Bill Foster

Mr. FOSTER

Mr. FOSTER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise today in support of H.R. 3903. This bill will expand the ability of companies to test the waters prior to going public and to submit confidential filings for feedback from the SEC staff prior to filing of an IPO. The JOBS Act of 2012 created these mechanisms for emerging growth companies. Emerging growth companies are those with less than $1 billion in revenue, $700 million in public float, and $1 billion in nonconvertible debt. The JOBS Act enabled these companies to speak to institutional investors prior to an IPO without it being considered an unregistered offering for sale of securities. The definition of a securities offering is appropriately broad to protect investors and ensure transparency in our markets by requiring registration and significant disclosures. However, companies considering a public offering should be able to talk to the most sophisticated investors in the markets, large institutional investors, to gauge the interest in the offering. Having that ability will help encourage public offerings because it enables companies to realize efficiencies in assessing demand. Research-intensive firms are more likely to test the waters because it lowers the cost of proprietary disclosure. These are the firms that drive economic growth by bringing new ideas to market. Research is obviously a passion of mine, having founded a company that was based on my intellectual property and subsequently designing particle accelerators as a physicist at Fermi National Lab. It is the new ideas that grow our GDP and improve the standard of living for all Americans. Moreover, new businesses with new ideas do more to grow the economy than incumbents with new ideas or just acquisitions. The public market presents an opportunity for small businesses to become big businesses without being bought out. Additionally, this bill would allow companies of all sizes to file confidentially forms with the SEC. This allows the firm to receive feedback without making inappropriate or unrequired information public. Disclosing the correct information helps the markets understand risks and price an offering appropriately. The bill also includes a provision giving the SEC discretion to ensure that these mechanisms are used in a way that benefits markets and investors. The U.S. capital markets are the deepest and most liquid in the world, and this bill will help more companies tap into that capital and grow our economy. Mr. Speaker, I urge broad support for this bill today, and I reserve the balance of my time.

Mr. FOSTER. Mr. Speaker, I would like to, first off, reiterate my support of this bill. It is the sort of commonsense, bipartisan fix that will make an incremental improvement to our public markets. However, I would also like to emphasize what I believe is the real threat to the health of our public markets, which is the concentration of wealth at the very top. It is no secret that the competition to our public markets are private equity and venture capital, and these are investment instruments largely, almost entirely, under the control of the very wealthy. We are, this week, going to begin debate on a tax bill that will decide, to a large extent, whether we accelerate or decelerate the concentration of wealth at the very top. I just want to emphasize that connection to make everyone understand that the continued health of our public markets, which historically have been such an important contributor to middle class investment in growing businesses. So I want people to consider that as we debate this bill, which I fully support, and, as well, the variety of important issues that we debate that really affect the distribution of wealth in this country. Mr. Speaker, I yield back the balance of my time.

Mr. FOSTER

Mr. FOSTER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise today in support of H.R. 1585. This bill will expand the definition of accredited investor, a status reserved for investors who possess the sophistication and financial means necessary to invest in private securities offerings. Currently, accredited investors are limited to persons who have an annual income more than $200,000, or $300,000 together with a spouse, or a net worth in excess of $1 million, excluding a primary residence. Aside from the primary residence exclusion added by the Dodd-Frank Act, the accredited investor definition has not been updated since 1982. In light of the growth of private markets and increasing complexity, the SEC's Investor Advisory Committee recommended that the SEC conduct additional study of adjusting the current thresholds for inflation and establishing alternatives based on existing credentials, investment experience, and limits of investments. An updated definition is long overdue. Current law speaks almost exclusively to the ability to bear a loss rather than the sophistication of the investor. The bill we consider today is the product of bipartisan compromise. Last Congress, it was significantly narrowed to include only persons who qualify based on current income and net worth tests: registered brokers, and investment advisers, and those who have the appropriate educational background and job experience as determined by the SEC and verified by FINRA. These categories are in line with the recommendations of the Investor Advisory Committee and effective proxies for sophistication, access to information, and ability to withstand losses. There is an inherent tension between democratizing markets and protecting investors on the basis of their ability to bear financial losses. This bill includes Ranking Member Waters' bipartisan amendment to require the SEC to adjust net worth and income thresholds for inflation every 5 years. This will establish the economic value of the thresholds in current law, as the dollar amounts are increased, with growth in the overall economy and changes in the value of the dollar. Doing so will preserve access to private markets for those currently investing in them. Private offerings can offer some of the best returns in the market, but they obviously carry different risks, like illiquidity, than securities in the public markets. While there can be investment opportunities that significantly increase a person's net worth, they cannot be immediately sold if an investor's financial circumstances change. So this bill strikes a good compromise between giving access to investments without exposing the retirement accounts of working families to excessive risks. Mr. Speaker, I urge broad support for the bill today, and I reserve the balance of my time.

Mr. FOSTER. Mr. Speaker, I yield back the balance of my time.

Mr. FOSTER

Mr. FOSTER. Madam Speaker, I was unavoidably detained. Had I been present, I would have voted ``yea'' on rollcall No. 548.

Mr. FOSTER

Mr. FOSTER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I thank my colleague from Arkansas (Mr. Hill) for his years of bipartisan work that went into this bill. I am proud to support this bill today because I believe that it will strengthen the ability of investors to make informed decisions. Exchange-traded funds are valuable and popular tools for investors to diversify risks and returns through a single security at low cost. This bill will help investors understand the various ETF choices on the market. I was proud that the House passed our bill, H.R. 910, earlier this Congress by a vote of 405-2. This bill is essentially the same bill and incorporates, among other things, an amendment by Senator Elizabeth Warren to reiterate that the safe harbor will not be available to affiliates of the ETF, including the fund's registered investment adviser. I am really proud of the bipartisanship that went into this bill. Mr. Speaker, I urge my colleagues to support this bill, and I reserve the balance of my time.

Mr. FOSTER. Mr. Speaker, I yield myself the balance of my time. Mr. Speaker, I, again, thank my colleague from Arkansas (Mr. Hill) for working with us on this bill over the past years and look forward to it now being sent to the President's desk and signed into law. Mr. Speaker, I yield back the balance of my time.

Mr. FOSTER

Mr. FOSTER. Mr. Chairman, my amendment highlights the need to think about our future workforce and how it will change because of technology and to encourage the Bureau of Labor Statistics to accept a wider and more forward-looking range of inputs into its range of projections for its workforce of the future. I co-chair the New Democrat Coalition Future of Work Task Force with my colleagues, Congressman Seth Moulton and Congressman Jared Polis. Congressman Jim Himes, the chair of the New Dem Coalition, has been active in the task force work and joins me in cosponsoring this amendment today. Over the course of several months, the task force has held a series of forums to hear from experts on various areas that will require this body's attention in the coming years and decades. We have heard from historians, economists, and policy experts about how technological revolutions of the past have impacted social and political institutions and how lessons from those experiences and from current conditions can help us prepare for the future. We have also heard from labor and business leaders who are pioneering the way they attract talent, retain their services, and develop skills for the increasingly rapidly change economy. It is nearly unanimous among our experts that the economy will change significantly and change faster, but it is less clear just how quickly the workforce will need to adapt. For decades, the Bureau of Labor Statistics has been doing excellent and invaluable work to track our labor trends, and its projections have been proven very reliable and useful--to business and to our educators--in times of slower and relatively predictable technological development. However, they are based on historical data and historical trends, and some of the anticipated changes in technology--such as robotics, self- driving vehicles, and artificial intelligence--could fundamentally change our economy in ways that haven't been seen before. So, in its current form, the way the Bureau calculates and estimates future development of the workforce may not be able to capture the dramatic changes that our future holds. One panel convened by the task force suggested that it would be impossible to do projections in any single way to predict the workforce, but that, with additional resources, the Bureau of Labor Statistics could model for a variety of scenarios of different rates of technological change in different areas. My amendment increases the BLS account by a dollar and decreases it by a dollar, and I intend it to mean that the BLS should submit to Congress an estimate of the resources it would need to make a range of forward-looking estimates, including consultation with those industries that are driving this rapid technological change and those that will be affected by that change to account for the increasing rate of technological job displacement. It is hard to estimate by backward-looking extrapolations how the changes from self-driving cars and vehicles or artificial intelligence will affect the real jobs of the future. Technological changes in the workforce are not new. The industrial revolution and the automation of agriculture transformed the way work was performed in our country and significantly improved, on the whole, our standard of living over time. The results have not been uniform for all communities and all populations. Those transformations typically played out over generations, so our social and political institutions had ample time to respond. But today, development and deployment of technology is far more rapid, and Congress, business, and our educational system need the best possible data to evaluate policy proposals and to produce the workforce training needed for future employees and to develop educational curricula to ensure that our economy works for everyone. Like in the industrial revolution, technological development presents the opportunity for a greatly improved standard of living, but it will also bring challenges to our workforce. Businesses, communities, and the government must work together. Additional considerations in the projections made by the BLS will help Congress to anticipate these changes and to weigh proposed solutions. Objective projections based on empirical evidence are crucial to a debate that will be based on our different views of the role of government and its relationship with market forces. Those are the differences that should shape our ideas for helping Americans enjoy prosperous and full lives in the future. I urge my colleagues to join me and vote ``yes'' on my amendment to begin to establish a range of scenarios for the Bureau of Labor Statistics and the future world that we will inhabit. Mr. Chairman, I reserve the balance of my time.

Mr. FOSTER. I yield back the balance of my time.

Mr. FOSTER. Mr. Chairman, I have an amendment at the desk.

Mr. FOSTER

Mr. FOSTER. Mr. Chairman, I have an amendment at the desk.

Mr. FOSTER. Mr. Chairman, as you know, the National Defense Authorization Act for fiscal year 2018 tasks the Missile Defense Agency with developing a space-based ballistic missile intercept layer. There is no doubt that a space-based missile defense, if it is technologically feasible and economically justifiable, would make an important contribution to our national security. So would the Star Trek transporter or the warp drive, but as a scientist and, in fact, the only Ph.D. scientist in the U.S. Congress, I think that we need to do our homework before investing hundreds of billions of dollars into attempting to develop this system. As such, my amendment would prohibit the use of funds to attempt to develop a space-based missile intercept layer. It has been more than 30 years since President Reagan called for defending the United States against a first strike by developing a strategic defense system, commonly known as Star Wars. The idea of a space-based version of this has gone in and out of fashion for the last 30 years, but every time this space-based concept has been looked at by technologically competent outside experts, it was deemed to be unworkable, impossibly expensive, vulnerable to countermeasures, easy for an opponent to destroy, easy to overwhelm with a small number of enemy missiles, or all of the above. This approach was judged technologically unworkable in 1983, and the status quo has not changed. In order to reach a ballistic missile during the first few minutes of flight, a large number of interceptors must be stationed in low- altitude orbit. A report conducted by the American Physical Society in 2003 concluded that in order to ensure full coverage, a fleet of 1,000 or more orbiting satellites would be required to intercept just a single missile. To put that in perspective, the United States currently has slightly more than 600 satellites in Earth orbit, which includes commercial, scientific, and military satellites. Moreover, the amount of launch that is required to put this material into orbit in a reasonable amount of time would greatly exceed the current U.S. launch capability. The National Academies of Sciences estimated that it would cost at least $300 billion--in 2003 dollars--for just such a limited capability. And just last year, in his testimony to the House Armed Services Committee, the former Director of the Missile Defense Authority, Admiral Syring, concluded the same thing. Setting aside the high cost, a space-based missile defense system has inherent vulnerabilities that greatly limit its effectiveness. Even with thousands of interceptors deployed, only a few would be within range to target an incoming missile, and those could be easily overwhelmed by the launch of several missiles from one location. And because interceptors must be stationed in low-altitude orbit, they are easily detected, tracked, and destroyed. Finally, there is a more fundamental question that we must ask ourselves. And that is: Is it wise to deploy weapons in space, especially when the required technology is becoming widely available around the world? Deploying such a system would strain strategic relationships around the globe and almost certainly trigger a space arms race. There is no doubt that ensuring our Nation's defense and national security are of paramount priority, but spending hundreds of billions of dollars on a system which will not work, without having serious debate and at least some concept for how this might be remotely practical or affordable, is indefensible. Mr. Chairman, I urge my colleagues to join me in voting ``yes'' on my amendment. Mr. Chairman, I reserve the balance of my time.

Mr. FOSTER. Mr. Chairman, can I inquire how much time I have remaining?

Mr. FOSTER. Mr. Chairman, I would like to point out that Ronald Reagan never illuminated the possibility of this to the American public, because the possibility never existed. What we have today is not a missile defense system. It has failed in the great majority of tests. It has been tested against a very small fraction of the countermeasures that are elementary to deploy against it. I hope that no one involved in the missile defense system is telling President Trump that we have an effective antimissile system today, because if he gambles counting on any defense from that system, he is putting our country at risk. Mr. Chairman, I yield the remaining amount of my time to the ranking member.

Mr. FOSTER

Mr. FOSTER. Mr. Chairman, my amendment is a symbolic adjustment to the NNSA budget intended to raise awareness about two areas of emerging national security risk that I believe deserve more attention and investment. As the only Ph.D. physicist in Congress, I feel a special responsibility to speak out on issues of national security, especially when they concern emerging technological threats that Congress may not be sufficiently aware of. Any student of the history of warfare is well aware of the dangers of fighting the last war, and for more than 70 years, nuclear weapons have held center stage among threats to our national security and global safety because of their unique capabilities to threaten the existence of mankind. That threat remains, but I fear that the balance of our defensive investments do not adequately reflect emerging threats. We now appear to be in the process of deciding to spend over $1 trillion to upgrade our nuclear weapons despite the fact that our existing systems are far more sufficient to deter any rational actor. There is no adversary of ours who is not intimidated by our nuclear arsenal but who will suddenly fall in line if we add just one more upgrade or additional weapons manufacturing capability. Put simply, another generation of nuclear weapons will not make us significantly safer. On the other hand, we live in a world where newly emerging and potentially equally great threats loom: first, bioterror, driven by recent breakthroughs in genetic engineering and off-the-shelf biotechnology; and, second, lethal autonomous weapons systems driven by recent breakthroughs in machine vision, facial recognition, and artificial intelligence. These are small, inexpensive lethal drones and similar devices that use machine vision and artificial intelligence to target individuals or groups of humans, potentially without any human involvement in the kill decision. For those of my colleagues unfamiliar with these technologies, perform an internet search for the term ``lethal autonomous weapons systems,'' sometimes abbreviated ``LAWS''; or read the recent press coverage of the ab initio synthesis of the horsepox virus, a close variant of the smallpox virus that killed millions; then search for the term ``biohacking.'' For more detailed information, I urge my colleagues to request a classified or unclassified briefing on recent studies of these subjects by the National Academies of Sciences, Engineering, and Medicine. Both of these technologies pose unique threats to our national security for two reasons: The first is because of the small physical footprint of a terror facility based on either of these technologies. Either a bioterror laboratory or a small shop to produce and program small lethal drones could easily fit in a basement or small apartment. There is no radiological signature to detect them as there is with nuclear material. The second is because of the low cost and general availability of key enabling technological components. The monetary investment necessary for a capable terror facility is in the range of hundreds of thousands of dollars, perhaps less. The relevant technologies are already in wide use in industry. Contrast this with the threats of nuclear proliferation, where the multibillion-dollar investment to enrich and separate nuclear fissile material pretty much limits nuclear weapons either to established nation-states or perhaps terrorist organizations with access to fissile material from poorly guarded facilities. Anyone who is unconvinced that we need to take these emerging threats seriously needs only to look at what happened in cybersecurity. One of the painful lessons we have learned in recent years is that everything evil that can be done with computer viruses has, in fact, been done. In large part, this is because of the low barriers to entry and the difficulty of attributing an attack. Both of these features are shared fully by both bioterror and lethal autonomous weapons systems. So if we are going to stay ahead of these threats, we need to be strategic about our investments. It is time to reconsider the wisdom of pouring hundreds of billions of dollars into Cold War weapons which contribute negligibly to our national security and past time to consider a much more rapid increase in investments in defensive measures against lethal autonomous weapons systems and against bioterror, because by the time they become a reality, it will be too late to react. As a leader in technology and innovation, the United States should act now to circumvent any danger these technologies could pose. Mr. Chairman, I reserve the balance of my time.

Mr. FOSTER. Mr. Chairman, I have an amendment at the desk.

Mr. FOSTER. Mr. Chairman, I urge my colleagues to support this amendment and to take the time to educate themselves about these emerging threats. Mr. Chairman, I yield back the balance of my time.

Mr. FOSTER

Mr. FOSTER. Mr. Chair, I thank my friend from California (Mr. Takano) and my colleagues, Representatives Esty, Langevin, Lieu, and Lujan for cosponsoring this amendment. Our amendment would provide $2.5 million to revive the Office of Technology Assessment to provide Congress with unbiased, timely, and nonpartisan reports on a wide range of issues in science and technology. This office is no less necessary today than when it was first started in 1972, or when it was defunded in 1995. As technology continues to advance at an increasingly rapid pace and our partisan divide seems to grow deeper, Congress needs this now more than ever. The OTA did important work in a number of areas, but I would like to highlight just one of those areas in particular. One of the last recommendations the OTA made was that the U.S. should move rapidly to computerized health records and that standards should be put in place to ensure what we now call interoperability. Had we heeded this advice rather than defunding the OTA, we could have saved hundreds of billions of dollars of taxpayer money and saved hundreds of thousands of American lives by ensuring accurate, up-to- date patient data that was accessible regardless of where the patient turned up for care. This also could have helped slow or prevent the opioid epidemic by ensuring that patients would not be able to doctor shop to acquire numerous opioid prescriptions. While we cannot slow down the rapid pace of technology, we can give our country back an important and proven tool. So I urge my colleagues to join me in supporting this amendment to restore this vital source of credible, nonpartisan scientific expertise to the U.S. Congress.

Mr. FOSTER

Mr. FOSTER. Mr. Speaker, I urge my colleagues to vote ``no'' on H.J. Res. 111 to block the Consumer Financial Protection Bureau's arbitration rule. The CFPB is charged with protecting consumers from unfair and abusive behaviors by banks and financial firms. To that end, the CFPB's rules would prohibit provisions requiring that a bank customer surrender the right to participate in class actions. This practice undermines a consumer's right to be compensated for damages, particularly when they get nickeled and dimed by the fine print in financial contracts. Class actions often represent the only realistic option for consumers who are ripped off to the tune of a few dozen or a few hundred dollars, and they reduce the burden on the courts by consolidating claims, thereby saving money for both plaintiffs and defendants. Opponents of the CFPB's rule hope that, by prohibiting the consolidation of claims, they can make potential damages so small that the individual claims are not viable. Meritorious claims from aggrieved plaintiffs who have suffered actual damages would go uncompensated, and equally importantly, wrongdoers would go unpunished. I urge my colleagues to stand up for consumers and ensure that they can be fairly compensated by actual damages and wrongdoers punished.

Mr. FOSTER

Mr. FOSTER. Mr. Chairman, I rise in opposition to this amendment.

Mr. FOSTER. Mr. Chairman, I yield myself such time as I may consume. As the only physicist in the U.S. Congress, I feel a special responsibility to speak out on the importance of strengthening our global nuclear security architecture. At a time when it is more important than ever for the security of the United States to reinforce international norms against nuclear testing, we are here debating an amendment that would restrict the ability of a key international institution to monitor nuclear weapons, and, in fact, is designed to undercut prospects for either eventual ratification or even continued adherence to the Comprehensive Nuclear-Test-Ban Treaty. The Comprehensive Nuclear-Test-Ban Treaty Organization Preparatory Commission is tasked with establishing a verification regime to monitor compliance with the comprehensive ban on nuclear explosive testing. If enacted, this amendment would send the wrong signal to the world, deliberately risking an opening for the resumption of unrestricted nuclear testing by many nations on Earth, which would be a national security disaster for the United States. During the debate on the Iran nuclear agreement, I received more than a dozen classified briefings, many of them individual classified briefings by our weapons experts who supported the negotiating team. At that time, I spent a lot of time putting myself in the place of a terrorist or proliferating nation, and I came to understand the overwhelming technical advantage that the United States possesses today over both other nuclear states, and any potential proliferation state, because we conducted more than 1,000 nuclear tests from 1945 to 1992, more than all other countries on Earth combined. Many of those tests were extensively instrumented and have provided us with the ability to accurately computer model and evaluate the performance of nuclear weapons without the risk to safety and to the environment. This is why no official of the Department of Energy, Department of Defense, or any other of our nuclear laboratories have ever called for a resumption of nuclear testing or an unsigning or deprecation of the CTBT, because the moment that other nations begin or resume testing, we lose that crucial advantage. It seems very odd to me that my Republican colleagues would want other nuclear or nonnuclear states to obtain intellectual property and parity in this matter. Although under this amendment the direct funding for the international monitoring system would nominally remain unscathed, it is difficult to imagine that a significant reduction in U.S. technical and financial support to the CTBTO would not adversely affect the organization's ability to maintain and operate any nuclear monitoring system. The proposed amendment also seeks to undermine the United States' obligation as a signatory not to conduct nuclear test explosions. If the United States unilaterally declares itself exempt, then other countries are very likely to do the same. In addition, contrary to what the amendment implies, U.N. Security Council Resolution 2310, does not impose any new obligations on the United States. Nothing is mandatory in the U.N. resolution. But repudiating support for the resolution could trigger bad faith in other nations around the world and reduce U.S. legitimacy and leverage that ensures other countries do not test nuclear weapons. So we should not signal any intention that the United States encourages a return to a more hostile nuclear environment, an environment in which the United States does not condemn nuclear weapons testing but, rather, gives away our position as a country that seeks peace and prosperity for our future. We have an opportunity to turn political rhetoric into concrete action to curb the global proliferation of nuclear weapons and secure the safety of future generations. From a national security point of view, we must acknowledge that the CTBT locks in an enormous competitive advantage for the United States, one that would be a huge mistake to begin throwing away. Although the CTBT failed to be ratified by a handful of votes the first time it came up in 1999, as George Shultz, the Secretary of State under President Reagan said: ``You can say that a Senator might have been right to vote against the CTBT when it was first put forward''--in 1999--``and right to vote for it now. Why? Because things have changed.'' And what he meant by that is that stockpiled stewardship works, and that the detection system, both that is maintained by the United States and by the world communities by the CTBTO works as well. Short of ratification, the U.S. support for the CTBTO Preparatory Commission remains essential. I urge my colleagues to vote ``no'' on the Wilson amendment, and I yield back the balance of my time.

Mr. FOSTER

Mr. FOSTER. Mr. Speaker, I rise today to recognize Fermi National Accelerator Laboratory, which celebrated its 50th anniversary last week. Built on the prairies of Illinois, under the leadership of its first director, Robert Wilson, this national lab performs cutting-edge research in physics to help us understand the fundamental properties of matter. It is also where I spent most of my career as a high energy particle physicist before I ran for Congress. The discoveries made in Fermilab's first 50 years will remain in the science textbooks forever. Experiments at Fermilab discovered three of the fundamental components of matter: the bottom quark, the neutrino tau, and the top quark, the heaviest known form of matter. Unfortunately, the Republican budget proposal of the Trump administration threatens the legacy of Fermilab and national labs and scientific facilities throughout the country. Mr. Speaker, scientific research is not like highway building that can turn on and off in any given fiscal year. Scientific teams and facilities that take generations to build can be wiped out in a single budget cycle by having their funding cut. So, Mr. Speaker, I call upon you and your colleagues to show us a budget that will maintain our country's leadership in science and technology, because destroying our scientific facilities is no way to make America great again.

Mr. FOSTER

Mr. FOSTER. Mr. Chair, I thank Ranking Member Waters for yielding me time and for her leadership on this. Nine years ago, I was there, in 2008, when our financial system collapsed, as a new Member of Congress, the sole scientist on the Financial Services Committee. And as we surveyed the wreckage of our economy, I wondered how we ever could have gotten into a place like that with our financial system clogged with toxic assets based on trillions of dollars of mortgages that never had any realistic chance of being repaid by their homeowners. We saw giant banks and trading firms leveraged beyond belief, huge financial corporations so complex that they had thousands of business units that even their CEOs were unaware of, and risk management software that was being ignored, if it existed at all. How could we have gotten there? But when I look at the CHOICE Act that Republicans are about to ram through on a party-line vote, I understand perfectly how we got there. I see all the same forces of mindless deregulation and free market ideology, an overriding mania for tax cuts for the rich, while stripping financial protection for ordinary American families; the same refusal to learn the lessons of financial history and to replace them with alternative facts that fit their ideology. Mr. Chair, I urge my colleagues to stand up for working families and protect our economy by opposing this bill today.

Mr. FOSTER

Mr. FOSTER. Mr. Speaker, I yield myself such time as I may consume. I thank my colleague from Arkansas (Mr. Hill) for his years of hard bipartisan work that went into this bill. I am proud to support this bill today because I believe that it will strengthen the abilities of investors to make informed decisions. This legislation would add transparency in the financial markets that will ultimately benefit consumers. Exchange-traded funds are valuable and popular tools for investors to get exposure to diversified risk through a single security with low costs. My wife and I use them ourselves. They are, however, like the iPhone, very simple on the outside but incredibly complicated products on the inside. They often can be thoroughly understood only by those with the background and the time to analyze the way the ETF is constructed, as well as each of the underlying securities and the sectors they are targeting. Retail investors and retirement savers often do not have this time and often do not have the expertise in the markets. High-quality research can help them make informed decisions about which ETFs to invest in, equipping them to make decisions on how to diversify across different sectors and indices. ETFs are continuously issued, so they present unique potential risks to underwriting broker-dealers under the Federal securities laws. Generally, the Federal securities laws prohibit a broker-dealer from participating in a securities offering from publishing research 15 days before or 30 days after the issuance for very good reason. This is to prevent research that could hype the security ahead of the offering or try to puff its price afterwards. ETF pricing, however, reflects a wide variety of data across many issuers and classes of securities. Because they are continuously brought to market, it is necessary to provide a clarification in the law that research is permitted to be published continuously, because they are also continually traded on the exchanges. The antifraud provisions of the securities laws will still apply. To be clear, this bill does not vitiate any rights of investors or responsibilities of broker dealers with respect to the accuracy and truthfulness of statements. Specifically, section 2(c)(1) provides that the antifraud and antimanipulation provisions of the securities laws are not limited by anything in this bill. Moreover, this applies only to bona fide research, and FINRA can require sales materials to be posted to the public. Section 2(c)(2) preserves the powers of the SROs to oversee all of the practices of broker-dealers, including the publication of these reports. Lastly, the bill provides for a statutory safe harbor should the Commission not be able to promulgate a rule in the 270-day period established by the bill. This statutory safe harbor is only available to research on funds that have been reported to the SEC for the last year, ensuring that it is true to the purpose of the bill to provide research to be used by investors for existing securities. Statutory safe harbors exist elsewhere in the Federal securities laws, most notably section 4(a)(2) of the 1933 Act. A statutory private offering exemption can be perfected without relying on regulation D. In practice, though, that does not happen, and I trust that the SEC will prescribe an appropriate set of rules consistent with section 2(a) of this bill so that the regulatory safe harbor will be effective. I urge my colleagues to support this bill, and I reserve the balance of my time.

Mr. FOSTER. Mr. Speaker, I again thank my colleague from Arkansas (Mr. Hill) and now-Governor Carney, as well, for working on this bill over the past years. I look forward to it being signed into law. Mr. Speaker, I yield back the balance of my time.