 and  7ii7 such  
investment option is not added or       
retained as1 or included as a component 
of1 a default investment described in   
subsection 7c77#e7 7or any other default
 investment alternative74  7,d7         
,definitions  ,for the purposes of this 

paragraph3 7i7 ,capita aut navia ,the   
term capita aut navia means a standard  
by which a fiduciary chooses at random  
between or among investment alternatives
 where pecuniary factors are equal and  
does not give added weight to #a        
investment or another1 provided that the
 investment alternatives have identical 
risk and return attributes and choosing 
among the investment alternatives would 
have comparatively negligible impact1   
not considering liquidity constraints or
 transaction costs4  7ii7  ,investment  
course of action  ,the term investment  
course of action means any series or    
program of investments or actions       
related to a fiduciary's performance of 
the fiduciary's investment duties1 and  
includes the selection of an investment 
fund as a plan investment1 or in the    
case of a plan described in subsection  
7c77#a77;,a71 a designated investment   
alternative under the plan4  7iii7      
,material  ,the term material1 when used
 to qualify a financial risk or         

financial return--  7,i7 means a        
financial risk or financial return in   
which there is a substantial likelihood 
that a reasonable investor would attach 
importance when--  7aa7 evaluating the  
potential financial risks or returns of 
an existing or prospective investment2  
or  7bb7 exercising1 or declining to    
exercise1 any rights with respect to    
securities2 and  7,,ii7 does not include
 furthering nonpecuniary1 environmental1
 social1 political1 ideological1 or     
other goals or objectives4  7iv7        
,pecuniary factor  ,the term pecuniary  
factor means a factor that a fiduciary  
prudently determines is expected to have
 a material effect on the risk or return
 of an investment based on appropriate  
investment horizons consistent with the 
plan's investment objectives and the    
funding policy established pursuant to  
section #djb7;b77#a74  4  7b7           
,effective date  ,the amendments made by
 this section shall apply to actions    
taken by a fiduciary on or after the    

date that is #a year after the date of  
enactment of this ,act4  #c4  ,exercise 
of shareholder rights  7a7  ,in general 
,section #djd of the ,employee          
,retirement ,income ,security ,act of   
#aigd 7#bi ,u4,s4,c4 #aajd7 is amended  
by adding at the end the following new  
subsection3  7f7  ,exercise of          
shareholder rights  7#a7  ,authority to 
exercise shareholder rights  7,a7  ,in  
general  ,the fiduciary duty to manage  
plan assets that are shares of stock    
includes the management of shareholder  
rights appurtenant to those shares1     
including the right to vote proxies4    
,when deciding whether to exercise a    
shareholder right and in exercising such
 right1 including the voting of proxies1
 a fiduciary shall act prudently and    
solely in the interests of participants 
and beneficiaries and for the exclusive 
purpose of providing benefits to        
participants and beneficiaries and      
defraying the reasonable expenses of    
administering the plan4 ,the fiduciary  

duty to manage shareholder rights       
appurtenant to shares of stock does not 
require the voting of every proxy or the
 exercise of every shareholder right4   
7,b7  ,exception  ,this subsection shall
 not apply to voting1 tender1 and       
similar rights with respect to          
securities that are passed through      
pursuant to the terms of an individual  
account plan to participants and        
beneficiaries with accounts holding such
 securities4  7#b7  ,requirements for   
exercise of shareholder rights  ,a      
fiduciary1 when deciding whether to     
exercise a shareholder right and when   
exercising a shareholder right--  7,a7  
shall-- 7i7 act solely in accordance    
with the economic interest of the plan  
and its participants and beneficiaries2 
7ii7 consider any costs involved2  7iii7
 evaluate material facts that form the  
basis for any particular proxy vote or  
exercise of shareholder rights2 and     
7iv7 maintain a record of any proxy     
vote1 proxy voting activity1 or other   

exercise of a shareholder right1        
including any attempt to influence      
management2 and  7,b7 shall not         
subordinate the interests of            
participants and beneficiaries in their 
retirement income or financial benefits 
under the plan to any nonpecuniary      
objective1 or promote nonpecuniary      
benefits or goals unrelated to those    
financial interests of the plan's       
participants and beneficiaries4  7#c7   
,monitoring  ,a fiduciary shall exercise
 prudence and diligence in the selection
 and monitoring of a person1 if any1    
selected to advise or otherwise assist  
with the exercise of shareholder rights1
 including by providing research and    
analysis1 recommendations on exercise of
 proxy voting or other shareholder      
rights1 administrative services with    
respect to voting proxies1 and          
recordkeeping and reporting services4   
7#d7  ,investment managers and proxy    
advisory firms  ,where the authority to 
vote proxies or exercise other          

shareholder rights has been delegated to
 an investment manager pursuant to      
section #djc7;a71 or a proxy voting     
advisory firm or other person who       
performs advisory services as to the    
voting of proxies or the exercise of    
other shareholder rights1 a responsible 
plan fiduciary shall prudently monitor  
the proxy voting activities of such     
investment manager or advisory firm and 
determine whether such activities are in
 compliance with paragraphs 7#a7 and    
7#b74  7#e7  ,voting policies  7,a7  ,in
 general  ,in deciding whether to vote a
 proxy pursuant to this subsection1 the 
plan fiduciary may adopt a proxy voting 
policy1 including a safe harbor proxy   
voting policy described in subparagraph 
7,b71 providing that the authority to   
vote a proxy shall be exercised pursuant
 to specific parameters designed to     
serve the economic interest of the plan4
  7,b7  ,safe harbor voting policy      
,with respect to a decision not to vote 
a proxy1 a fiduciary shall satisfy the  

fiduciary responsibilities under this   
subsection if such fiduciary adopts and 
is following a safe harbor proxy voting 
policy that--  7i7 limits voting        
resources to particular types of        
proposals that the fiduciary has        
prudently determined are substantially  
related to the business activities of   
the issuer or are expected to have a    
material effect on the value of the plan
 investment2 or  7ii7 establishes that  
the fiduciary will refrain from voting  
on proposals or particular types of     
proposals when the assets of a plan     
invested in the issuer relative to the  
total assets of such plan are below #e  
percent 7or1 in the event such assets   
are under management1 when the assets   
under management invested in the issuer 
are below #e percent of the total assets
 under management74  7,c7  ,exception   
,no proxy voting policy adopted pursuant
 to this paragraph shall preclude a     
fiduciary from submitting a proxy vote  
when the fiduciary determines that the  

matter being voted on is expected to    
have a material economic effect on the  
investment performance of a plan's      
portfolio 7or the investment performance
 of assets under management in the case 
of an investment manager72 provided1    
however1 that in all cases compliance   
with a safe harbor voting policy shall  
be presumed to satisfy fiduciary        
responsibilities with respect to        
decisions not to vote4  7#f7  ,review   
,a fiduciary shall periodically review  
any policy adopted under this           
subsection4  4  7b7  ,effective date    
,the amendments made by subsection 7a7  
shall apply to an exercise of           
shareholder rights occurring on or after
 ,january #a1 #bjbf4