October 23, 2025
Mr. Reed (for himself and Mr. Tillis) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs
To amend the Investment Advisers Act of 1940 to require proxy advisory firms to register as investment advisers under that Act, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
Section 1. Short title
This Act may be cited as the Corporate Governance Fairness Act
.
Sec. 2. Proxy advisory firms
The Investment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) is amended—
(1)
in section 202(a) (15 U.S.C. 80b–2(a))—
(A)
in paragraph (11)—
(i)
in the matter preceding subparagraph (A), by inserting , and includes a proxy advisory firm
after promulgates analyses or reports concerning securities
; and
(ii)
in subparagraph (F), by striking on behalf of others;;
and inserting on behalf of others or acts as a proxy advisory firm;
;
(B)
by redesignating the second paragraph (29) (relating to commodity pool
and other terms) as paragraph (31); and
(C)
by adding at the end the following:
(32)
(A)
The term proxy advisory firm—
(i)
subject to clause (ii), means any person that is engaged in the business of providing proxy voting research, analysis, ratings, or recommendations to investors in issuers by means of written or oral statements that are reasonably designed to meet the objectives or needs of specific clients, investors, or their accounts, including proxy voting research, analysis, ratings, or recommendations that are tailored to or reflect particular proxy voting guidelines developed or selected by investors; and
(ii)
does not include any person described in clause (i) that, together with the parent, subsidiaries, and affiliates of the person, receives on a consolidated basis in a fiscal year gross receipts from the clients of the person in an amount that is not more than $5,000,000, as adjusted annually by the Commission to reflect the percentage change for the previous calendar year in the gross domestic product of the United States, as calculated by the Bureau of Economic Analysis of the Department of Commerce, except that a person described in this clause may choose to be considered a proxy advisory firm for the purposes of this Act.
(B)
Notwithstanding any other provision of law or regulation—
(i)
for the purposes of this Act, a proxy advisory firm may not be considered to be excluded from the definition of the term investment adviser under paragraph (11) because of the application of subparagraph (D) of that paragraph; and
(ii)
only the Commission, under subparagraph (H) of paragraph (11), may designate a proxy advisory firm as a person described in that subparagraph, except that the Commission may not make such a designation if the proxy advisory firm is described in any of paragraphs (1) through (9) of section 203(e).;
(2)
in section 203 (15 U.S.C. 80b–3), by adding at the end the following:
(o) Rule of construction
Nothing in subsections (b) through (n) may be construed to exempt a proxy advisory firm from the application of the provisions of subsection (a).;
(3)
in section 203A(a)(1) (15 U.S.C. 80b–3a(a)(1))—
(A)
in subparagraph (A), by striking or
at the end;
(B)
in subparagraph (B), by striking the period at the end and inserting ; or
; and
(C)
by adding at the end the following:
(C)
is a proxy advisory firm.;
(4)
in section 204 (15 U.S.C. 80b–4), by adding at the end the following:
(g) Examination of records of proxy advisory firms
(1) Periodic and special examinations
The Commission—
(A)
shall—
(i)
beginning not later than 1 year after the date of enactment of this subsection, conduct periodic inspections of the records of proxy advisory firms in accordance with a schedule established by the Commission; and
(ii)
when conducting each inspection under clause (i), review—
(I)
whether any proxy advisory firm, with respect to any statement made by the firm to a client of the proxy advisory firm, knowingly—
(aa)
made any false statement to the client; or
(bb)
omitted to state a material fact that would be necessary to make the statement to the client not misleading; and
(II)
policies and programs regarding conflicts of interest at proxy advisory firms; and
(B)
may conduct, in addition to the inspections conducted under subparagraph (A), at any time and from time to time, such additional, special, and other examinations of proxy advisory firms and the records of proxy advisory firms as the Commission may prescribe as necessary and appropriate in the public interest and for the protection of investors.
(2) Availability of records
A proxy advisory firm shall make available to the Commission any copies or extracts from the records described in subparagraph (A)(i) or (B) of paragraph (1), as applicable, as may be prepared without undue effort, expense, or delay, as the Commission or the representatives of the Commission may reasonably request.; and
(5)
in section 211(h) (15 U.S.C. 80b–11(h))—
(A)
by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively, and adjusting the margins accordingly;
(B)
in the matter preceding subparagraph (A), as so redesignated, by striking The Commission
and inserting the following:
(1) In general
The Commission;
(C)
in paragraph (1), as so redesignated—
(i)
in subparagraph (A), as so redesignated, by striking and
at the end;
(ii)
in subparagraph (B), as so redesignated, by striking the period at the end and inserting ; and
; and
(iii)
by adding at the end the following:
(C)
not later than 2 years after the date of enactment of the Corporate Governance Fairness Act, and after consulting with all relevant stakeholders, submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report that—
(i)
evaluates existing, as of the date on which the report is submitted—
(I)
policies and programs regarding conflicts of interest at proxy advisory firms; and
(II)
policies and procedures at proxy advisory firms that are designed to avoid knowingly making any false statement, or omitting to state a material fact, that would be necessary to make a statement to a client of the proxy advisory firm not misleading; and
(ii)
examines whether any additional protection to investors under subparagraph (B) would be helpful to those investors, including policies and procedures that allow investors to consider, in a reasonably timely manner, material information that is necessary for the investors to—
(I)
make informed investment decisions; and
(II)
exercise any of the rights of the investors that are conferred by securities held by the investors.; and
(D)
by adding at the end the following:
(2) Updates of proxy advisory firms report
Not less frequently than once every 5 years, beginning on the date on which the Commission submits the report required under paragraph (1)(C), the Commission shall submit to the congressional committees described in that paragraph an updated version of that report, which shall evaluate whether the existing rules of the Commission, as of the date on which the applicable updated report is submitted, sufficiently protect investors, including the ability of investors to consider, in a reasonably timely manner, material information that is necessary for the investors to—
(A)
make informed investment decisions; and
(B)
exercise any of the rights of the investors that are conferred by securities held by the investors.