Downing Introduces Protecting Private Job Creators Act

WASHINGTON, D.C.—Congressman Troy Downing (MT-02) introduced H.R. 3959, the Protecting Private Job Creators Act. 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.

Rep. Cleo Fields (LA-06) is an original cosponsor of the bill. 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.

“The market for fixed income securities is a critical driver of consumer finance and job growth,” said Congressman Downing. “We cannot afford to mire this market in regulatory ambiguity. My common sense legislation safeguards U.S. job creation by ensuring that rules tailored to over-the-counter securities are not misapplied to fixed income offerings.”

“While I appreciate the SEC's role in protecting investors, we cannot allow regulatory agencies to suddenly reverse 50 years of established practice without proper notice,” said Rep. Fields. “Louisiana's agricultural producers, manufacturers, and healthcare systems depend on stable capital markets to create jobs and serve our communities. The threat of eliminating tens of thousands of jobs nationwide—including good-paying positions in Louisiana—through hasty regulatory interpretation is unacceptable. We need legislative clarity to ensure our businesses can access capital markets predictably while maintaining appropriate investor protections.”

“SIFMA has long supported exempting fixed income securities from the equity-focused Rule 15c2-11, and the Protecting Private Job Creators Act takes an important step in that direction,” said SIFMA President and CEO Ken Bentsen. “We commend Representatives Troy Downing (R-MT) and Cleo Fields (D-LA) for their leadership in introducing this legislation. By recognizing the fundamental differences between equity and fixed income markets, this bill will help ensure the continued efficient operation of our vital fixed income markets.”

“Many privately held manufacturers issue fixed-income securities, such as corporate bonds issued pursuant to Rule 144A, to access capital to support job creation, manufacturing growth, and economic prosperity across America,” said Charles Crain, Managing Vice President of Policy, National Association of Manufacturers. “Applying SEC Rule 15c2-11 to these offerings would force private companies to publicly disclose confidential financial information about their business and risk competitive harm. Manufacturers strongly support the Protecting Private Job Creators Act to exempt fixed-income securities from Rule 15c2-11 and ensure that private manufacturers have the regulatory certainty necessary to support the long-term investments that drive economic growth.”

“The American Securities Association strongly supports the Protecting Private Job Creators Act, which provides certainty to fixed-income market participants and avoids regulatory induced market failures,” said ASA President and CEO Chris Iacovella. “We thank Representatives Troy Downing and Cleo Fields for their leadership and focusing on the stability of our fixed-income markets.”

“The IAA thanks Representative Troy Downing (R-MT) and Representative Cleo Fields (D-LA) for introducing the Protecting Private Job Creators Act,” said Investment Adviser Association Director of Public Policy and Associate General Counsel William Nelson. “Applying Rule 15c2-11 to bond markets could restrict quoting activity, leading to reduced liquidity and transparency. This would make it more difficult for investment advisers to trade efficiently and manage risk for their clients. While the SEC has provided exemptive relief, this bill would offer much-needed, lasting clarity for the bond market on this issue.”

“The CRE Finance Council represents both bond investors and issuers, a market that finances commercial and multifamily real estate in communities across the country, and the misapplication of 15c2-11 has been a looming threat to liquidity,” said CRE Finance Council President and CEO Lisa Pendergast. “The Protecting Private Jobs Creators Act is a commonsense step to ensure enduring regulatory clarity for fixed-income markets. Fixed-income products in the CRE finance market provide robust data to investors, as well as liquidity to the real estate market, and we applaud Rep. Downing and Rep. Fields for this bipartisan effort to permanently codify 50 years of regulatory practice.”

“The U.S. Chamber of Commerce applauds Rep. Downing and Rep. Fields for sponsoring the Protecting Private Job Creators Act,” said Kristen Malinconico, U.S. Chamber of Commerce, Senior Director, U.S. Chamber of Commerce Center for Capital Markets Competitiveness. “The legislation would provide permanent relief for fixed-income markets from SEC Rule 15c2-11, thereby supporting liquidity and capital formation for businesses and investors alike.”

“LSTA strongly supports the bill,” said Elliot Ganz, EVP, Head of Advocacy, Co-Chair Public Policy at the Loan Syndications and Trading Association. “15c2-11 was never meant to apply to fixed income securities and the bill would resolve this issue once and for all.”

“The Protecting Private Jobs Creators Act is an important piece of legislation that ensures the continued efficiency and liquidity of the structured finance markets,” said Structured Finance Association General Counsel David Dwyer. “By codifying existing regulatory relief, this bill provides certainty for investors and issuers alike, allowing businesses to access capital and grow without unnecessary regulatory hurdles. The Structured Finance Association strongly supports this measure as it reinforces a well-functioning financial system that underpins job creation and economic expansion. Our industry appreciates the leadership of Reps. Troy Downing (R-MT) and Cleo Fields (D-LA) in addressing this important issue.”

“The BDA applauds the introduction of the Protecting Private Job Creators Act that would exempt quotations for all fixed income  securities from SEC Rule 15c2-11,” said Mike Nicholas, President and CEO of the Bond Dealers of America. “We urge Congress to take swift action in passing this legislation correcting the SEC's action applying the Rule to bonds, which is contrary to current law. We thank Reps. Downing and Fields for their work on this bill and look forward to working with Congress to advance this important legislation.”

“ICI supports the Protecting Private Job Creators Act and thanks Representatives Downing and Fields for introducing this important legislation,” said ICI CEO & President Eric J. Pan. “The bill would ensure that an SEC rule meant only for certain equity markets could not be imprudently extended to fixed-income investments in a way that would harm investors and borrowers relying on the bond markets for their capital needs,”

Read text of the Protecting Private Job Creators Act here.

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 Act exempts fixed-income securities from the Rule, protecting American jobs and providing regulatory clarity for the U.S. market for fixed income securities.

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