---
kind: "diff"
citation: "H.R. 1815"
bill: "116-hr-1815"
heading: "SEC Disclosure Effectiveness Testing Act"
from: "rh"
from_label: "Reported in House"
to: "eh"
to_label: "Engrossed in House"
sections_amended: 1
sections_added: 0
sections_removed: 0
url: "https://uscodex.org/bills/116/hr/1815/changes/eh"
---
# H.R. 1815 — what changed
H.R. 1815, SEC Disclosure Effectiveness Testing Act — 1 section amended between Reported in House and Engrossed in House.
Edits are marked `struck` and `inserted`.
## Sec. 2 Disclosure testing
- (a) In general— Section 23(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78w(a)) is amended by adding at the end the following:
- “(4) Investor testing
- “(A) In general—The Commission shall engage in investor testing prior to issuing any rule or regulation which designates documents or information to be disclosed under the securities laws, if such documents or information—information are required to be delivered to, and are intended or substantially likely to be materially relied upon by, a retail investor when—
- “(i) are primarily used by retail investors, as determined by the Commission; andselecting a broker-dealer or investment adviser, evaluating their services and fees, or materially altering a brokerage or advisory relationship;
- “(ii) are intended to be used by retail investors to make informed investment decisions assessing a securities recommendation or to understand the investments held investment advice provided by the retail investor.a broker-dealer or investment adviser;
- “(B) Contents—Investor testing conducted pursuant “(iii) making a decision to subparagraph (A) shall include the following:purchase or sell a security; or
- “(iv) such other circumstances as the Commission may, with input from the Investor Advocate, determine appropriate for the protection of retail investors.
- “(B) Exemption for certain disclosures—This section shall not apply to—
- “(i) disclosures made pursuant to Regulations S–K and S–X (including Industry Guides), Regulation 14A, Form N–PX, Form 10–K, Form 10–Q, Form 8–K, Form SD, Form N–PORT, Form PF, Regulation SBSR, disclosures mandated by or jointly with the Board of Governors of the Federal Reserve System or the Financial Stability Oversight Council, or successors thereto; or
- “(ii) any other documents or information that the Commission, with input from the Investor Advocate, determines are outside the intended scope and purposes of this Act.
- “(C) Commission authority to conduct additional testing—This section shall not be construed to limit the Commission’s ability to conduct any investor testing on any other documents or information not subject to this section 23(a), provided that any such investor testing shall not be subject to the requirements of this section 23(a).
- “(D) Contents—Investor testing conducted pursuant to subparagraph (A) shall include the following:
- “(i) Qualitative testing in the form of one-on-one cognitive interviews of retail investors about documents or information, or samples of such documents or information, to be provided.
- “(ii) Such other forms of testing that the Commission, with input from the Investor Advocate, deems appropriate for evaluating the effectiveness of retail disclosures.
- “(iii) Analysis and publication in the Federal Register of the results of the testing.
- “(ii) A nationwide survey of retail investors, designed to complement the interviews under clause (i), on—
- “(I) the usefulness of such documents or information, or samples of such documents or information;
- “(II) the proposed format of such documents or information, or samples of such documents or information; and
- “(III) delivery preferences of such documents or information, or samples of such documents or information.
- “(iii) Analysis and publication in the Federal Register of the results of the survey and interviews.
- “(iv) An opportunity for the public to comment on such results published in the Federal Register.
- “(v) A consideration of unique challenges faced by retail investors age 65 or older.
- “(E) Substantive changes—If the Commission, in the period between engaging in investor testing and publishing a final rule, makes substantive changes to such rule that the Commission determines would have a significant impact on retail investors, and such changes were not already investor tested, the Commission shall again engage in investor testing related to such changes.
- “(F) Public availability of retail testing results—The Commission shall make the data and results of any investor testing performed pursuant to this paragraph available to the public.
- “(G) Rules of construction
- “(i) The determination that some or all of a document or information is deemed to be subject to this paragraph shall not forestall the determination that such document or information may also be used or relied upon by the public, market participants other than retail investors, or government agencies.
- “(ii) The Commission may, in consultation with the Investor Advocate, determine which, if any, components of such document or information are substantially likely to be relied on by retail investors for the purposes outlined in paragraph (4)(A) above and focus testing under this paragraph on those components of the disclosure.
- “(iii) Notwithstanding clause (ii) above, where any information subject to testing under this paragraph may be used or relied upon by the public, market participants other than retail investors, or government agencies, the results of testing made pursuant to this paragraph shall not provide grounds for reducing or eliminating (including any undermining of reliability of and accountability for) the information that existing or proposed regulation requires or would require be made available to the public, market participants other than retail investors, and government agencies, whether or not such information is delivered to retail investors.
- “(H) Retail investor defined—For the purposes of this paragraph, the term “retail investor” means any investor that is not an institutional investor.”
- “(C) Substantive changes—If the Commission, in the period between engaging in investor testing and publishing a final rule, makes substantive changes to such rule that the Commission determines would have a significant impact on retail investors, the Commission shall again engage in investor testing.
- “(D) Public availability of retail testing results—The Commission shall make the data and results of any investor testing performed pursuant to this paragraph available to the public.”
- (b) Participation of Investor Advocate—investor advocate— Section 4(g) of the Securities Exchange Act of 1934 (15 U.S.C. 78d(g)) is amended—
- (1) in paragraph (4)—
- (A) in subparagraph (D)(ii), by striking “and” at the end;
- (B) by redesignating subparagraph (E) as subparagraph (F); and
- (C) by inserting after subparagraph (D) the following:
- “(E) engage in investor testing—
- “(i) as necessary to carry out the functions of the Office; and
- “(ii) under pursuant to section 23(a)(4), if the Commission determines it as appropriate; and”
- (2) by adding at the end the following:
- “(9) Publication of data and results of investor testing—With respect to any investor testing carried out by the Investor Advocate pursuant to paragraph (4)(E), the Investor Advocate may make the data and results of such investor testing available to the public, and without further review or editing by the Commission.”Commission.
- “(10) Personnel—If the Investor Advocate decides, within its sole discretion, to conduct testing under this section, the Investor Advocate may do so and the Commission shall provide the Office of the Investor Advocate with sufficient personnel and funding necessary to carry out such testing. Such testing may qualify as the testing covered by this section, provided that all requirements of the section are met.”
- (c) Prior rules—
- (1) In general— For any final rule or regulation issued by the Securities and Exchange Commission (in this subsection referred to as the “Commission”) before the date of the enactment of this Act that would be subject to investor testing under section 23(a)(4) of the Securities Exchange Act of 1934, had such rule been issued on or after the date of enactment of this Act, the Commission shall perform investor testing with respect to such rule or regulation that includes the contents described in such section 23(a)(4).
- (2) Schedule— The Commission shall, not later than 6 months after the date of the enactment of this Act, with input from the Investor Advocate, establish a schedule for completing any investor testing required under paragraph (1) that prioritizes testing of any final rules and regulations that designate documents or information central to retail investor decision making.making, and in particular prioritize the testing of documents or information required to be delivered to retail investors in the form of summary documents or summary sections of documents including for the purpose of determining whether and how such summary documents can achieve the goals of informed investor decision-making in the circumstances set forth in section 23(a)(4) of the Securities Exchange Act of 1934 while maintaining full accessibility by retail investors, the public, other market participants, and government regulators to the full range of documents and information that they may utilize or rely on, whether or not such documents or information are required to be delivered to retail investors.
- (3) Report— The Commission shall shall, with input from the Investor Advocate, issue a report to Congress each year containing the following:
- (A) The status of any investor testing required under paragraph (1).(1) initiated within the last year or otherwise ongoing.
- (B) The results of any investor testing completed under paragraph (1).(1) within the last year.
- (C) Any priorities the Commission has, based on results of investor testing required by paragraph (1), for—
- (i) revising or eliminating any proposed or final rule or regulation designating documents or information to be provided to retail investors; andbased on the results of testing;
- (ii) revising initiating any other final rule or regulation to supplement revised or eliminated rules designating documents rulemaking or information to be provided to retail investors.actions arising from the results of the testing; and
- (iii) the Investor Advocate’s views on the above priorities and any such other matters arising from the testing or results of testing.