[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 2756 Introduced in Senate (IS)]

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115th CONGRESS
  2d Session
                                S. 2756

   To amend the Securities Act of 1933 to direct the Securities and 
    Exchange Commission to revise the regulations of the Commission 
     regarding the qualifications of natural persons as accredited 
                               investors.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 25, 2018

Mr. Tillis (for himself and Ms. Cortez Masto) introduced the following 
 bill; which was read twice and referred to the Committee on Banking, 
                       Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
   To amend the Securities Act of 1933 to direct the Securities and 
    Exchange Commission to revise the regulations of the Commission 
     regarding the qualifications of natural persons as accredited 
                               investors.

    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 ``Fair Investment Opportunities for 
Professional Experts Act''.

SEC. 2. DEFINITION OF ACCREDITED INVESTOR.

    (a) In General.--Section 2(a) of the Securities Act of 1933 (15 
U.S.C. 77b(a)) is amended by striking paragraph (15) and inserting the 
following:
            ``(15)(A) The term `accredited investor' shall mean--
                    ``(i) a bank, as defined in section 3(a)(2), 
                whether acting in its individual or fiduciary capacity; 
                an insurance company, as defined in paragraph (13) of 
                this subsection; an investment company registered under 
                the Investment Company Act of 1940 (15 U.S.C. 80a-1 et 
                seq.) or a business development company, as defined in 
                section 2(a)(48) of that Act (15 U.S.C. 80a-2(a)(48)); 
                a small business investment company licensed by the 
                Small Business Administration; or an employee benefit 
                plan, including an individual retirement account, which 
                is subject to the provisions of the Employee Retirement 
                Income Security Act of 1974 (29 U.S.C. 1001 et seq.), 
                if the investment decision is made by a plan fiduciary, 
                as defined in section 3(21) of such Act (29 U.S.C. 
                1002(21)), which is either a bank, an insurance 
                company, or a registered investment adviser;
                    ``(ii) any natural person whose individual net 
                worth, or joint net worth with that person's spouse, 
                exceeds $1,000,000 (which amount shall be adjusted for 
                inflation by the Commission every 3 years to reflect 
                the change in the Consumer Price Index for All Urban 
                Consumers published by the Bureau of Labor Statistics, 
                rounding to the nearest $10,000) where, for purposes of 
                calculating net worth under this clause--
                            ``(I) the person's primary residence shall 
                        not be included as an asset;
                            ``(II) indebtedness that is secured by the 
                        person's primary residence, up to the estimated 
                        fair market value of the primary residence at 
                        the time of the sale of securities, shall not 
                        be included as a liability (except that if the 
                        amount of such indebtedness outstanding at the 
                        time of sale of securities exceeds the amount 
                        outstanding 60 days before such time, other 
                        than as a result of the acquisition of the 
                        primary residence, the amount of such excess 
                        shall be included as a liability); and
                            ``(III) indebtedness that is secured by the 
                        person's primary residence in excess of the 
                        estimated fair market value of the primary 
                        residence at the time of the sale of securities 
                        shall be included as a liability;
                    ``(iii) any natural person who had an individual 
                income in excess of $200,000 in each of the 2 most 
                recent years or joint income with that person's spouse 
                in excess of $300,000 in each of those years and has a 
                reasonable expectation of reaching the same income 
                level in the current year (which amounts shall be 
                adjusted for inflation by the Commission every 3 years 
                to reflect the change in the Consumer Price Index for 
                All Urban Consumers published by the Bureau of Labor 
                Statistics, rounding to the nearest $10,000);
                    ``(iv) any natural person who holds securities 
                purchased from an issuer if such issuer has a 
                reasonable belief that the natural person exceeded the 
                threshold described in clause (ii) or (iii) at the time 
                of the original purchase and would continue to exceed 
                that threshold, without regard to any subsequent 
                adjustment for inflation;
                    ``(v) any natural person who is currently licensed 
                or registered as a broker, dealer, registered 
                representative, investment adviser, or investment 
                adviser representative by the Commission, the Financial 
                Industry Regulatory Authority, or an equivalent self-
                regulatory organization, as defined in section 3(a) of 
                the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)), 
                or the securities division of a State or the equivalent 
                State division responsible for licensing or 
                registration of individuals in connection with 
                securities activities;
                    ``(vi) any natural person that the Commission 
                determines, by regulation and in accordance with 
                subparagraph (B), to have demonstrable education, job, 
                or professional experience to qualify such person as an 
                accredited investor; or
                    ``(vii) any natural person who, on the basis of 
                such factors as financial sophistication, net worth, 
                knowledge, and experience in financial matters, or 
                amount of assets under management qualifies as an 
                accredited investor under rules and regulations which 
                the Commission shall prescribe.
            ``(B) When issuing a regulation under subparagraph (A)(vi), 
        the Commission shall--
                    ``(i) consider such factors as whether a natural 
                person has--
                            ``(I) a qualifying education, job, or 
                        professional experience, as verified by the 
                        Financial Industry Regulatory Authority or an 
                        equivalent self-regulatory organization, as 
                        defined in section 3(a) of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 78c(a)), or a 
                        certification or accreditation as verified by 
                        an independent third party; and
                            ``(II) a reasonable level of relevant 
                        financial expertise in order to understand--
                                    ``(aa) features of commonly issued 
                                private securities, including any 
                                voting and economic rights and 
                                disclosure obligations of the issuer;
                                    ``(bb) the basic components of a 
                                financial statement;
                                    ``(cc) the material investment risk 
                                associated with the investment; and
                                    ``(dd) any other factor that the 
                                Commission determines will serve the 
                                public interest and protect investors; 
                                and
                    ``(ii) determine the period of time during which an 
                accredited investor shall retain such status.''.
    (b) Regulations.--The Securities and Exchange Commission shall 
revise the definition of accredited investor under section 230.501 of 
title 17, Code of Federal Regulations, to conform with the amendment 
made by subsection (a).
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