WASHINGTON – Congressman Alex X. Mooney introduced H.R. 7092, the Protecting Private Job Creators Act, to protect the fixed-income market from unnecessary and burdensome Securities and Exchange Commission (SEC) disclosure requirements. This legislation will exempt fixed-income securities from a recently misinterpreted SEC regulation. Fixed-income securities, which are often bonds, provide investors with regular interest payments and an eventual return of the original loan amount.
Senator Bill Hagerty (R-TN) introduced this legislation in the Senate.
“The SEC’s application of Rule 15c2-11 to fixed-income securities reverses decades of regulatory practice which threw the market into disarray,” said Congressman Alex Mooney. “My legislation brings needed clarity to the fixed-income market.”
“We cannot allow the SEC to suffocate our capital markets with onerous regulations,” said Senator Hagerty. “The Protecting Private Job Creators Act prevents the SEC from over-regulating fixed-income markets, preserving companies’ abilities to raise capital for investment, job creation, and economic growth.”
Six Financial Services Committee Republicans signed onto the bill as original cosponsors: French Hill (R-AR), Scott Fitzgerald (R-WI), Dan Meuser (R-PA), Barry Loudermilk (R-GA), Roger Williams (R-TX), and Pete Sessions (R-TX).
In 1971, the SEC adopted Rule 15c2-11 to protect retail investors from predatory schemes in the over-the-counter (OTC) penny stock market. This rule requires broker-dealers (like Charles Schwab, Morgan Stanley, etc.) to ensure that the financial information is current for each private company for which they publicize stock prices. In 2021, the SEC broke decades of regulatory practice by announcing that this rule, which now includes a public disclosure requirement, also applies to fixed-income securities. This new interpretation would expose proprietary information about private companies to the public and subject them to burdensome compliance costs.
While the SEC partially walked back its interpretation (including by exempting Rule 144A fixed-income securities), Rule 15c2-11 still applies to other fixed-income securities. Permanent legislative relief is needed. This legislation would exempt fixed-income securities from Rule 15c2-11 compliance, consistent with the SEC’s historical practice.
This legislation is endorsed by SIFMA, National Association of Manufacturers (NAM), American Securities Association (ASA), Investment Adviser Association (IAA), CRE Finance Council, U.S. Chamber of Commerce, Loan Syndications and Trading Association (LSTA), Structured Finance Association (SFA), and Bond Dealers of America (BDA) and Managed Funds Association (MFA).
“ASA supports Congressman Alex Mooney’s legislation to grant broker-dealers permanent relief from Rule 15c2-11 for fixed-income securities,” said ASA President & CEO Chris Iacovella. “While the SEC issued an order granting exemptive relief, legislation granting permanent relief is necessary to provide certainty to participants in America’s capital markets. Rule 144A debt offerings allow both public and private companies to create jobs and grow our economy, and we thank Congressman Alex Mooney for his work on this bill.”
“The Investment Adviser Association supports this legislative solution making clear that Rule 15c2-11, which was intended to address concerns in the equities market, may not be read to apply to any fixed income securities.” – Neil Simon, Vice President of Government Relations, IAA
“The U.S. Chamber of Commerce applauds Rep. Mooney for sponsoring legislation to stop the SEC’s new interpretation of Rule 15c2-11 from affecting fixed-income markets and maintaining their liquidity and transparency for businesses and investors alike.” – Kristen Malinconico, U.S. Chamber of Commerce, Director, U.S. Chamber of Commerce Center for Capital Markets Competitiveness
“We very much appreciate Representatives Mooney, Hill, Fitzgerald, Meuser, Loudermilk, Williams, and Sessions for their focus on this issue, which is of critical importance to the fixed-income markets. Congressional relief can help give the markets certainty that helps liquidity and capital formation for consumers and businesses across the country over the long run.” – Michael Bright, CEO, SFA
“The BDA applauds Rep. Mooney’s introduction of legislation that would exempt quotations for all fixed income securities from SEC Rule 15c2-11. We urge Congress to take swift action in passing this legislation correcting the SEC’s action applying the Rule to bonds, which is contrary to current law.” – Mike Nicholas, CEO, BDA