Securities Research Modernization Act
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The bill would let securities brokers and dealers publish research reports on any company's proposed public stock offering without that report counting as an illegal "offer to sell" the securities.
Currently this safe harbor applies only to reports about emerging growth companies; broadening it to all issuers would let analysts write about a much wider range of upcoming stock offerings during the pre-sale marketing period.
What this bill would do
What it would do
The bill would amend the Securities Act of 1933 so that a research report published or distributed by a broker or dealer about a company's proposed public offering is not treated as an "offer to sell" securities for registration purposes, regardless of what kind of company issues the securities. Under current law, this exception applies only to research reports about "emerging growth companies" (generally smaller, newer public companies) and only covers reports about their common equity.
The bill would strike that narrower language and replace it so the exception covers reports about "an issuer" and "any" securities, not just an emerging growth company's common equity. It does not create new disclosure requirements, change who may act as a broker or dealer, or otherwise alter the registration process for public offerings themselves.
Key provisions
- 1Would replace "an emerging growth company" with "an issuer" so the research-report exception applies to any company undertaking a public offering, not just emerging growth companies.
- 2Would replace "the common equity" with "any," extending the exception beyond common equity securities to cover research reports about any securities in the offering.
- 3Would replace "such emerging growth company" with "such issuer" to conform the rest of the provision to the broadened scope.
Who would be affected
Securities brokers and dealers who publish investment research, companies of any size planning a public securities offering, and institutional and retail investors who read broker research during an offering's marketing period. The Securities and Exchange Commission, which enforces registration rules under the Securities Act, is also affected.
Why it matters
Broadening the exception would let brokers and dealers publish research on offerings by larger, established companies without triggering securities-offer restrictions, potentially giving investors more analyst coverage during the pre-offering period. It could also change how the SEC evaluates whether a research report constitutes a regulated "offer" in a broader range of public offerings.
What would change
Changes to existing law
Amends Securities Act of 1933 (15 U.S.C. 77b(a)(3)) (Sec. 2)
Expands the research-report exception from covering only emerging growth companies' common equity to covering any issuer and any securities.
Funding and costs
Congressional Budget Office estimate
CBO estimates H.R. 3672 would have no effect on direct spending or revenues, with discretionary implementation costs of less than $500,000 over the 2026–2030 period.
CBO finds that the Securities Research Modernization Act would have zero effect on direct (mandatory) spending, revenues, or the deficit over the 2026–2030 and 2026–2035 scoring windows. The only federal cost is a small discretionary expense — less than $500,000 over 2026–2030 — for roughly one Securities and Exchange Commission employee to issue and update rules for about six months; because the SEC is authorized to collect fees to offset its appropriation, the net effect on discretionary spending is expected to be negligible. The bill contains no intergovernmental mandates, but does impose a private-sector mandate (higher SEC fees passed on to regulated entities) that CBO estimates would fall well below the UMRA threshold of $206 million annually.
Legislative status & sources
Latest action
Placed on the Union Calendar, Calendar No. 167.
Official CRS summary
Show the CRS summaryHide the CRS summary
This bill allows a securities broker or dealer to publish or distribute a research report on a proposed public offering by any issuer without it being considered an offer to sell securities for purposes of registration requirements. Currently, only reports published or distributed regarding a proposed public offering by an emerging growth company fall under this exception.
Legislative subjects
Business records; Finance and Financial Sector; Financial services and investments; Securities
Committee report
H. Rept. 119-204