Today, Congressman Troy Downing's (MT-02) H.R. 3959, the Protecting Private Job Creators Act, was reported favorably out of the House Financial Services Committee in a 41-11 bipartisan vote, taking a critical step toward becoming law. This bill exempts fixed-income securities from Securities and Exchange Commission (SEC) Rule 15c2-11, protecting American jobs and providing regulatory clarity for the U.S. market for fixed income securities.

"Securities regulation must be fit for purpose or risk harming the very markets it is meant to protect," said Congressman Downing. "The SEC's rule 15c2-11 is one such case where a misinterpretation of financial regulation has left the market for fixed-income securities worse off, threatening reduced liquidity and harm to private capital formation. I'm proud of the bipartisan support this legislation received today and look forward to getting it across the finish line."

Read text of the Protecting Private Job Creators Acthere.

Watch Congressman Downing's remarks in support of H.R. 3959 hereor by clicking on the image above.

Background:

• The SEC adopted Rule 15c2-11 to protect investors from fraud in the over-the-counter (OTC) market.

• In a 2021 no-action letter, SEC staff explained that they intended to begin enforcing the Rule in fixed-income markets, a reversal of 50 years of regulatory practice.

• Applying the Rule to fixed-income markets would deter dealers from offering a wide range of fixed income securities to investors.

• A 2022 study found that applying the Rule to fixed-income securities would result in 30,000 fewer jobs each year over the next five years, 50,000 fewer jobs each year over the following five years, and 100,000 fewer jobs each year thereafter, decreasing U.S. GDP by $100 billion over the next ten years.

• Despite halting enforcement action related to the 2021 no-action letter, the SEC has yet to provide updated regulatory clarity regarding the Rule.

• Rep. Downing's bipartisan Protecting Private Job Creators Actexempts fixed-income securities from the Rule, protecting American jobs and providing regulatory clarity for the U.S. market for fixed income securities.

• Supporting organizations include the Securities Industry and Financial Markets Association (SIFMA), National Association of Manufacturers, American Securities Association, Investment Adviser Association, CRE Finance Council,US Chamber of Commerce, Loan Syndications and Trading Association, Structured Finance Association, Bond Dealers of America, Investment Company Institute, and Managed Funds Association.

###