Mind Your Own Business Act of 2023

II 118TH CONGRESS 1ST SESSION S. 189 To amend the Securities Exchange Act of 1934 to require the Securities and Exchange Commission to require the contractual provision by large issuers of procedural privileges with respect to certain shareholder claims relating to board and management accountability for ‘‘woke’’ social policy actions as a condition of listing on a national securities exchange, and for other purposes. IN THE SENATE OF THE UNITED STATES JANUARY 31, 2023 Mr. RUBIO introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Securities Exchange Act of 1934 to require the Securities and Exchange Commission to require the contractual provision by large issuers of procedural privi- leges with respect to certain shareholder claims relating to board and management accountability for ‘‘woke’’ so- cial policy actions as a condition of listing on a national securities exchange, 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 VerDate Sep 11 2014 04:36 Feb 14, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S189.IS S189 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •S 189 IS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Mind Your Own Busi- 2 ness Act of 2023’’. 3 SEC. 2. FINDINGS. 4 Congress finds the following: 5 (1) The fiduciary duties of boards of directors 6 and other corporate actors to corporations and their 7 stockholders are generally established by and en- 8 forceable under State law. 9 (2) State law generally permits corporations 10 discretion with respect to altering the rights of 11 stockholders, including the process by which stock- 12 holders assert claims for breach of fiduciary duties 13 by the board of directors or other corporate actors, 14 limited by State law governing these fiduciary du- 15 ties. 16 (3) The regulation of corporations as issuers of 17 securities authorized by Congress in the Securities 18 Exchange Act of 1934 (15 U.S.C. 78a et seq.) gen- 19 erally regulates corporate behavior in connection 20 with the issuance of securities, including with re- 21 spect to contractual arrangements between corpora- 22 tions and their stockholders via provisions in the 23 charters and bylaws of the corporations, and does 24 not— 25 VerDate Sep 11 2014 04:36 Feb 14, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S189.IS S189 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •S 189 IS (A) establish fiduciary duties of boards of 1 directors or other corporate actors to corpora- 2 tions and their stockholders under Federal law; 3 or 4 (B) regulate the fiduciary duties of boards 5 of directors or other corporate actors to cor- 6 porations and their stockholders under State 7 law. 8 (4) The State law fiduciary duties of boards of 9 directors and other corporate actors establish certain 10 norms upon which the national market system for 11 securities has historically relied, including— 12 (A) boards of directors and other corporate 13 actors generally have fiduciary duties to their 14 respective corporations and stockholders; and 15 (B) the behavior of corporations as issuers 16 of securities will generally conform to these fi- 17 duciary duties, to the benefit of the protection 18 of investors and the public interest. 19 (5) Other norms related to the public interest 20 have historically provided critical bases upon which 21 the national market system for securities has histori- 22 cally relied, including norms that large corporate 23 issuers that are significant to the national econ- 24 omy— 25 VerDate Sep 11 2014 04:36 Feb 14, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S189.IS S189 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •S 189 IS (A) generally invest corporate resources to 1 increase the long-term value of the corporation 2 as a business rather than as an agent of social 3 change; 4 (B) do not use corporate resources to ad- 5 vance narrowly political or partisan agendas; 6 and 7 (C) do not use corporate resources to pro- 8 mote socialism, Marxism, critical race theory, or 9 other un-American ideologies among their 10 workforces or customers. 11 (6) Though these norms are not enforceable 12 legal duties of boards of directors or other corporate 13 actors under Federal law, they substantially con- 14 tribute to the commercial purpose and nationwide 15 availability of the national market system for securi- 16 ties, which are recognized by section 2 of the Securi- 17 ties Exchange Act of 1934 (15 U.S.C. 78b) as prin- 18 cipal bases for the regulation authorized by that Act. 19 (7) Certain large corporate issuers that are sig- 20 nificant to the national economy have recently un- 21 dertaken actions which facially violate these norms 22 on account of apparent political bias. Examples of 23 such actions include the use of corporate resources 24 to— 25 VerDate Sep 11 2014 04:36 Feb 14, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S189.IS S189 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •S 189 IS (A) deny goods and services to States and 1 their political subdivisions, and private entities 2 within such States and their political subdivi- 3 sions, in response to the social policies proposed 4 or enacted in such States and their political 5 subdivisions, including those related to election 6 procedures, restrictions on abortion, protections 7 for religious freedom, and enforcement of immi- 8 gration law; 9 (B) deny goods and services to industries 10 and other classes of entities on the basis of 11 characteristics of those industries and classes 12 related to social policy, including industries in- 13 volved in the sale or manufacture of firearms, 14 operation of border security or criminal deten- 15 tion facilities, and performance of services for 16 the United States military, and classes of enti- 17 ties based on religious belief or identity; 18 (C) promote race and sex stereotyping, 19 such as those described in section 2(a) of Exec- 20 utive Order 13950 (5 U.S.C. 4103 note; relat- 21 ing to combating race and sex stereotyping), 22 which include such destructive concepts that the 23 United States is fundamentally racist or sexist, 24 an individual should be discriminated against or 25 VerDate Sep 11 2014 04:36 Feb 14, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S189.IS S189 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •S 189 IS receive adverse treatment solely or partly be- 1 cause of his or her race or sex, and meritocracy 2 or traits such as a hard work ethic are racist 3 or sexist, or were created by a particular race 4 to oppress another race; and 5 (D) openly coordinate with political actors 6 to pursue such actions, including— 7 (i) undertaking such actions upon the 8 action (or inaction) of boards of directors 9 and other corporate actors that are not 10 sufficiently independent from conflicts of 11 interest with political actors, including 12 elected officials, political parties, news 13 media, labor unions, nonprofit or non- 14 governmental organizations that advocate 15 for changes in political or social policy 16 through issuers, other activists affiliated 17 with such actors, and activist investors 18 that advocate for changes in corporate pol- 19 icy primarily unrelated to the pecuniary in- 20 terest of the issuer; and 21 (ii) conceding to the demands of the 22 political actors without undertaking due 23 care. 24 VerDate Sep 11 2014 04:36 Feb 14, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S189.IS S189 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •S 189 IS (8) The prominent, open, and public facial vio- 1 lation of these norms by large corporate issuers that 2 are significant to the national economy undermine 3 the commercial purpose and nationwide availability 4 of the national market system for securities by 5 spending corporate resources on noncommercial and 6 divisive, political and partisan causes. 7 (9) The threat these actions pose to the na- 8 tional market system for securities establishes a 9 public interest in ensuring large corporate issuers 10 that are significant to the national economy— 11 (A) have adequate internal procedural 12 mechanisms to ensure the accountability of 13 boards of directors and other corporate actors 14 with respect to their adherence with the norms 15 described in this section; and 16 (B) do not unduly burden the ability of 17 stockholders to assert claims for breach of fidu- 18 ciary duty under State law where the actions at 19 issue in such claims facially violates those 20 norms. 21 VerDate Sep 11 2014 04:36 Feb 14, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S189.IS S189 pbinns on DSKJLVW7X2PROD with $$_JOB 8 •S 189 IS SEC. 3. LISTING REQUIREMENT RELATING TO PROCE- 1 DURAL PRIVILEGES FOR CERTAIN SHARE- 2 HOLDER CLAIMS. 3 The Securities Exchange Act of 1934 (15 U.S.C. 78a 4 et seq.) is amended by inserting after section 10D (15 5 U.S.C. 78j–4) the following: 6 ‘‘SEC. 10E. PROCEDURAL PRIVILEGES FOR CERTAIN 7 SHAREHOLDER CLAIMS. 8 ‘‘(a) DEFINITIONS.—In this section: 9 ‘‘(1) CLAIMANT.—The term ‘claimant’ means— 10 ‘‘(A) a person that brings a covered claim; 11 or 12 ‘‘(B) if a covered claim is brought as a 13 class action, the representative of the class in 14 that action. 15 ‘‘(2) CONTROLLER.—The term ‘controller’ 16 means any person or entity that has control, directly 17 or indirectly, by any means (as those terms are de- 18 fined under applicable State law), over the board of 19 directors of an issuer— 20 ‘‘(A) generally; or 21 ‘‘(B) with respect to an action at issue in 22 a covered claim. 23 ‘‘(3) COVERED CLAIM.—The term ‘covered 24 claim’— 25 VerDate Sep 11 2014 04:36 Feb 14, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S189.IS S189 pbinns on DSKJLVW7X2PROD with $$_JOB 9 •S 189 IS ‘‘(A) means any single cause of action 1 that— 2 ‘‘(i) asserts a claim for breach of fidu- 3 ciary duty owed by any corporate defend- 4 ant to the applicable issuer (or the share- 5 holders of the applicable issuer) resulting 6 from material action by any covered cor- 7 porate actor with respect to the applicable 8 issuer— 9 ‘‘(I) that is taken primarily in re- 10 sponse to a law (including a regula- 11 tion) that is enacted by a State, or a 12 bill that is introduced in the legisla- 13 ture of a State or policy otherwise 14 publicly proposed by an elected official 15 of a State, which shall include if such 16 action includes any prohibition of 17 business within that State by an 18 issuer, whether with respect to busi- 19 ness services or travel to, or major 20 events in, that State, that is facially 21 unrelated to the pecuniary interest of 22 the applicable issuer, which shall pre- 23 sumptively include if the law bill, or 24 VerDate Sep 11 2014 04:36 Feb 14, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S189.IS S189 pbinns on DSKJLVW7X2PROD with $$_JOB 10 •S 189 IS policy would modify, establish, or cre- 1 ate a law relating to— 2 ‘‘(aa) the manner in which 3 elections are conducted in the 4 State; 5 ‘‘(bb) protecting religious 6 freedom; or 7 ‘‘(cc) limiting the availability 8 of services that include the abor- 9 tion of unborn children; 10 ‘‘(II) to prohibit the sale of goods 11 or services by any covered corporate 12 actor with respect to the applicable 13 issuer to customers who operate in an 14 industry with which the issuer en- 15 gages in such business primarily on 16 the basis of a characteristic of that in- 17 dustry that is facially unrelated to the 18 pecuniary interest of the applicable 19 issuer; 20 ‘‘(III) to promote a covered divi- 21 sive concept; or 22 ‘‘(IV) for which the reasoning 23 publicly presented by any covered cor- 24 VerDate Sep 11 2014 04:36 Feb 14, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S189.IS S189 pbinns on DSKJLVW7X2PROD with $$_JOB 11 •S 189 IS porate actor with respect to the appli- 1 cable issuer as— 2 ‘‘(aa) any basis for such ac- 3 tion promotes a covered divisive 4 concept; or 5 ‘‘(bb) the primary basis for 6 such action is facially unrelated 7 to the pecuniary interest of the 8 applicable issuer, which shall pre- 9 sumptively include any reference 10 to diversity, equity, or inclusion 11 with respect to the composition 12 of the workforce, management, or 13 board of directors of the issuer or 14 society in general; and 15 ‘‘(ii) is brought by a covered share- 16 holder as— 17 ‘‘(I) a direct action; or 18 ‘‘(II) a derivative action or pro- 19 ceeding brought on behalf of the ap- 20 plicable issuer; and 21 ‘‘(B) does not include a cause of action 22 that asserts a claim for the breach of fiduciary 23 duty owed by any corporate defendant to the 24 VerDate Sep 11 2014 04:36 Feb 14, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S189.IS S189 pbinns on DSKJLVW7X2PROD with $$_JOB 12 •S 189 IS applicable issuer (or the shareholders of that 1 issuer) resulting from— 2 ‘‘(i) a charitable contribution by any 3 covered corporate actor with respect to the 4 applicable issuer; 5 ‘‘(ii) the exercise of religion by any 6 covered corporate actor with respect to the 7 applicable issuer; 8 ‘‘(iii) business activity by any covered 9 corporate actor in connection with the na- 10 tional security of the United States, the 11 Armed Forces, or veterans of the Armed 12 Forces; or 13 ‘‘(iv) the limitation of business by any 14 covered corporate actor with respect to the 15 applicable issuer— 16 ‘‘(I) occurring in the jurisdiction 17 of, or with an agent of the People’s 18 Republic of China, the Russian Fed- 19 eration, North Korea, Iran, Syria, 20 Sudan, Venezuela, or Cuba; 21 ‘‘(II) in connection with pre- 22 venting the abuse of internationally 23 recognized worker rights, as defined 24 VerDate Sep 11 2014 04:36 Feb 14, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S189.IS S189 pbinns on DSKJLVW7X2PROD with $$_JOB 13 •S 189 IS in section 507 of the Trade Act of 1 1974 (19 U.S.C. 2467); 2 ‘‘(III) with any entity that de- 3 rives directly or indirectly more than 4 de minimis gross revenue through the 5 sale of products or services, or the 6 presentation of any depictions or dis- 7 plays, of a prurient sexual nature; 8 ‘‘(IV) with any entity that en- 9 gages in a commerce- or investment- 10 related boycott, divestment, or sanc- 11 tions activity that targets Israel; or 12 ‘‘(V) that is required under Fed- 13 eral, State, or local law. 14 ‘‘(4) COVERED COMPANY.—The term ‘covered 15 company’ means an issuer that has, as calculated in 16 accordance with section 240.12b–2 of title 17, Code 17 of Federal Regulations, or any succ [Text truncated for display. 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