Increasing Investor Opportunities Act

IB Union Calendar No. 252 118TH CONGRESS 1ST SESSION H. R. 2627 [Report No. 118–312] To amend the Investment Company Act of 1940 to prohibit limitations on closed-end companies investing in private funds, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 13, 2023 Mrs. WAGNER (for herself and Mr. MEEKS) introduced the following bill; which was referred to the Committee on Financial Services DECEMBER 12, 2023 Additional sponsors: Mr. TORRES of New York, Mr. DAVID SCOTT of Georgia, and Mr. NICKEL DECEMBER 12, 2023 Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, and ordered to be printed [Strike out all after the enacting clause and insert the part printed in italic] [For text of introduced bill, see copy of bill as introduced on April 13, 2023] VerDate Sep 11 2014 00:01 Dec 13, 2023 Jkt 049200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H2627.RH H2627 2 •HR 2627 RH A BILL To amend the Investment Company Act of 1940 to prohibit limitations on closed-end companies investing in private funds, and for other purposes. VerDate Sep 11 2014 00:01 Dec 13, 2023 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6652 E:\BILLS\H2627.RH H2627 3 •HR 2627 RH 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 ‘‘Increasing Investor Op- 4 portunities Act’’. 5 SEC. 2. CLOSED-END COMPANY AUTHORITY TO INVEST IN 6 PRIVATE FUNDS. 7 (a) IN GENERAL.—Section 5 of the Investment Com- 8 pany Act of 1940 (15 U.S.C. 80a–5) is amended by adding 9 at the end the following: 10 ‘‘(d) CLOSED-END COMPANY AUTHORITY TO INVEST IN 11 PRIVATE FUNDS.— 12 ‘‘(1) IN GENERAL.—Except as otherwise prohib- 13 ited or restricted by this Act (or any rule issued 14 under this Act), the Commission may not prohibit or 15 otherwise limit a closed-end company from investing 16 any or all of the assets of the closed-end company in 17 securities issued by private funds. 18 ‘‘(2) OTHER RESTRICTIONS ON COMMISSION AU- 19 THORITY.— 20 ‘‘(A) IN GENERAL.—Except as otherwise 21 prohibited or restricted by this Act (or any rule 22 issued under this Act) or to the extent permitted 23 by subparagraph (B), the Commission may not 24 VerDate Sep 11 2014 00:01 Dec 13, 2023 Jkt 049200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6203 E:\BILLS\H2627.RH H2627 4 •HR 2627 RH impose any condition on, restrict, or otherwise 1 limit— 2 ‘‘(i) the offer to sell, or the sale of, secu- 3 rities issued by a closed-end company that 4 invests, or proposes to invest, in securities 5 issued by private funds; or 6 ‘‘(ii) the listing of the securities of a 7 closed-end company described in clause (i) 8 on a national securities exchange. 9 ‘‘(B) UNRELATED RESTRICTIONS.—The 10 Commission may impose a condition on, restrict, 11 or otherwise limit an activity described in clause 12 (i) or (ii) of subparagraph (A) if that condition, 13 restriction or limitation is unrelated to the un- 14 derlying characteristics of a private fund or the 15 status of a private fund as a private fund. 16 ‘‘(3) APPLICATION.—Notwithstanding section 17 6(f), this subsection shall also apply to a closed-end 18 company that elects to be treated as a business devel- 19 opment company pursuant to section 54.’’. 20 (b) DEFINITION OF PRIVATE FUND.—Section 2(a) of 21 the Investment Company Act of 1940 (15 U.S.C. 80a–2(a)) 22 is amended by adding at the end the following: 23 VerDate Sep 11 2014 00:01 Dec 13, 2023 Jkt 049200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6203 E:\BILLS\H2627.RH H2627 5 •HR 2627 RH ‘‘(55) The term ‘private fund’ has the meaning 1 given in section 202(a) of the Investment Advisers Act 2 of 1940 (15 U.S.C. 80b–2(a)).’’. 3 (c) TREATMENT BY NATIONAL SECURITIES EX- 4 CHANGES.—Section 6 of the Securities Exchange Act of 5 1934 (15 U.S.C. 78f) is amended by adding at the end the 6 following: 7 ‘‘(m)(1) Except as otherwise prohibited or restricted by 8 rules of the exchange that are consistent with section 5(d) 9 of the Investment Company Act of 1940 (15 U.S.C. 80a– 10 5(d)), an exchange may not prohibit, condition, restrict, or 11 impose any other limitation on the listing or trading of 12 the securities of a closed-end company when the closed-end 13 company invests, or may invest, some or all of the assets 14 of the closed-end company in securities issued by private 15 funds. 16 ‘‘(2) In this paragraph— 17 ‘‘(A) the term ‘closed-end company’— 18 ‘‘(i) has the meaning given the term in sec- 19 tion 5(a) of the Investment Company Act of 1940 20 (15 U.S.C. 80a–5(a)); and 21 ‘‘(ii) includes a closed-end company that 22 elects to be treated as a business development 23 company pursuant to section 54 of the Invest- 24 VerDate Sep 11 2014 00:01 Dec 13, 2023 Jkt 049200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6203 E:\BILLS\H2627.RH H2627 6 •HR 2627 RH ment Company Act of 1940 (15 U.S.C. 80a–53); 1 and 2 ‘‘(B) the term ‘private fund’ has the meaning 3 given the term in section 2(a) of the Investment Com- 4 pany Act of 1940 (15 U.S.C. 80a–2(a))).’’. 5 (d) INVESTMENT LIMITATION.—Section 3(c) of the In- 6 vestment Company Act of 1940 (15 U.S.C. 80a–3(c)) is 7 amended— 8 (1) in paragraph (1), in the matter preceding 9 subparagraph (A), in the second sentence, by striking 10 ‘‘subparagraphs (A)(i) and (B)(i)’’ and inserting 11 ‘‘subparagraphs (A)(i), (B)(i), and (C)’’; and 12 (2) in paragraph (7)(D), by striking ‘‘subpara- 13 graphs (A)(i) and (B)(i)’’ and inserting ‘‘subpara- 14 graphs (A)(i), (B)(i), and (C)’’. 15 (e) RULES OF CONSTRUCTION.— 16 (1) Nothing in this Act or the amendments made 17 by this Act may be construed to limit or amend any 18 fiduciary duty owed to a closed-end company (as de- 19 fined in section 5(a)(2) of the Investment Company 20 Act of 1940 (15 U.S.C. 80a-5(a)(2))) or by an invest- 21 ment adviser (as defined under section 2(a) of the In- 22 vestment Company Act of 1940 (15 U.S.C. 80a–2(a))) 23 to a closed-end company. 24 VerDate Sep 11 2014 00:01 Dec 13, 2023 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6203 E:\BILLS\H2627.RH H2627 7 •HR 2627 RH (2) Nothing in this Act or the amendments made 1 by this Act may be construed to limit or amend the 2 valuation, liquidity, or redemption requirements or 3 obligations of a closed-end company (as defined in 4 section 5(a)(2) of the Investment Company Act of 5 1940 (15 U.S.C. 80a-5(a)(2))) as required by the In- 6 vestment Company Act of 1940. 7 VerDate Sep 11 2014 00:01 Dec 13, 2023 Jkt 049200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6203 E:\BILLS\H2627.RH H2627 Union Calendar No. 252 118TH CONGRESS 1ST SESSION H. R. 2627 [Report No. 118–312] A BILL To amend the Investment Company Act of 1940 to prohibit limitations on closed-end companies in- vesting in private funds, and for other purposes. DECEMBER 12, 2023 Reported with an amendment, committed to the Com- mittee of the Whole House on the State of the Union, and ordered to be printed VerDate Sep 11 2014 00:01 Dec 13, 2023 Jkt 049200 PO 00000 Frm 00008 Fmt 6651 Sfmt 6651 E:\BILLS\H2627.RH H2627