The U.S. House Financial Services Committee voted 41-28 today to approve a wide-ranging investor protection bill that affirms the authority of the Securities and Exchange Commission to issue a rule on proxy access.

The legislation, the “Investor Protection Act of 2009,” also would double the SEC’s budget over five years, authorize the commission to bar mandatory arbitration clauses in investor contracts, require all financial intermediaries to have a fiduciary duty to their investor clients, expand whistleblower bounties, and address some of the enforcement failures and regulatory loopholes illustrated by the Madoff scandal.

However, the bill also includes an amendment that would permanently exempt companies with less than $75 million in market capitalization from the auditor attestation requirements of Section 404 (b) of the Sarbanes-Oxley Act of 2002. That amendment, which was sponsored by Reps. Scott Garrett and John Adler of New Jersey, was narrowly approved by a 37-32 vote, with nine Democrats joining panel Republicans in support. That measure, which was opposed by SEC chair Mary Schapiro and investor advocates, also directs the SEC and the Comptroller General to study how to reduce compliance burdens for companies with less than $250 million in market capitalization.

Supporters of the Garrett-Adler amendment said the measure was backed by the Treasury Department and White House officials. The SEC previously extended the Section 404(b) compliance deadline for small issuers until 2010, while looking into ways to lessen compliance burdens. Rep. Adler argued that Sarbanes-Oxley’s higher-than-expected compliance costs had dissuaded some companies from going public and prompted others to list their shares overseas. He and Garrett said the amendment would help preserve jobs while maintaining the status quo.

Rep. Paul Kanjorski, a Democrat from Pennsylvania, opposed the permanent exemption, noting that 43 percent of restatements occur at firms with less than $75 million in market capitalization. “This is exactly the wrong time to lessen reporting and the information that investors can get,” he warned.

The proxy access amendment, which was offered Rep. Maxine Waters of California and Rep. Gary Peters of Minnesota, was approved by a 39-30 vote, with 28 Republicans and two Democrats opposing the measure. The amendment, which doesn’t set any specific ownership standards for access, was offered to provide legal support to the SEC in the event that the U.S. Chamber of Commerce or other corporate groups file a lawsuit to block the rule. Corporate advocates and some governance observers have warned that the SEC doesn’t have the authority currently to set minimum federal standards for permitting shareholders to nominate directors to appear on management proxy statements. Schapiro and other SEC officials have said they hope to approve a final access rule in early 2010.

The California Public Employees’ Retirement System, the nation’s largest public pension fund, hailed the approval of the proxy access amendment. “This legislative effort strongly led by Rep. Maxine Waters supports the single most powerful thing we can do to improve corporate governance in America’s boardrooms by giving shareowners a way to hold directors more accountable,” Rob Feckner, CalPERS’ board president, said in a press release.

The House committee also voted 41-27 to reject an amendment by Rep. Christopher Lee of New York that would have prohibited certain contingency fee arrangements for lawyers suing broker-dealers and investment advisers under contracts that predate the legislation.