Consumer Financial Choice and Capital Markets Protection Act of 2019

II 116TH CONGRESS 1ST SESSION S. 733 To protect the investment choices of investors in the United States, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 11, 2019 Mr. TOOMEY (for himself, Mr. MENENDEZ, Mr. ROUNDS, and Mr. PETERS) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To protect the investment choices of investors in the United States, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Consumer Financial 4 Choice and Capital Markets Protection Act of 2019’’. 5 SEC. 2. TREATMENT OF MONEY MARKET FUNDS UNDER 6 THE INVESTMENT COMPANY ACT OF 1940. 7 The Investment Company Act of 1940 (15 U.S.C. 8 80a–1 et seq.) is amended by adding at the end the fol- 9 lowing: 10 VerDate Sep 11 2014 23:34 Mar 22, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S733.IS S733 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 733 IS ‘‘SEC. 66. MONEY MARKET FUNDS. 1 ‘‘(a) DEFINITIONS.—In this section— 2 ‘‘(1) the term ‘covered Federal assistance’ 3 means Federal assistance used for the purpose of— 4 ‘‘(A) making any loan to, or purchasing 5 any stock, equity interest, or debt obligation of, 6 any money market fund; 7 ‘‘(B) guaranteeing any loan or debt 8 issuance of any money market fund; or 9 ‘‘(C) entering into any assistance arrange- 10 ment (including tax breaks), loss sharing, or 11 profit sharing with any money market fund; 12 and 13 ‘‘(2) the term ‘Federal assistance’ means— 14 ‘‘(A) insurance or guarantees by the Fed- 15 eral Deposit Insurance Corporation; 16 ‘‘(B) transactions involving the Secretary 17 of the Treasury; or 18 ‘‘(C) the use of any advances from any 19 Federal Reserve credit facility or discount win- 20 dow that is not part of a program or facility 21 with broad-based eligibility established in un- 22 usual or exigent circumstances. 23 ‘‘(b) ELECTION TO BE A STABLE VALUE MONEY 24 MARKET FUND.— 25 VerDate Sep 11 2014 23:34 Mar 22, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S733.IS S733 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 733 IS ‘‘(1) IN GENERAL.—Notwithstanding any other 1 provision of this title, any open-end investment com- 2 pany (or a separate series thereof) that is a money 3 market fund that relies on section 270.2a–7 of title 4 17, Code of Federal Regulations, may, in the pro- 5 spectus included in its registration statement filed 6 under section 8 state that the company or series has 7 elected to compute the current price per share, for 8 purposes of distribution or redemption and repur- 9 chase, of any redeemable security issued by the com- 10 pany or series by using the amortized cost method 11 of valuation, or the penny-rounding method of pric- 12 ing, regardless of whether its shareholders are lim- 13 ited to natural persons, if— 14 ‘‘(A) the objective or principal investment 15 strategy of the company or series is not incon- 16 sistent with the generation of income and pres- 17 ervation of capital through investment in short- 18 term, high-quality debt securities; 19 ‘‘(B) the board of directors of the company 20 or series elects, on behalf of the company or se- 21 ries, to maintain a stable net asset value per 22 share or stable price per share, by using the 23 amortized cost valuation method, as defined in 24 section 270.2a–7(a) of title 17, Code of Federal 25 VerDate Sep 11 2014 23:34 Mar 22, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S733.IS S733 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 733 IS Regulations (or successor regulation), or the 1 penny-rounding pricing method, as defined in 2 section 270.2a–7(a) of title 17, Code of Federal 3 Regulations (or successor regulation), and the 4 board of directors of the company has deter- 5 mined, in good faith, that— 6 ‘‘(i) it is in the best interests of the 7 company or series, and its shareholders, to 8 do so; and 9 ‘‘(ii) the money market fund will con- 10 tinue to use such method or methods only 11 as long as the board of directors believes 12 that the resulting share price fairly reflects 13 the market-based net asset value per share 14 of the company or series; and 15 ‘‘(C) the company or series will comply 16 with such quality, maturity, diversification, li- 17 quidity, and other requirements, including re- 18 lated procedural and recordkeeping require- 19 ments, as the Commission, by rule or regulation 20 or order, may prescribe or has prescribed as 21 necessary or appropriate in the public interest 22 or for the protection of investors to the extent 23 that such requirements and provisions are not 24 inconsistent with this section. 25 VerDate Sep 11 2014 23:34 Mar 22, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S733.IS S733 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 733 IS ‘‘(2) EXEMPTION FROM DEFAULT LIQUIDITY 1 FEE REQUIREMENTS.—Notwithstanding section 2 270.2a–7 of title 17, Code of Federal Regulations 3 (or successor regulation), no company or series that 4 makes the election under paragraph (1) shall be sub- 5 ject to the default liquidity fee requirements of sec- 6 tion 270.2a–7(c)(2)(ii) of title 17, Code of Federal 7 Regulations (or successor regulation). 8 ‘‘(c) PROHIBITION AGAINST FEDERAL GOVERNMENT 9 BAILOUTS OF MONEY MARKET FUNDS.—Notwith- 10 standing any other provision of law (including regula- 11 tions), covered Federal assistance may not be provided di- 12 rectly to any money market fund. 13 ‘‘(d) DISCLOSURE OF THE PROHIBITION AGAINST 14 FEDERAL GOVERNMENT BAILOUTS OF MONEY MARKET 15 FUNDS.— 16 ‘‘(1) IN GENERAL.—No principal underwriter of 17 a redeemable security issued by a money market 18 fund nor any dealer shall offer or sell any such secu- 19 rity to any person unless the prospectus of the 20 money market fund and any advertising or sales lit- 21 erature for such fund prominently discloses the pro- 22 hibition against direct covered Federal assistance as 23 described in subsection (c). 24 VerDate Sep 11 2014 23:34 Mar 22, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S733.IS S733 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 733 IS ‘‘(2) RULES, REGULATIONS, AND ORDERS.— 1 The Commission may, after consultation with and 2 taking into account the views of the Board of Gov- 3 ernors of the Federal Reserve System, the Federal 4 Deposit Insurance Corporation, and the Department 5 of the Treasury, adopt rules and regulations and 6 issue orders consistent with the protection of inves- 7 tors, prescribing the manner in which the disclosure 8 under this subsection shall be provided. 9 ‘‘(e) CONTINUING OBLIGATION TO MEET REQUIRE- 10 MENTS OF THIS TITLE.—A company or series that makes 11 an election under subsection (b)(1) shall remain subject 12 to the provisions of this title and the rules and regulations 13 of the Commission thereunder that would otherwise apply 14 if those provisions do not conflict with the provisions of 15 this section.’’. 16 Æ VerDate Sep 11 2014 23:34 Mar 22, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\S733.IS S733 pamtmann on DSKBFK8HB2PROD with BILLS