Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Securities and Exchange Commission relating to "Form N-PORT and Form N-CEN Reporting; Guidance on Open-End Fund Liquidity Risk Management Programs".

Bill Number

H.J.Res. 53

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Finance and Financial Sector

Status

Introduced

Latest Action

2025-02-12: Referred to the House Committee on Financial Services.

Last Updated

2025-02-14T15:16:40Z

AI-Generated Summary

Purpose

This joint resolution (H.J. Res. 53) aims to disapprove a specific rule issued by the Securities and Exchange Commission (SEC), an agency that regulates the financial markets. The rule focuses on reporting requirements and guidance for managing liquidity risks in open-end investment funds, such as mutual funds. By disapproving it, Congress seeks to prevent the rule from taking effect, using a process called the Congressional Review Act (CRA), which allows lawmakers to overturn certain federal agency regulations.

Key Provisions

• Disapproval of the Rule: The resolution explicitly disapproves the SEC rule titled "Form N-PORT and Form N-CEN Reporting; Guidance on Open-End Fund Liquidity Risk Management Programs," published in the Federal Register on September 11, 2024 (89 Fed. Reg. 73764).
• Nullification: If enacted, the rule would have no legal force or effect, meaning the SEC could not enforce its requirements.
• Scope: The disapproval targets the entire rule, which includes updates to two reporting forms (N-PORT for monthly portfolio holdings and N-CEN for annual fund information) and non-binding guidance on how funds should assess and manage liquidity risks—the ability to quickly sell assets to meet investor withdrawal requests without major losses.

Significant Changes to Existing Law

• This resolution does not amend broader laws but invokes the CRA (chapter 8 of title 5, U.S. Code) to override the SEC's rulemaking authority under the Investment Company Act of 1940.
• If passed, it would block enhancements to existing reporting obligations, rolling back proposed increases in transparency about fund portfolios and liquidity practices that the SEC intended to implement or clarify.

Potential Impacts

• On Government Agencies: The SEC's ability to regulate investment fund transparency and risk management would be limited for this specific rule, potentially requiring the agency to revisit or abandon similar initiatives. It could set a precedent for future congressional interventions in SEC actions.
• On Citizens and Investors: Investors in open-end funds might have less detailed information about fund risks and holdings, potentially affecting their decision-making. However, it could reduce administrative burdens on funds, indirectly lowering costs passed on to investors.
• On International Relations: Minimal direct impact, though U.S. fund regulations influence global financial markets, and blocking this rule might signal a lighter regulatory touch to international investors or partners.

Main Stakeholders

• Securities and Exchange Commission (SEC): The primary regulator affected, as its rule would be invalidated.
• Open-End Investment Funds: Including mutual funds and exchange-traded funds (ETFs), which would avoid new reporting and compliance requirements.
• Financial Industry and Fund Managers: Entities managing these funds, who might benefit from reduced paperwork but could face ongoing scrutiny on liquidity risks.
• Investors and the Public: Retail and institutional investors relying on SEC disclosures for informed choices about fund stability.

Notable Legal, Constitutional, or Political Implications

• Legal: Reinforces the CRA as a tool for Congress to check executive branch agencies without needing presidential approval (if passed by both chambers and not vetoed). It highlights tensions between legislative oversight and agency expertise in financial regulation.
• Constitutional: Aligns with the separation of powers by allowing Congress to reclaim authority over rules it views as overreaching, but could raise questions about the balance between rulemaking and democratic accountability.
• Political: Introduced in the 119th Congress (2025), it reflects partisan efforts to curb SEC regulations perceived as burdensome, potentially influencing debates on financial oversight and deregulation. If successful, it could encourage similar resolutions against other agency rules.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Clyde, Andrew S. [R-GA-9]

Recent Actions

• 2025-02-12: Referred to the House Committee on Financial Services.
• 2025-02-12: Introduced in House
• 2025-02-12: Introduced in House

Bill Versions

• Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Securities and Exchange Commission relating to "Form N–PORT and Form N–CEN Reporting; Guidance on Open-End Fund Liquidity Risk Management Programs". — issued 2025-02-12 — PDF (2 pages)