Consumer Financial Choice and Capital Markets Protection Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 4492 To protect the investment choices of investors in the United States, and for other purposes. IN THE HOUSE OF REPRESENTATIVES SEPTEMBER 25, 2019 Ms. MOORE (for herself, Mr. STIVERS, Mr. HASTINGS, Mr. GONZALEZ of Texas, Mr. MICHAEL F. DOYLE of Pennsylvania, Mr. ESTES, and Mr. MOONEY of West Virginia) introduced the following bill; which was re- ferred to the Committee on Financial Services 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 VerDate Sep 11 2014 02:36 Oct 01, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4492.IH H4492 kjohnson on DSK79L0C42 with BILLS 2 •HR 4492 IH SEC. 2. TREATMENT OF MONEY MARKET FUNDS UNDER 1 THE INVESTMENT COMPANY ACT OF 1940. 2 The Investment Company Act of 1940 (15 U.S.C. 3 80a–1 et seq.) is amended by adding at the end the fol- 4 lowing: 5 ‘‘SEC. 66. MONEY MARKET FUNDS. 6 ‘‘(a) DEFINITIONS.—In this section— 7 ‘‘(1) the term ‘covered Federal assistance’ 8 means Federal assistance used for the purpose of— 9 ‘‘(A) making any loan to, or purchasing 10 any stock, equity interest, or debt obligation of, 11 any money market fund; 12 ‘‘(B) guaranteeing any loan or debt 13 issuance of any money market fund; or 14 ‘‘(C) entering into any assistance arrange- 15 ment (including tax breaks), loss sharing, or 16 profit sharing with any money market fund; 17 and 18 ‘‘(2) the term ‘Federal assistance’ means— 19 ‘‘(A) insurance or guarantees by the Fed- 20 eral Deposit Insurance Corporation; 21 ‘‘(B) transactions involving the Secretary 22 of the Treasury; or 23 ‘‘(C) the use of any advances from any 24 Federal Reserve credit facility or discount win- 25 dow that is not part of a program or facility 26 VerDate Sep 11 2014 02:36 Oct 01, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4492.IH H4492 kjohnson on DSK79L0C42 with BILLS 3 •HR 4492 IH with broad-based eligibility established in un- 1 usual or exigent circumstances. 2 ‘‘(b) ELECTION TO BE A STABLE VALUE MONEY 3 MARKET FUND.— 4 ‘‘(1) IN GENERAL.—Notwithstanding any other 5 provision of this title, any open-end investment com- 6 pany (or a separate series thereof) that is a money 7 market fund that relies on section 270.2a–7 of title 8 17, Code of Federal Regulations, may, in the pro- 9 spectus included in its registration statement filed 10 under section 8 state that the company or series has 11 elected to compute the current price per share, for 12 purposes of distribution or redemption and repur- 13 chase, of any redeemable security issued by the com- 14 pany or series by using the amortized cost method 15 of valuation, or the penny-rounding method of pric- 16 ing, regardless of whether its shareholders are lim- 17 ited to natural persons, if— 18 ‘‘(A) the objective or principal investment 19 strategy of the company or series is not incon- 20 sistent with the generation of income and pres- 21 ervation of capital through investment in short- 22 term, high-quality debt securities; 23 ‘‘(B) the board of directors of the company 24 or series elects, on behalf of the company or se- 25 VerDate Sep 11 2014 02:36 Oct 01, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4492.IH H4492 kjohnson on DSK79L0C42 with BILLS 4 •HR 4492 IH ries, to maintain a stable net asset value per 1 share or stable price per share, by using the 2 amortized cost valuation method, as defined in 3 section 270.2a–7(a) of title 17, Code of Federal 4 Regulations (or successor regulation), or the 5 penny-rounding pricing method, as defined in 6 section 270.2a–7(a) of title 17, Code of Federal 7 Regulations (or successor regulation), and the 8 board of directors of the company has deter- 9 mined, in good faith, that— 10 ‘‘(i) it is in the best interests of the 11 company or series, and its shareholders, to 12 do so; and 13 ‘‘(ii) the money market fund will con- 14 tinue to use such method or methods only 15 as long as the board of directors believes 16 that the resulting share price fairly reflects 17 the market-based net asset value per share 18 of the company or series; and 19 ‘‘(C) the company or series will comply 20 with such quality, maturity, diversification, li- 21 quidity, and other requirements, including re- 22 lated procedural and recordkeeping require- 23 ments, as the Commission, by rule or regulation 24 or order, may prescribe or has prescribed as 25 VerDate Sep 11 2014 02:36 Oct 01, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4492.IH H4492 kjohnson on DSK79L0C42 with BILLS 5 •HR 4492 IH necessary or appropriate in the public interest 1 or for the protection of investors to the extent 2 that such requirements and provisions are not 3 inconsistent with this section. 4 ‘‘(2) EXEMPTION FROM DEFAULT LIQUIDITY 5 FEE REQUIREMENTS.—Notwithstanding section 6 270.2a–7 of title 17, Code of Federal Regulations 7 (or successor regulation), no company or series that 8 makes the election under paragraph (1) shall be sub- 9 ject to the default liquidity fee requirements of sec- 10 tion 270.2a–7(c)(2)(ii) of title 17, Code of Federal 11 Regulations (or successor regulation). 12 ‘‘(c) PROHIBITION AGAINST FEDERAL GOVERNMENT 13 BAILOUTS OF MONEY MARKET FUNDS.—Notwith- 14 standing any other provision of law (including regula- 15 tions), covered Federal assistance may not be provided di- 16 rectly to any money market fund. 17 ‘‘(d) DISCLOSURE OF THE PROHIBITION AGAINST 18 FEDERAL GOVERNMENT BAILOUTS OF MONEY MARKET 19 FUNDS.— 20 ‘‘(1) IN GENERAL.—No principal underwriter of 21 a redeemable security issued by a money market 22 fund nor any dealer shall offer or sell any such secu- 23 rity to any person unless the prospectus of the 24 money market fund and any advertising or sales lit- 25 VerDate Sep 11 2014 02:36 Oct 01, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4492.IH H4492 kjohnson on DSK79L0C42 with BILLS 6 •HR 4492 IH erature for such fund prominently discloses the pro- 1 hibition against direct covered Federal assistance as 2 described in subsection (c). 3 ‘‘(2) RULES, REGULATIONS, AND ORDERS.— 4 The Commission may, after consultation with and 5 taking into account the views of the Board of Gov- 6 ernors of the Federal Reserve System, the Federal 7 Deposit Insurance Corporation, and the Department 8 of the Treasury, adopt rules and regulations and 9 issue orders consistent with the protection of inves- 10 tors, prescribing the manner in which the disclosure 11 under this subsection shall be provided. 12 ‘‘(e) CONTINUING OBLIGATION TO MEET REQUIRE- 13 MENTS OF THIS TITLE.—A company or series that makes 14 an election under subsection (b)(1) shall remain subject 15 to the provisions of this title and the rules and regulations 16 of the Commission thereunder that would otherwise apply 17 if those provisions do not conflict with the provisions of 18 this section.’’. 19 Æ VerDate Sep 11 2014 02:36 Oct 01, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H4492.IH H4492 kjohnson on DSK79L0C42 with BILLS