H.R. 1675

Capital Markets Improvement Act of 2016

TITLE I--ENCOURAGING EMPLOYEE OWNERSHIP

(Sec. 101) This bill directs the Securities and Exchange Commission (SEC) to revise regulations to require an issuer to furnish investors with additional specified disclosures regarding compensatory benefit plans if the aggregate sales price or amount of securities sold during any consecutive 12-month period exceeds $10 million (currently $5 million), indexed for inflation every five years.

TITLE II--FAIR ACCESS TO INVESTMENT RESEARCH

(Sec. 201) The SEC shall revise a specified regulation to create a safe harbor for certain publications or distributions of research reports by brokers or dealers distributing securities.

The revised regulation shall declare that, even if a broker or dealer participates in the registered offering of a covered investment fund's securities, the investment fund research report shall not be deemed to constitute an offer for sale nor an offer to sell a security that is the subject of the offering pursuant to a registration statement that the issuer proposes to file, or has filed, or that is effective.

The covered investment fund research report shall be deemed to satisfy the regulation's requirements as well as those of any self-regulatory organization.

The SEC shall not impose specified conditions and requirements when implementing the safe harbor.

TITLE III--SMALL BUSINESS MERGERS, ACQUISITIONS, SALES, AND BROKERAGE SIMPLIFICATION

(Sec. 301) The Securities Exchange Act of 1934 is amended to exempt from its registration requirements certain merger and acquisition brokers and associated persons.

This registration exemption, however, shall be denied to brokers who:

• receive, hold, transmit, or have custody of any funds or securities to be exchanged by parties to a transfer of ownership of an eligible privately held company;
• engage on behalf of an issuer in a public offering of securities that are either subject to mandatory registration, or with respect to which the issuer must file periodic information, documents, and reports; or
• engage on behalf of any party in a transaction involving a public shell company.

A broker shall not be exempt from registration if the broker is subject to:

• a suspension or revocation of registration;
• a specified statutory disqualification;
• a disqualification under certain rules adopted by the SEC under the Investor Protection and Securities Reform Act of 2010; or
• a final order of a state securities commission, a state financial institution supervisory authority, a federal banking agency, or the National Credit Union Administration.

This Act may not be construed to limit any other authority of the SEC to exempt any person, or any class of persons, from any provision of this Act, including any related rule or regulation.

TITLE IV--SMALL COMPANY DISCLOSURE SIMPLIFICATION

(Sec. 401) The bill exempts emerging growth companies and issuers with total annual gross revenues of less than $250 million from the requirement to use Extensible Business Reporting Language (XBRL) for financial statements and other mandatory periodic reporting filed with the SEC. Such companies, however, may elect to use XBRL for such reporting.

(Sec. 402) The SEC shall: (1) analyze the costs and benefits to such issuers of the requirement to use XBRL for financial statements and other mandatory periodic reporting; and (2) report to certain congressional committees on the results of such analysis as well as on progress in implementing XBRL reporting within the SEC, and use of XBRL data by the SEC and by investors.

TITLE V--STREAMLINING EXCESSIVE AND COSTLY REGULATIONS REVIEW

(Sec. 501) Within 5 years after enactment of this Act, and thereafter at least once within each 10-year period, the SEC shall:

• review each significant regulation it has issued;
• determine by vote whether it is ineffective, excessively burdensome, unnecessary, or inconsistent with its mandate;
• solicit public comment as to whether the regulation should be amended or repealed; and
• subsequently amend or repeal accordingly.

The SEC shall report to certain congressional committees the steps it has taken to implement the results of its decision, including any action to amend or repeal the target regulation.

The bill declares that SEC determinations made pursuant to this Act are final and not subject to judicial review.