Securities and Exchange Atonement Act

Summary#

This bill would add a new section to the Securities Act of 1933 that requires many large issuers to do a racial equity audit every 2 years. Within 6 months of the law taking effect, and every two years after, each covered issuer must hire an independent auditor to check: the issuer's civil rights, equity, diversity, and inclusion policies; how those policies affect its business; and whether the issuer, a predecessor, or an affiliate had direct or indirect ties to or profited from slavery. The issuer must send a report to the Commission with findings. If the issuer finds ties to or profits from slavery, the report must say what steps the issuer has taken or plans to take to reconcile those ties, and gives examples of possible steps (for example, startup capital programs, grants to historically Black colleges and universities, or grants to certain historically Black organizations). Issuers must make the report public on their own website and on the Commission's website.

If a covered issuer fails to file the report or files a false or misleading report, the bill directs the Commission to fine the issuer $20,000 per day until fixed. The bill also directs fines of $2,000 per day for an employee or officer who intentionally fails to file or files false reports. Half of fines collected would go to the Treasury Department to support an Office of Minority Low to Moderate Income Programs; the other half would go to HUD to fund specified housing and related programs. The bill creates a private right of action for holders of a covered issuer's securities who suffer harm because of a failure to issue a required report. The Commission may pay whistleblower awards of at least $20,000 to people who provide original information that leads to enforcement.

The bill defines a "covered issuer" as an issuer that uses the mails or interstate commerce and has more than 100 employees or a capitalization of $300,000,000 or more. The bill also establishes an Office of Minority Low to Moderate Income Programs within the Treasury, authorizes $3,000,000,000 for that office, and allows the Secretary of the Treasury to use 2 percent of those funds for administrative costs.

What it means for you#

  • If your company meets the covered issuer test (uses interstate commerce and has >100 employees or >= $300 million capitalization), it must complete an independent racial equity audit within 6 months and every 2 years, file reports with the Commission, and post them publicly.
  • If you work for a covered issuer, officers and employees who intentionally fail to file required reports or file false reports face individual fines under the bill.
  • If you own securities of a covered issuer and are harmed by that issuer's failure to file a required report, you could bring a lawsuit in federal district court.
  • Individuals who provide original information that leads to enforcement may be eligible for whistleblower awards of at least $20,000.
  • Funds from penalties are directed to the Treasury office created by the bill and to HUD programs such as housing counseling, eviction and foreclosure assistance, affordable housing production, rental assistance, and formula grants to jurisdictions for equity plans.

Expenses#

  • The bill authorizes $3,000,000,000 to be appropriated to the Secretary of the Treasury to carry out the Office of Minority Low to Moderate Income Programs. The Secretary may use up to 2 percent of those amounts for administrative costs.
  • The bill sets fines of $20,000 per day for covered issuers that fail to file required reports or that file false or misleading reports, and $2,000 per day for employees or officers who intentionally fail or file false or misleading reports.
  • The Commission must transfer 50 percent of fines to the Treasury and 50 percent to HUD to carry out specified programs, without further appropriation.
  • No publicly available information on total expected revenues from fines or on the long-term budgetary impact beyond the amounts and transfers stated in the bill.

Proponents' View#

No publicly available information.

Opponents' View#

No publicly available information.