Protecting Americans’ Retirement Savings From Politics Act

A fund that tracks an index would have to send you a form to pick a voting policy, with at least five business days to reply. On big votes, your adviser would then follow your pick, back the company's board, sit out, or match other shareholders. It covers most index funds and ETFs, 403(b) and 457 workplace plans, and the federal Thrift Savings Plan.

When a broker or adviser gives you personal investment advice, your best interest would be measured by expected risk and return. Other factors can only outrank those if you agree by e-signature or your own written plan calls for it. If you do agree, they must tell you what putting those factors first could cost you. It applies to advice given one year or more after the bill becomes law.

When the SEC writes a future rule on what public companies must tell investors, it would have to say the company need report only what the company itself judges important to a buying, selling, or voting decision. The limit does not apply when the SEC takes a disclosure rule away.

A firm selling advice on how to vote a company's shares would have to give that company at least one week with the data behind the advice, plus a real chance to comment and correct it before clients get it. The firm would also employ a complaint officer and print unresolved company complaints in its final report.

If an advice firm backs a shareholder proposal the company opposed, the proposal passes, and a court later finds it breaks state or federal law, the company can sue that firm for what the proposal cost to carry out plus any fines.

An adviser that votes an index fund's shares the way the company's board suggests, abstains, mirrors other shareholders, or follows the owner's instruction could not be sued over that vote under any federal or state law, contract, or arbitration agreement. Simply never asking owners for instructions is covered as well.

The new Public Company Advisory Committee would hold 10 to 20 members, all from public companies, the trade groups that speak for them, or their lawyers, accountants and bankers. At least half must be company officers or directors, and firms in asset management, brokerage or proxy services are shut out. The SEC's existing small-company advisory panel seats investors; this one seats none.

Firms that sell advice on how to vote company shares would first register with the SEC. Their applications, their voting methods, and a yearly report naming every recommendation, the staff behind it, and the money analysis supporting it would all be public. Registration starts within about nine months of the bill becoming law.

A large fund manager that hires a share-voting advice firm would file a yearly SEC report explaining its vote on each shareholder proposal and how often it followed the advice firm. Managers holding at least $100 billion must also run and publish a money analysis before each of those votes.

If a firm selling share-voting advice leaves out its methods, its sources, or its conflicts of interest, or misstates them, the law would treat that as a false or misleading statement about an important fact under the SEC's proxy rules. That opens the firm to SEC action and to private lawsuits.

The Federal Advisory Committee Act would not cover the new Public Company Advisory Committee. That law normally makes advisory panels give public notice, open their meetings, keep public records, and balance their membership. The SEC would still have to answer each recommendation in public.