S. 3055 — Corporate Governance Fairness Act

This section amends the Investment Advisers Act of 1940 to define and regulate proxy advisory firms (i.e., persons providing proxy voting research, analysis, ratings, or recommendations to investors) as investment advisers, subject to registration, state regulation, SEC examinations, and reporting requirements. (1) Adds proxy advisory firms to the definition of investment adviser in IAA §202(a), with an exception for firms (including affiliates) receiving ≤$5 million in annual gross receipts from clients (adjusted annually for U.S. GDP changes), unless they opt in; clarifies they are ineligible for certain exclusions from the definition. (2) Adds a rule of construction in IAA §203(o) clarifying that proxy advisory firms are subject to investment adviser registration. (3) Subjects proxy advisory firms to state investment adviser regulation under IAA §203A(a)(1). (4) Requires the SEC, beginning one year after enactment, to conduct periodic inspections of proxy advisory firms' records—reviewing false statements or material omissions to clients and conflicts of interest policies—and authorizes special examinations as needed (IAA §204(g)). (5) Requires the SEC, within two years of enactment, to report to the Senate Banking Committee and House Financial Services Committee evaluating proxy advisory firms' conflicts of interest policies and procedures to prevent false statements or omissions, and assessing additional investor protections (IAA §211(h)).