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Committee Passes Legislation to Advance Investor Protections, Support Manufactured Housing Communities, and Promote De Novo Depository Institutions

The House Financial Services Committee passed eleven bills to protect investors and reduce conflicts of interest born out of payment for order flow, support manufactured housing communities, fight for everyone’s right to vote, promote de novo depository institutions, and strengthen protections for the LIBOR transition. 

The following bills passed the Committee en bloc #1 by a vote of 28-23.

  • Manufactured Housing Community Preservation Act of 2021 (H.R. 3332), a bill by Representative Cindy Axne (D-IA). Through the Department of Housing and Urban Development, this bill would assist nonprofits, resident-formed cooperatives, public housing authorities, and other local entities purchase, preserve, and maintain long-term affordability of manufactured housing communities for the benefit of residents.

  • Voters on the Move Registration Act of 2021 (H.R. 3555), a bill by Representative Nikema Williams (D-GA). This bill would require public housing authorities, owners of HUD-assisted housing, and lenders of federally-backed single- and multi-family mortgages to provide tenants and mortgage loan applicants with a uniform statement, developed by the Consumer Financial Protection Bureau (CFPB) in consultation with the Election Assistance Commission, that includes information on how to register to vote. The statement would be translated into multiple languages.

The following bills passed the Committee en bloc #2 by a vote of 27-22.

  • Short Sale Transparency and Market Fairness Act (H.R. 4618), a bill by Representative Maxine Waters (D-CA). This bill would shorten the reporting period for 13-F disclosures from quarterly to monthly, require such reports to be filed within 10 days of the end of each month, expand the list of items to be disclosed to include certain derivatives, direct the SEC to complete rulemaking pursuant to Section 929X of Dodd-Frank, which requires aggregate short positions to be disclosed on form 13F, and direct the SEC to study and report the use of confidential filing requests.

  • To amend the Securities Exchange Act of 1934 to prohibit trading ahead by market makers, and for other purposes (H.R. 4619), a bill by Representative Al Green (D-TX). This bill would statutorily prohibit market makers from “trading ahead” or engaging in insider trading. It would also require the CEO of each market maker to annually certify that the CEO has performed reasonable due diligence during the reporting period to ensure the market maker has not engaged in the prohibited activities. 

  • Family Office Regulation Act of 2021 (H.R. 4620), a bill by Representative Alexandria Ocasio-Cortez (D-NY). This bill would limit the use of the family office exemption from registration as an investment adviser with the SEC to offices with $750 million or less in assets under management, and prevent persons who are barred or subject to final orders for conduct constituting fraud, manipulation, or deceit from being associated with a family office. Family offices with more than $750 million assets under management (AUM) would have to register with the SEC as “exempt reporting advisers” (ERA).  

The bills passed by the Committee included:

  • Promoting New and Diverse Depository Institutions Act (H.R. 4590), a bill by Representative Jake Auchincloss (D-MA). H.R. 4590 would require Federal banking regulators to conduct an 18-month study examining challenges prospective de novo depository institutions face. (A de novo depository institution is a newly chartered depository institution.) The bill would also require Federal banking regulators to develop a strategic plan based on the study to promote the creation of newly chartered depository institutions, especially minority depository institutions (MDIs) and community development financial institutions (CDFIs), in a manner that promotes increased access to financial services, including in banking deserts, as well as safety and soundness, consumer protection, and community reinvestment.

The bill passed the Committee by a voice vote.

  • The Adjustable Interest Rate (LIBOR) Act of 2021 (H.R. 4616), a bill by Representative Brad Sherman (D-CA). This bill would establish a process for certain financial contracts that reference the London Interbank Offered Rate (LIBOR) and do not contain sufficient language that would allow them to continue to function as originally intended after LIBOR is discontinued, to instead reference Secured Overnight Financing Rate (SOFR), or an appropriately adjusted form of SOFR without the need to be amended or subject to litigation.

The bill passed the Committee by a voice vote.

  • Order Flow Improvement Act (H.R. 4617), a bill by Representative Brad Sherman (D-CA). This bill directs the SEC to study and consider banning or limiting the payment for order flow (PFOF) in the form of exchange rebates or payments from market centers to broker dealers, conflicts of interest based on PFOF arrangements, and the impact of PFOF on the quality of order execution. 

The bill passed the Committee by a vote of 28-22.

  • Trading Isn't A Game Act (H.R. 4685), a bill by Representative Sean Casten (D-IL). This bill would require the GAO to conduct a study on the positive and negative impacts of the trend of gamification of online trading platforms, such as the use of nudging and other inducement, and require the GAO to issue a report to Congress with recommendation. 

The bill passed the Committee by a vote of 28-23.

  • Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act of 2021 (H.R. 935), a bill by Representative Bill Huizenga (R-MI). This bill codifies a long-standing SEC no action letter that exempts certain merger-and-acquisition brokers from securities registration requirements that facilitate the transfer of ownership in privately held companies with earnings or revenues under specified thresholds, provided such brokers meet certain conditions.  

The bill passed the Committee by a voice vote.

  • Financial Exploitation Prevention Act of 2021 (H.R. 2265), a bill by Representative Ann Wagner (R-MO). This bill would codify a SEC no action letter by amending the Investment Company Act of 1940 to allow a company or agent of the company to postpone a payment or redemption of security, provided they meet certain conditions, when they suspect the request of payment or redemption is the result of exploitation of an elder.

    The bill passed the Committee by a voice vote.


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