Congress approves Heller, Hill effort to make investment fund research reports public

Legislation introduced by U.S. Sen. Dean Heller (R-NV) and U.S. Rep. French Hill (R-AR) to make certain types of investment fund research reports publicly available will advance to the president’s desk for signature after gaining House approval on Wednesday.

Current securities laws offer legal protections for broker-dealers that issue public research reports on some asset classes, like listed stocks and corporate debt. Research reports on exchange traded funds (ETFs), however, aren’t protected under current laws.

The Fair Access to Investment Research Act would direct the Securities and Exchange Commission (SEC) to draft and implement a “safe harbor” for public research reports on ETFs.

“Making this research readily available for consumers and investors in Nevada will go a long way to helping people better understand the benefits and risks before investing their hard-earned money,” Heller said.

Over the last decade, demand has risen for ETFs, which are pooled investment vehicles with shares that investors can buy and sell on a stock exchange at a market-determined price.

Under the bill, the research reports wouldn’t be considered offers under securities law, even if the brokers or dealers take part in the registered offering of the investment fund’s securities.

“During my three decades in the financial industry, I witnessed the explosive growth in the ETF industry and the lack of available research caused by outdated securities law,” Hill said. “My common sense bill, with Senate amendments, clarifies current law to allow broker-dealers to publish ETF research, facilitating investors’ access to useful information in this rapidly growing market. This is a good bill because it removes barriers to investment and promotes capital formation.”

In 2016, net issuance of ETF shares, including reinvested dividends, hit a record $284 billion, according to data from the Investment Company Institute. An estimated 5.9 million, or about 5 percent of U.S. households, held ETFs in mid-2016, ICI said.

Heller thanked Hill, U.S. Sen. Gary Peters (D-MI), and U.S. Rep. Bill Foster (D-IL) for helping push the bill through Congress and said he hoped the president would swiftly sign the legislation into law.