The U.S. House Committee on Financial Services marked up and passed bills on special purpose acquisition companies ("SPACs"), broker-dealer and investment adviser mandatory arbitration clauses in customer agreements, and hiring practices.
In a statement, Committee Chair Maxine Waters (D-CA) asserted that SPACs have enjoyed lower requirements when compared to traditional IPOs, resulting in increased risk for retail investors. In a memorandum, the Majority Staff described proposals to heighten the disclosure requirements and remove safe harbor protections for forward-looking statements related to SPACs. Majority Staff also provided background on an amendment to eliminate mandatory arbitration clauses in certain customer arrangements.
At the full markup, the following legislation was considered on SPACs and mandatory arbitration:
- H.R. 5910, the "Holding SPACs Accountable Act of 2021," which would preclude SPACs from relying on the safe harbor protections for forward-looking statements (see also proposed amendment no. 3);
- H.R. 5913, the "Protecting Investors from Excessive SPACs Fees Act of 2021," which would require SPACs to disclose fees that may result in investor dilution (see also proposed amendment no. 5); and
- H.R. 2620, the "Investor Choice Act of 2021," which would prohibit broker-dealers, investment advisers and issuers from including binding mandatory arbitration clauses in their customer agreements (see also proposed amendment no. 2).
In addition, the Committee reviewed the following legislation to restructure the procedures for federal credit unions to expel and reinstate members, address barriers for employment at banks and credit unions, and create a grant program within the SEC to assist state securities watchdogs:
- H.R. 2311, the "Credit Union Governance Modernization Act of 2021," which would give credit unions new procedures for the expulsion and reinstatement of members under certain circumstances;
- H.R. 5911, the "Fair Hiring in Banking Act," which would reduce the lookback period for criminal charges of potential hires; and
- H.R. 5914, the "Empowering States to Protect Seniors from Bad Actors Act," which would establish a task force within the SEC to administer the Senior Investment Protection Grant Program of the Dodd-Frank Act.
All six bills were passed by the Committee.
Primary Sources
- U.S. House Financial Services Committee Event: Markup - H.R. 2311; H.R. 2620; H.R. 5910; H.R. 5911; H.R. 5913; and H.R. 5914
- U.S. House Financial Services Committee Memorandum: November 16, 2021, Full Committee Markup
- Congresswoman Maxine Waters Statement: Opening Statement at November Full Committee Markup
- U.S. House Financial Services Committee Press Release: Committee Passes Legislation to Protect Retail Investors from Predatory Practices and Promote Fair Hiring Opportunities
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