TICKER Act Trading and Investing with Clear Knowledge and Expectations about Risk Act
Impact
The bill emphasizes transparency for investors, mandating that warnings about the nature of investments in variable interest entities should be clearly visible. It aims to protect U.S. investors from potential losses associated with these entities, which often lack equity ownership and provide minimal legal recourse for those who invest in them. By enhancing risk disclosure practices, the bill intends to create a more informed investing environment that empowers individuals to make sound financial decisions based on clear knowledge of the risks involved.
Summary
SB855, titled the 'Trading and Investing with Clear Knowledge and Expectations about Risk Act' or 'TICKER Act', is a legislative proposal aimed at amending the Securities Exchange Act of 1934. The primary goal of this bill is to require national securities exchanges to identify issuers that are classified as consolidated variable interest entities (VIEs). This is particularly significant as some of these entities are based in foreign jurisdictions, which are seen as posing substantial risks to U.S. investors.
Contention
Though the bill is aimed at safeguarding investor interests, it may also spark debates regarding the implications for foreign investments. Concerns may arise about the extent to which the bill could deter investment in foreign entities due to heightened risk profiles. Additionally, the industries and foreign markets affected could lobby against such disclosures, viewing them as barriers to entry or unnecessarily punitive measures that may inhibit growth in cross-border capital flows. The bill's passage will likely involve extensive discussions about the balance between risk management and investment opportunities.
Putting Investors First Act of 2023 This bill requires a proxy advisory firm to register with the Securities and Exchange Commission and prohibits an unregistered proxy advisory firm from using interstate commerce to provide proxy-voting advice, research, analysis, or recommendations to any client. With respect to these firms, the bill (1) establishes procedures for both registration and termination of registration; (2) requires each firm to employ an ombudsman, designate a compliance officer, and publicly disclose conflicts of interest; (3) allows issuers to assess and comment on proxy voting recommendations; and (4) prohibits unfair, coercive, or abusive practices. The bill establishes a private right of action against a proxy advisory firm that endorses an approved proposal that is not supported by the issuer and is found to be illegal.
Securing American Families and Enterprises from People's Republic of China Investments Act or the SAFE from PRC Investments Act This bill requires certain issuers of securities and funds traded on an exchange to report on connections to China or the Communist Party of China. In particular, an issuer with specified connections to China must annually disclose a variety of details, including whether executive-level employees, senior directors, or board members are members of the Communist Party of China; interactions with the party; expenditures in China; expenditures in the United States regarding operations and lobbying activities; and the ability of the Public Company Accounting Oversight Board to audit the issuer. Additionally, an exchange-traded fund that invests in a Chinese company must annually disclose about that company ownership information, party involvement, whether the company participates in specified Chinese policies or activities, any ties to U.S.-sanctioned individuals, and the types of products or services produced by the company.