Encouraging Employee Ownership Act of 2015

Floor Speech

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Mr. HILL. Mr. Chairman, today I rise in support of H.R. 1675 and particularly want to speak about title II, which is called the Fair Access to Investment Research Act, which I sponsored along with my friend and colleague, Mr. Carney from Delaware.

Since starting my most recent investment firm that I had back in the 1990s before I came to Congress a year ago, I have seen the investment category exchange-traded funds, or ETFs, grow from about 100 funds with $100 billion in assets to over 1,400 funds with almost $2 trillion in assets--a significant increase over that time.

Despite their growing popularity and use by retail investors and small institutional investors, most broker-dealers in this country do not publish research on ETFs. Primarily, the lack of that publication is due to anomalies in the securities laws and regulations, and that is at the heart of what we are talking about here. It is an important investment category. It deserves research, and it deserves more information, not less.

Title II's mission is simple. It directs the SEC to provide a safe harbor for research reports that cover ETFs so that those reports are not considered offers under section 5 of the Securities Act of 1933. Therefore, ETF research is just treated like all other stock corporate research.

This is a commonsense proposal, and it mirrors other research safe harbors implemented by the SEC which clarify the law and allow broker- dealers to publish ETF research allowing investors more information about this rapidly growing and important market.

Further, this bill holds the SEC accountable--a large challenge before the Congress--to follow our direction. This bill requires the SEC to finalize the rules within 120 days, and if the deadline is not met, an interim safe harbor will take effect until the SEC's rules are finalized.

I might add to my friends at the Commission, this is not a topic unfamiliar to you as it has been raised at the Commission many times, including by the Commission staff over the past 17 years--and yet no action has happened. So we are no longer out ahead of the curve on this topic, we are behind it, as there are some 6 million U.S. households currently using ETFs in their investment portfolios, and they need access to this research.

Having worked in the banking and investment industry for three decades, I appreciate Chairman Hensarling and Congress' efforts to promote capital formation, reduce unnecessary barriers, provide sunshine, provide information to our investors, and, by definition, grow jobs and our economy.

I want to finally thank Mr. Carney of Delaware for working with me on this project and for being so patient along its way in the last weeks.

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