SEC Disclosure Effectiveness Testing Act
This bill requires the Securities and Exchange Commission (SEC) to assess the usefulness of certain disclosure rules to retail investors. Specifically, the SEC must make these assessments regarding both current and new securities rules and regulations that require the disclosure of documents or information to retail investors.
To require the Securities and Exchange Commission, when developing 
rules and regulations about disclosures to retail investors, to conduct 
     investor testing, including a survey and interviews of retail 
                   investors, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``SEC Disclosure Effectiveness Testing 
Act''.

SEC. 2. DISCLOSURE TESTING.

    (a) In General.--Section 23(a) of the Securities Exchange Act of 
1934 (15 U.S.C. 78w(a)) is amended by adding at the end the following:
    ``(4) Investor Testing.--
            ``(A) In general.--The Commission shall engage in investor 
        testing prior to issuing any rule or regulation which 
        designates documents or information to be disclosed under the 
        securities laws, if such documents or information are required 
        to be delivered to, and are intended or substantially likely to 
        be materially relied upon by, a retail investor when--
                    ``(i) selecting a broker-dealer or investment 
                adviser, evaluating their services and fees, or 
                materially altering a brokerage or advisory 
                relationship;
                    ``(ii) assessing a securities recommendation or 
                investment advice provided by a broker-dealer or 
                investment adviser;
                    ``(iii) making a decision to purchase or sell a 
                security; or
                    ``(iv) such other circumstances as the Commission 
                may, with input from the Investor Advocate, determine 
                appropriate for the protection of retail investors.
            ``(B) Exemption for certain disclosures.--This section 
        shall not apply to--
                    ``(i) disclosures made pursuant to Regulations S-K 
                and S-X (including Industry Guides), Regulation 14A, 
                Form N-PX, Form 10-K, Form 10-Q, Form 8-K, Form SD, 
                Form N-PORT, Form PF, Regulation SBSR, disclosures 
                mandated by or jointly with the Board of Governors of 
                the Federal Reserve System or the Financial Stability 
                Oversight Council, or successors thereto; or
                    ``(ii) any other documents or information that the 
                Commission, with input from the Investor Advocate, 
                determines are outside the intended scope and purposes 
                of this Act.
            ``(C) Commission authority to conduct additional testing.--
        This section shall not be construed to limit the Commission's 
        ability to conduct any investor testing on any other documents 
        or information not subject to this section 23(a), provided that 
        any such investor testing shall not be subject to the 
        requirements of this section 23(a).
            ``(D) Contents.--Investor testing conducted pursuant to 
        subparagraph (A) shall include the following:
                    ``(i) Qualitative testing in the form of one-on-one 
                cognitive interviews of retail investors about 
                documents or information, or samples of such documents 
                or information, to be provided.
                    ``(ii) Such other forms of testing that the 
                Commission, with input from the Investor Advocate, 
                deems appropriate for evaluating the effectiveness of 
                retail disclosures.
                    ``(iii) Analysis and publication in the Federal 
                Register of the results of the testing.
                    ``(iv) An opportunity for the public to comment on 
                such results published in the Federal Register.
                    ``(v) A consideration of unique challenges faced by 
                retail investors age 65 or older.
            ``(E) Substantive changes.--If the Commission, in the 
        period between engaging in investor testing and publishing a 
        final rule, makes substantive changes to such rule that the 
        Commission determines would have a significant impact on retail 
        investors, and such changes were not already investor tested, 
        the Commission shall again engage in investor testing related 
        to such changes.
            ``(F) Public availability of retail testing results.--The 
        Commission shall make the data and results of any investor 
        testing performed pursuant to this paragraph available to the 
        public.
            ``(G) Rules of construction.--
                    ``(i) The determination that some or all of a 
                document or information is deemed to be subject to this 
                paragraph shall not forestall the determination that 
                such document or information may also be used or relied 
                upon by the public, market participants other than 
                retail investors, or government agencies.
                    ``(ii) The Commission may, in consultation with the 
                Investor Advocate, determine which, if any, components 
                of such document or information are substantially 
                likely to be relied on by retail investors for the 
                purposes outlined in paragraph (4)(A) above and focus 
                testing under this paragraph on those components of the 
                disclosure.
                    ``(iii) Notwithstanding clause (ii) above, where 
                any information subject to testing under this paragraph 
                may be used or relied upon by the public, market 
                participants other than retail investors, or government 
                agencies, the results of testing made pursuant to this 
                paragraph shall not provide grounds for reducing or 
                eliminating (including any undermining of reliability 
                of and accountability for) the information that 
                existing or proposed regulation requires or would 
                require be made available to the public, market 
                participants other than retail investors, and 
                government agencies, whether or not such information is 
                delivered to retail investors.
            ``(H) Retail investor defined.--For the purposes of this 
        paragraph, the term `retail investor' means any investor that 
        is not an institutional investor.''.
    (b) Participation of Investor Advocate.--Section 4(g) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78d(g)) is amended--
            (1) in paragraph (4)--
                    (A) in subparagraph (D)(ii), by striking ``and'' at 
                the end;
                    (B) by redesignating subparagraph (E) as 
                subparagraph (F); and
                    (C) by inserting after subparagraph (D) the 
                following:
                    ``(E) engage in investor testing--
                            ``(i) to carry out the functions of the 
                        Office; and
                            ``(ii) pursuant to section 23(a)(4), as 
                        appropriate; and'';
            (2) by adding at the end the following:
            ``(9) Publication of data and results of investor 
        testing.--With respect to any investor testing carried out by 
        the Investor Advocate pursuant to paragraph (4)(E), the 
        Investor Advocate may make the data and results of such 
        investor testing available to the public, without further 
        review or editing by the Commission.
            ``(10) Personnel.--If the Investor Advocate decides, within 
        its sole discretion, to conduct testing under this section, the 
        Investor Advocate may do so and the Commission shall provide 
        the Office of the Investor Advocate with sufficient personnel 
        and funding necessary to carry out such testing. Such testing 
        may qualify as the testing covered by this section, provided 
        that all requirements of the section are met.''.
    (c) Prior Rules.--
            (1) In general.--For any final rule or regulation issued by 
        the Securities and Exchange Commission (in this subsection 
        referred to as the ``Commission'') before the date of the 
        enactment of this Act that would be subject to investor testing 
        under section 23(a)(4) of the Securities Exchange Act of 1934, 
        had such rule been issued on or after the date of enactment of 
        this Act, the Commission shall perform investor testing with 
        respect to such rule or regulation that includes the contents 
        described in such section 23(a)(4).
            (2) Schedule.--The Commission shall, not later than 6 
        months after the date of the enactment of this Act, with input 
        from the Investor Advocate, establish a schedule for completing 
        any investor testing required under paragraph (1) that 
        prioritizes testing of any final rules and regulations that 
        designate documents or information central to retail investor 
        decision making, and in particular prioritize the testing of 
        documents or information required to be delivered to retail 
        investors in the form of summary documents or summary sections 
        of documents including for the purpose of determining whether 
        and how such summary documents can achieve the goals of 
        informed investor decision-making in the circumstances set 
        forth in section 23(a)(4) of the Securities Exchange Act of 
        1934 while maintaining full accessibility by retail investors, 
        the public, other market participants, and government 
        regulators to the full range of documents and information that 
        they may utilize or rely on, whether or not such documents or 
        information are required to be delivered to retail investors.
            (3) Report.--The Commission shall, with input from the 
        Investor Advocate, issue a report to Congress each year 
        containing the following:
                    (A) The status of any investor testing required 
                under paragraph (1) initiated within the last year or 
                otherwise ongoing.
                    (B) The results of any investor testing completed 
                under paragraph (1) within the last year.
                    (C) Any priorities the Commission has, based on 
                results of investor testing required by paragraph (1), 
                for--
                            (i) revising any proposed or final rule or 
                        regulation based on the results of testing;
                            (ii) initiating any rulemaking or actions 
                        arising from the results of the testing; and
                            (iii) the Investor Advocate's views on the 
                        above priorities and any such other matters 
                        arising from the testing or results of testing.
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SEC Disclosure Effectiveness Testing Act
To require the Securities and Exchange Commission, when developing rules and regulations about disclosures to retail investors, to conduct investor testing, including a survey and interviews of retail investors, and for other purposes.
SEC Disclosure Effectiveness Testing Act
Rep. Casten, Sean