[Congressional Record Volume 162, Number 135 (Thursday, September 8, 2016)]
[House]
[Pages H5188-H5201]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               ACCELERATING ACCESS TO CAPITAL ACT OF 2016


                             General Leave

  Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in which to revise and extend their remarks 
and submit extraneous materials on the bill, H.R. 2357, to direct the 
Securities and Exchange Commission to revise Form S-3 so as to add 
listing and registration of a class of common equity securities on a 
national securities exchange as an additional basis for satisfying the 
requirements of General Instruction I.B.1. of such form and to remove 
such listing and registration as a requirement of General Instruction 
I.B.6. of such form.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to House Resolution 844 and rule 
XVIII, the Chair declares the House in the Committee of the Whole House 
on the state of the Union for the consideration of the bill, H.R. 2357.
  The Chair appoints the gentleman from Tennessee (Mr. Duncan) to 
preside over the Committee of the Whole.

                              {time}  1423


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the state of the Union for the consideration of the bill 
(H.R. 2357) to direct the Securities and Exchange Commission to revise 
Form S-3 so as to add listing and registration of a class of common 
equity securities on a national securities exchange as an additional 
basis for satisfying the requirements of General Instruction I.B.1. of 
such form and to remove such listing and registration as a requirement 
of General Instruction I.B.6. of such form, with Mr. Duncan of 
Tennessee in the chair.
  The Clerk read the title of the bill.
  The CHAIR. Pursuant to the rule, the bill is considered read the 
first time.
  The gentleman from Texas (Mr. Hensarling) and the gentlewoman from 
New York (Mrs. Carolyn B. Maloney) each will control 30 minutes.
  The Chair recognizes the gentleman from Texas.
  Mr. HENSARLING. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, regrettably, we know that we continue to be mired in 
the slowest, weakest, and most tepid economic recovery in the history 
of the Republic, and our fellow citizens continue to suffer. The 
economy continues to not work for working people.
  Now, we hear a lot of happy talk coming out of the administration, 
and they throw statistics at us telling us how happy we should be with 
this economy. But the economy is limping along at 1.5 to 2 percent of 
economic growth when the historic norm is 3.5 percent; and if you can't 
grow America's economy, you cannot grow the family economy.
  So all this happy talk coming out of the administration, try to 
convince the 8 million Americans who don't have a job that this is a 
good economy. Try telling that to the 6 million Americans who want to 
work full time but only find part-time employment. Mr. Chairman, tell 
that to the 94 million Americans who are out of the workforce entirely. 
So many of them have just given up ever being able to find any type of 
gainful employment in this economy.
  Again, it is falling so far short of its potential. All across 
America, American families are worrying: How are they going to pay the 
bills? How are they going to pay the mortgage? How are they going to be 
able to pay their skyrocketing healthcare premiums under ObamaCare?
  We must--we must--get this economy moving again, but, Mr. Chairman, 
our great challenge is the job engine of America is broken, and the job 
engine is small business. One of the primary challenges for small 
business is they cannot access capital. Right now, bank lending to 
small businesses is at a 25-year low. Entrepreneurship, the launching 
of new business, and innovation, Mr. Chairman, is at a generational 
low. We have more small-business deaths than we do births in America 
today. This cannot be allowed to stand.
  That is why, Mr. Chairman, I am so happy that today the House 
Financial Services Committee is putting together a package of bills 
that will help unleash capital for our innovators, for our 
entrepreneurs, and for our small businesses.
  It is all part of the House Republican Better Way. We don't have to 
be stuck in this lackluster Obamanomics economy that is not working for 
working people. We can do better, and we must do better. So I am happy 
today that we will soon be voting on H.R. 2357, the Accelerating Access 
to Capital Act, sponsored by the gentlewoman from Missouri (Mrs. 
Wagner), who has been a real leader in access to capital.
  This is a bill which simply amends a registration form with the 
Securities and Exchange Commission to eliminate unnecessary cost for 
small private companies.
  This overburdensome regulation that has nothing to do with consumer 
protection is strangling small businesses. We need to pass this bill, 
again, because the cost of securities registration is falling 
heaviest--heaviest--on our small companies.
  Another bill in this package, Mr. Chairman, is H.R. 4850, the Micro 
Offering Safe Harbor Act sponsored by the gentleman from Minnesota (Mr. 
Emmer). This would give really small businesses and startups more 
flexibility to raise funds from existing relationships without having 
the added cost of having to register with the Securities and Exchange 
Commission.
  The third bill in this package is H.R. 4852, the Private Placement 
Improvement Act sponsored by the chairman of our Capital Markets and 
Government Sponsored Enterprises Subcommittee, the gentleman from New 
Jersey (Mr. Garrett), and it helps the bipartisan JOBS Act reach its 
full potential by maintaining a clear and commonsense approach to 
regulations for private offerings.
  Again, it simply helps smaller companies raise capital. You cannot 
have the benefits of capitalism for American families without capital.
  I commend each of my colleagues on the House Financial Services 
Committee for authoring these bills, for furthering these bills, and 
for what they will do to ensure that we can have economic growth for 
all, bank bailouts for none.
  Now, we will soon hear from the other side of the aisle, Mr. 
Chairman, and if history is our guide, we will have great angst, 
wailing, and gnashing of teeth that somehow this is hurting consumers. 
Nothing--nothing--in this package does anything to detract from the 
Securities Act of 1933, the Securities Exchange Act of 1934, the 
Investment Company Act of 1940, the Investors Advisers Act of 1940, the 
Sarbanes-Oxley Act of 2002, and the list goes on. Fraud is fraud. Fraud 
is illegal. You cannot have competitive, efficient markets with it.

[[Page H5189]]

  


                              {time}  1430

  But the SEC has a tri-part mission. Part of that mission is capital 
formation, and they have failed. They have failed. We must succeed on 
behalf of American families.
  I reserve the balance of my time.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Chair, I yield myself such 
time as I may consume.
  I am going to oppose this bill because I think it rolls back too many 
investor protections. But I understand and appreciate the chairman's 
goals here. We all support the goal of increasing capital formation. We 
just disagree on the best way to accomplish it.
  My view is that the best way to stimulate investment is to treat 
investors well and protect them, and that means strong investor 
protections. I firmly believe that markets run more, and better, on 
confidence than on capital.
  Unfortunately, this bill goes in the wrong direction. It strips away 
protections that investors want in order to feel comfortable investing 
in startups and small companies.
  I have particular concerns with title I of this bill, which would 
allow very small and thinly traded companies to sell securities using 
the faster shelf registration process. This raises serious market 
manipulation concerns. Let me explain why.
  Shelf registration allows companies to register securities in advance 
and then sell them later on short notice, without getting SEC approval. 
Traditionally, shelf registration has been limited to larger, well-
known companies, like GE or Apple, that are already widely followed by 
the markets, in other words, companies that investors are already very 
familiar with.
  In 2007, the SEC decided to expand the number of companies who are 
eligible to use shelf registration. In doing so, however, the SEC was 
very careful to balance this against the need to maintain strong 
investor protection.
  The SEC was comfortable allowing certain very small companies to have 
a limited ability to use shelf registration to offer securities, but 
only on the condition that the company have at least one class of 
securities listed on the exchange. This was because the exchanges have 
their own standards that companies must meet in order to get their 
securities listed on the exchange. These listing standards provide 
investors with sufficient assurance that the company is legitimate, has 
a reasonably wide investor base, and will have enough trading interest 
to assure a reasonable amount of liquidity in the stock.
  Without the comfort provided by the exchange's initial screening 
procedures for these companies, however, I am not sure we should be 
comfortable allowing these very small companies to use shelf 
registration. But that is what this bill would do. It would allow very 
small companies that trade in over-the-counter markets to sell 
securities using shelf registration.
  Allowing a small company, whose stock is very thinly traded to 
quickly sell a large amount of securities under the shelf registration 
raises real concerns about potential market manipulation. A company 
could easily bid up the price of its stock and then immediately dump a 
large amount of new stock to investors at the artificially inflated 
prices.
  As Columbia Professor John Coffee noted in his testimony before the 
Financial Services Committee on this proposal last Congress: ``Letting 
a small company with a modest $50 million public float use shelf 
registration to attempt to sell $150 million in securities invites 
potential disaster and investor confusion.''
  Mr. Chair, I include in the Record his entire, very critical 
testimony of the dangers of this legislation.

Statement of Professor John C. Coffee, Jr., Adolf A. Berle Professor of 
           Law, Columbia University Law School, April 9, 2014


   Legislative Proposals to Enhance Capital Formation for Small and 
                       Emerging Growth Companies

       Chairman Garrett, Ranking Member Waters, and Fellow Members 
     of the Committee:
     Introduction
       I thank you for inviting me. I have been asked to comment 
     on seven proposed bills, some of which appear to be a still 
     early stage of drafting. Reasonable people can disagree about 
     several of these provisions, but others are beyond the pale. 
     Still, my overarching comment is that each of these bills 
     represents a piecemeal attempt to ``tweak'' something in our 
     existing system, but collectively they are uncoordinated and 
     lack any consistent vision. If there is any common theme to 
     these bills, it is that better integration and coordination 
     is desirable between our twin disclosure regimes under the 
     Securities Act of 1933 and the Securities Exchange Act of 
     1934. That could well be true. If so, the appropriate 
     starting point might be to mandate a study by the SEC 
     (within, say, a realistic two-year period) of how to better 
     coordinate both (1) these two disclosure systems, and (2) 
     public and private offerings. Absent such an attempt at 
     coordination, we will obtain only piecemeal (and fumbling) 
     reforms that resemble the seven blind men groping at the 
     elephant. In particular, as these proposals suggest, private 
     placements may soon overtake public offerings--without 
     adequate attention being given to the appropriate role of 
     each.
       More generally, we seem to be moving from JOBS Act I to a 
     JOBS Act II without any serious evaluation of the impact of 
     the first round of changes. On balance, the JOBS Act may have 
     had only modest impact, and the proposals that are being 
     considered today will likely have less. Because my time is 
     limited, I will analyze these proposals in terms of the 
     intensity of my reaction, moving from those that I feel are 
     likely to cause real harm to those that are understandable 
     (but that probably do not require legislation). I will 509 
     begin with a provision (the definition of ``well-known 
     seasoned issuer'') whose impact has not been adequately or 
     candidly explained.
       1. The Definition of ``Well-Known Seasoned Issuer.'' This 
     may be the most radically deregulatory of the seven proposals 
     now before this Subcommittee, but it has not been adequately 
     explained just how far reaching this proposal would be. The 
     proposal derives from the 2011 Report of the SEC Government-
     Business Forum on Small Business Capital Formation, where it 
     was the 19th out of 25 recommendations made by that body. 
     Frankly, it received only lukewarm support. The 
     recommendation there made was to:

       ``Expand the availability of the special public offering 
     provisions currently applicable only to ``well-known seasoned 
     issuers'' (WKSIs) to all public companies, including smaller 
     reporting companies and foreign private issuers. This would 
     permit such companies to, among other things:
       a. File a universal shelf registration statement;
       b. Test the waters;
       c. Pay as you go; and
       d. Use forward incorporation by reference for Form S-1 
     registration statements.'' (Emphasis added)

       Each of these ``benefits'' can be debated. For example, a 
     WKSI is exempt from the ``gun jumping'' and ``quiet period'' 
     restrictions of Section 5(c) of the Securities Act of 1933, 
     and there can be reasonable debate about the wisdom of 
     freeing smaller companies from these rules. Still, the key 
     implication of expanding the definition of ``well-known 
     seasoned issuer'' has not been explained: it would permit the 
     majority of public companies to qualify for ``automatic shelf 
     registration.'' This may not have been the intent, but it is 
     the consequence.
       Under Rule 405, a ``Well-Known Seasoned Issuer'' generally 
     qualifies for ``automatic shelf registration.'' Since 2005, 
     the instant that a ``well-known seasoned issuer'' files a 
     registration statement, the registration statement becomes 
     ``effective'' and the securities can be sold under it--
     without any prior SEC review. As a practical matter, allowing 
     a company to qualify for automatic shelf registration both 
     (1) denies the SEC's staff any opportunity to review and 
     correct the registration statement before sales are made, and 
     (2) makes it much more difficult for the issuer, its 
     investment bankers, and its other agents to conduct a pre-
     offering ``due diligence'' review of the registration 
     statement's contents (because there no longer is a pre-
     offering period between the filing of the registration 
     statement and its effectiveness). Further, the SEC has a 
     substantial staff in its Division of Corporation Finance that 
     conducts a pre-effectiveness review of the registration 
     statement and engages in a dialogue with the issuer. This 
     provision short-circuits that review and largely renders them 
     irrelevant for such issuers.
       At present, a ``well-known seasoned issuer'' (or ``WKSI'' 
     in the parlance) basically must either (i) have a ``public 
     float'' of at least $700 million (that is, the worldwide 
     market value of its common equity, voting and nonvoting, held 
     by non-affiliates must equal or exceed $700 million), or (ii) 
     have issued over the last three years $1 billion in non-
     convertible debt securities. These are high standards. By 
     some estimates, only about a third of the issuers on the NYSE 
     meet this standard.
       Under the proposed legislation, the $700 million standard 
     would be reduced to $250 million. At that point, probably a 
     majority of the issuers on both the NYSE and Nasdaq could 
     become WKSIs--and in most cases could use ``automatic shelf 
     registration.'' Many of these issuers might be followed by 
     only a single securities analyst, and do not necessarily 
     trade in an efficient market. The SEC's staff that reviews 
     registration statements would be unable to focus on these 
     offerings and would be left to concentrate on IPOs and very 
     smaller issuers. This seems a poor allocation of the SEC's 
     resources.
       Since 1933, prior review by the SEC's staff of the 
     registration statement has been one of

[[Page H5190]]

     the bedrock protections of our federal securities laws. Thus, 
     I suggest to you that it is a fairly radical step to deny the 
     SEC's staff any opportunity for a pre-offering review of the 
     securities to be issued by most issuers. Yet, that is what 
     this proposed expansion of the definition of WKSI does. This 
     result may or may have been intended, but it both invites 
     misbehavior (if an issuer knows it will not be subject to 
     prior review) and encourages costly litigation (if errors are 
     later discovered).
       Even if this proposal were cut back so that it only 
     permitted smaller issuers to use ``universal shelf 
     registration,'' I would still have some concerns. When shelf 
     registration was first introduced in 1983, the issuer had to 
     allocate the gross dollar value of its offering to specific 
     types of securities (i.e., debt, equity, warrants, etc.). 
     Then, in 1992, the SEC permitted unallocated shelf 
     registration. In such a ``universal'' shelf registration, the 
     issuer may pre-register debt, equity and other classes of 
     securities in a single shelf registration statement without 
     any allocation of offering amounts among these classes. In 
     509 1992, the SEC lowered the threshold for Form 5-3 and 
     universal shelf registration to $75 million (well below the 
     $250 level here proposed).
       Thus, smaller issues can already make use of universal 
     shelf registration. What then is achieved by expanding the 
     definition of WKSIs (other than entitling the issuer to use 
     ``automatic shelf registration'')? A partial answer is that 
     WKSIs can uniquely register securities for sale for the 
     account of selling shareholders without separately 
     identifying ``the selling security holders or the securities 
     to be sold by such persons'' until the time of the actual 
     sale by such persons. See General Instruction ID(d) to Form 
     5-3. In short, by expanding the definition of WKSI, we 
     facilitate not primary offerings by the issuer, but secondary 
     sales by large shareholders. This does not raise capital for 
     the issuer or create jobs, but essentially encourages a 
     bailout by insiders. Such secondary sales, which do not have 
     to be disclosed in the original registration statement, seem 
     particularly problematic in the case of smaller companies.
       To sum up, this provision is not what it seems. It does not 
     simplify the issuer's access to capital, but it does both (i) 
     strip the SEC of its pre-offering review authority, and (ii) 
     facilitate secondary bailouts by insiders.
       2. HR 2659 (``Accelerated Filer''). This provision would 
     modify the definition of ``accelerated filer'' in SEC Rule 
     12b-2 (17 C.F.R. 240.12b-2), which today makes an issuer an 
     ``accelerated filer'' if it has a ``public float'' of between 
     $75 million and $700 million (that is, the value of its 
     equity shares not held by affiliates). Under the proposed 
     revision, the new test would be moved up to $250 million 
     (instead of $75 million), and in addition the issuer would 
     need to have ``annual revenues of greater than $100,000,000 
     during the most recently completed fiscal year for which 
     audited financial statements are available'' (see Section 2 
     of H.R. 2629). Thus, many issuers today deemed accelerated 
     filers would escape that label under this revised test, 
     including some with very large market capitalizations.
       What is the consequence of this change? First, it will 
     allow many companies to escape Section 404(b) of the 
     Sarbanes-Oxley Act and its requirement of an annual audit of 
     internal controls. The JOBS Act already did this with respect 
     to ``emerging growth companies'' (at least for a five-year 
     ``on ramp''), but this provision would exempt older companies 
     that did not qualify for that exemption. Also, the exemption 
     could continue forever and not just for five years. Second, 
     under the instructions to Form 10-Q, an ``accelerated filer'' 
     must file its Form 10-Q within 40 days after the end of the 
     fiscal quarter, whereas all other issuers must file within 45 
     days after the end of the quarter. This is a further small 
     step away from transparency.
       If the goal is to cut back further on the scope of Section 
     404(b), this might best be done directly without causing any 
     other collateral consequences. Still, some estimate should be 
     made of just how many companies will escape Section 404(b) by 
     this back door. Finally, the JOBS Act had a stronger 
     rationale for its Section 404(b) exemption, (namely, that it 
     permitted a temporary accommodation for young and emerging 
     companies), whereas this bill's exemption covers old 
     companies and potentially forever.
       3. Raising the Disclosure Exemption Under Rule 701(e) from 
     $5 million to $20 million. Currently, Rule 701 exempts from 
     registration sales by non-reporting issuers of their 
     securities to employees, consultants and advisors (and their 
     family members) pursuant to a written compensatory benefit 
     plan or compensatory contract. Effectively, this rule 
     shelters non-reporting companies from the potentially 
     expensive obligation to register stock options and similar 
     equity compensation under the Securities Act of 1933. But 
     under Rule 701(e), some minimal disclosure is required, 
     including financial statements and ``information about the 
     risks associated with investment in the securities.'' This 
     limited obligation to provide such information is not 
     applicable if the issuer sells less than $5 million of its 
     securities under this exemption during any consecutive 12-
     month period. The proposed bill before this Committee 
     would raise this $5 million level to $20 million.
       Because the disclosure obligation under Rule 701 is minimal 
     and does not require the preparation of any formal disclosure 
     document, this proposal to raise the exemption by 400% to $20 
     million seems hard to justify. First, there is no rationale 
     advanced for the $20 million threshold. Second, there is 
     little hardship or burden in giving your financial statements 
     to your own employees. This proposal did not even seem to win 
     substantial support within the small business community (as 
     it has not been regularly cited at the SEC's Government-
     Business Forum on Small Business Capital Formation).
       Further, once the volume of sales under Rule 701 exceeds $5 
     million and begins to approach $20 million, the cost of 
     providing minimal disclosure falls as a percentage of the 
     total transaction. It may seem a nuisance to an issuer to 
     provide disclosure when its Rule 701 sales are minimal, but 
     if the sales fall into the $5 to $20 million range, this is a 
     major (and probably recurring) activity for the issuer.
       4. Expanding the Availability of Form S-3. Today, 
     eligibility for use of Form S-3 (and thus the ability to use 
     shelf-registration) generally requires that an issuer have a 
     ``public float'' of at least $75 million. See General 
     Instruction IB(1) to Form S-3. In addition, other registrants 
     can use Form S-3 if (i) the aggregate market value of 
     securities sold by the registrant during the period of 12 
     calendar months immediately preceding and including the sale 
     does not exceed one-third of its public float (i.e., the 
     aggregate market value of its common equity held by non-
     affiliates--see General Instruction IB(6)(a) to Form S-3), 
     (ii) the issuer is not a ``shell company,'' and (iii) the 
     registrant has at least one class of common equity registered 
     on a national securities exchange (General Instruction 
     IB(6)(c) to Form S-3). In effect, this alternative test 
     allows listed companies with less than a $75 million public 
     float to use Form S-3, but places a ceiling on the size of 
     the offerings that they may do using Form 
     S-3 that is equal to one-third of their public float, Letting 
     a small company with a modest $50 million public float use 
     shelf registration to attempt to sell $150 million in 
     securities invites potential disaster and investor confusion.
       Nonetheless, a bill before this Committee, known as the 
     ``Small Company Freedom to Grow Act of 2014'' would permit 
     this by eliminating most of these limitations. Effectively, 
     it would allow any company, which is not a ``shell company'' 
     (as defined in Rule 405) and that has not been a ``shell 
     company for at least 12 calendar months, to use Form S-3. 
     Under this provision, even microcap companies could thus use 
     shelf registration and offer securities from time to time in 
     any amount, at least if they were reporting companies and 
     were current in their 1934 filings (to thereby satisfy 
     General Instruction IA).
       This would represent a significant change in long-standing 
     SEC policy, and I suggest that Committee consult the SEC to 
     hear its view. Traditionally, shelf registration was limited 
     to seasoned issuers with a sizable market capitalization and 
     an established market following. Under this provision, even 
     companies traded only on the Pink Sheets or the OTC Bulletin 
     Board might use shelf registration and make a sizable 
     offering with no prior notice. As a practical matter, I doubt 
     that the market will accept such offerings or that reputable 
     underwriters will feel comfortable with them, but the door is 
     at least opened (and in a frothy market, anything can happen 
     and has).
       5. Blue Sky Preemption. The above-noted ``Small Company 
     Freedom to Grow Act of 2014'' would also preempt state ``Blue 
     Sky'' laws in the case of ``smaller reporting companies'' and 
     ``emerging growth companies.'' Currently, Section 18 of the 
     Securities Act preempts only ``nationally traded securities'' 
     that are either (i) listed on certain national securities 
     exchanges (under SEC rules that look to their listing 
     standards), or (ii) are issued in certain exempt transactions 
     involving qualified purchasers. This proposal would extend 
     the scope of Section 18's preemption of state blue sky law by 
     an order of magnitude. Potentially, companies traded on the 
     Pink Sheets (or not even traded at all) would be exempted if 
     the issuer was a reporting company.
       This makes little sense at a time when the SEC is resource-
     constrained and cannot Challenge every transaction. The cases 
     most likely to sneak under the SEC's radar screen are 
     precisely those involving local or regional companies that 
     are traded over-the-counter, on the OTC Bulletin Board, or on 
     the Pink Sheets. Unfortunately, these are exactly the low 
     visibility companies that this statute would exempt from the 
     scrutiny of state regulators.
       Perhaps, the sponsors of this bill see state ``Blue Sky'' 
     regulators as difficult, overly suspicious, bureaucratic, or 
     prone to delay. I believe such a characterization is unfair. 
     State regulators are hard-working, have more than enough to 
     do, and typically focus their attention on precisely those 
     smaller companies that the SEC is most likely to overlook. 
     Preempting state law simply because an issuer files reports 
     with the SEC places excessive reliance on the SEC and invites 
     fraud and misconduct.
       6. Form S-1 and Forward Integration. For some time, the 
     SEC's Government-Business Forum on Small Business Capital 
     Formation has called for changes to permit smaller reporting 
     companies that have filed a Form 
     S-1 to incorporate by reference documents filed with the SEC. 
     Effectively, this would make the Form S-1 ``evergreen'' in 
     the sense that it would not become stale. Of the various 
     proposals before this Committee, I believe this one does have 
     real efficiency justifications and could help smaller 
     issuers.

[[Page H5191]]

       Again, I believe the Committee should seek the views of the 
     SEC on this matter, and I do not suggest that Form S-1 should 
     be expanded to become a vehicle for shelf registration (which 
     should instead require that the issuers qualify for the use 
     of Form S-3). But I do see merit in this proposal.

  Mrs. CAROLYN B. MALONEY of New York. Mr. Chair, I share Professor 
Coffee's concerns about this proposal.
  I also oppose title II of this bill, which would create another 
exemption for the securities law for certain microcap offerings of less 
than $500,000.
  Unfortunately, history has proven that there is a good deal of petty 
fraud in microcap offerings. So ensuring that there is proper oversight 
of microcap offerings--ideally, by State securities regulators--is 
important if your goal is to protect retail investors from fraud.
  Finally, title III of the bill would strip away even the most modest 
investor protections that the SEC has proposed for unregistered, 
private securities. It is important to note that we are already seeing 
a trend toward much greater use of unregistered, private securities 
rather than publicly registered securities. In fact, the private 
securities market is now larger than the public securities market. In 
2014, companies raised $2.1 trillion through the private securities 
market compared to only $1.35 trillion through the public securities 
market.
  What this means is that more securities are being sold with fewer 
investor protections. Title III of this bill would take away yet 
another investor protection by allowing companies to sell unregistered, 
private securities without having to file any information with the SEC 
first.
  I think this bill goes in the wrong direction. We should be talking 
about strengthening investor protections, not weakening them.
  I would also like to note that President Obama has issued a veto 
threat on this bill and states that all three titles are dangerous for 
investors. He states that markets function more efficiently when they 
are transparent, well regulated, and trusted by investors and insurers 
alike.
  These bills would reduce transparency, inhibit effective regulatory 
oversight of our capital markets by the SEC, and would undermine not 
only the health and integrity of our markets, but the very capital 
formation process they claim to promote.
  Mr. Chair, I include in the Record this veto.

                   Statement of Administration Policy


 H.R. 2357--Accelerating Access to Capital Act of 2016--Rep. Wagner, R-
                                  MO)

       The Administration strongly opposes H.R. 2357, the 
     Accelerating Access to Capital Act. The Rules Committee Print 
     of H.R. 2357 contains the text of H.R. 2357 as reported 
     (Title I), as well as texts of H.R. 4850, the Micro Offering 
     Safe Harbor Act, as reported (Title II), and H.R. 4852, the 
     Private Placement Improvement Act, as reported (Title III). 
     Markets function most efficiently when they are transparent, 
     well-regulated, and trusted by investors and issuers alike. 
     These bills would reduce transparency and inhibit effective 
     regulatory oversight of our capital markets by the Securities 
     and Exchange Commission (SEC). These bills would undermine 
     not only the health and integrity of our markets, but the 
     very capital formation process they claim to promote.
       H.R. 2357 (Title I) would weaken investor protections by 
     reducing the quality or availability of information needed to 
     make informed investment decisions. By compelling the SEC to 
     amend Form S-3, the bill would: (1) allow microcap companies 
     traded on an exchange to issue an unlimited number of shares 
     using shelf registration within a 12-month period; and (2) 
     permit unlisted microcap companies, including those listed on 
     the ``pink sheets,'' with less than $75 million in common 
     equity to sell up to \1/3\ of the market value of their 
     common equity using shelf registration in a 12-month period. 
     This bill would harm investors by reducing disclosure 
     requirements and infringe on the SEC's ability to 
     appropriately respond to market developments. Such changes 
     would increase the risks posed by accounting fraud, market 
     manipulation, insider trading, and the sale of artificially-
     inflated stock.
       H.R. 4850 (Title II) would similarly undermine investor 
     protections and the integrity of capital formation for small 
     businesses. Specifically, the bill eliminates all existing 
     investor protections for crowdfunding and Regulation A 
     offerings, provided that the securities: (1) are sold to 
     purchasers with a substantive pre-existing relationship with 
     individuals affiliated with the company, including 
     controlling investors; (2) involve 35 or fewer purchasers; 
     (3) do not exceed more than $500,000, annually; and (4) do 
     not involve a person who has violated the securities laws. 
     These criteria do not negate the need for consumer 
     protections embedded in current regulations.
       This legislation would create yet another unnecessary and 
     unwarranted exemption from the Securities Act of 1933 to 
     enable the sale of microcap offerings (those involving sales 
     of securities valued at $500,000 or less in a single year) 
     without appropriate regulatory protections. While the 
     legislation would limit the total number of investors in such 
     offerings, it lacks a requirement that those investors have 
     the financial sophistication to understand potential risks of 
     the offering or the financial means to withstand losses. It 
     requires only that they have a ``preexisting relationship'' 
     with an officer, director, or major shareholder of the 
     issuer, a condition that provides no meaningful protections.
       Finally, H.R. 4852 (Title III) runs counter to SEC efforts 
     to enhance disclosure requirements, limiting the SEC's 
     ability to finalize previously proposed investor protections, 
     and would weaken other key consumer protections and 
     provisions of the Dodd-Frank Wall Street Reform and Consumer 
     Protection Act. Additionally, H.R. 4852 bars the SEC from 
     taking appropriate actions to provide needed oversight of the 
     financial markets, encourages widespread non-compliance with 
     existing SEC filing requirements, and undermines the SEC's 
     informed policymaking.
       If the President were presented with H.R. 2357, his senior 
     advisors would recommend that he veto the bill.

  Mrs. CAROLYN B. MALONEY of New York. Mr. Chair, I would just like to 
close by reminding our colleagues on both sides of the aisle why these 
investor protections were put in place. We still have not recovered 
from the 2008 crisis where literally millions of Americans lost their 
homes, lost their jobs, and, depending on which economist you listen 
to, $15 to $18 trillion of wealth in this country lost and down the 
drain.
  I just came from a hearing of the Joint Economic Committee where 
testimony included a statement that this was the first financial crisis 
in the history of our country that could have been prevented by better 
regulation and oversight of our markets. I do not understand why anyone 
in this body would want to support rolling back investor protections. 
This merely keeps in place protections that have worked well for this 
country and for investors.
  I urge all of my colleagues to vote against this bill.
  I reserve the balance of my time.
  Mr. HENSARLING. Mr. Chair, I yield 3\1/2\ minutes to the gentlewoman 
from Missouri (Mrs. Wagner), the author of H.R. 2357, the Accelerating 
Access to Capital Act.
  Mrs. WAGNER. Mr. Chair, I thank the chairman of the Financial 
Services Committee.
  I am proud to sponsor the Accelerating Access to Capital Act, H.R. 
2357. I would also like to thank and congratulate my colleagues, 
Representative Emmer and Chairman Garrett, for their legislation as 
well.
  Regulatory burden is one of the reasons why we are still in the 
slowest recovery of our lifetime since the financial crisis. Small 
businesses are finding it more and more difficult to find financing in 
order to grow and expand their business.
  Dodd-Frank has made traditional bank lending for small businesses 
more scarce. Smaller companies that wish to go to the capital markets 
are finding compliance and regulatory requirements too extensive and 
far too costly.
  This legislation builds upon other efforts by this committee to 
provide simplified disclosure and reduce burdens for smaller companies 
in order to lower the cost of raising capital.
  Specifically, this would extend to smaller reporting companies the 
ability to utilize Form S-3, a much more simplified registration for 
companies that have already met prior reporting requirements with the 
SEC. Allowing small companies to use this form would provide 
significant benefits with its shorter length, allowing forward 
incorporation by reference and the ability to offer securities off the 
shelf, which are all things that larger companies are currently able to 
enjoy.
  Streamlining disclosure will lower compliance costs associated with 
filing redundant paperwork, which will in turn allow companies to 
direct more resources to growing their business. Fuel Performance 
Solutions, which is a fantastic company based in my hometown of St. 
Louis, has spent the last 10 years working on exciting fuel products 
that could potentially save Americans money at the pump and reduce 
harmful emissions.
  In order to fund this research in breakthrough technology, Fuel 
Performance Solutions eventually decided

[[Page H5192]]

to register with the SEC and go public to raise more capital and expand 
their business.
  The company conducted a study, Mr. Chair, and found that, instead of 
filling out a 100-page registration form which takes about 4 to 6 weeks 
to complete, this legislation would allow them to fill out a 20-page 
form which only takes 2 days to complete. As a result, they would have 
incurred less legal fees, less accounting, and less investment banking 
fees and saved close to $225,000.
  Additionally, under this job growth legislation, they could have 
received SEC approval in days, rather than months, and thereby obtain 
certainty in regard to funding their business.
  I am proud that the greater Metropolitan St. Louis region is the 
fastest growing startup scene in the country. But we must provide 
opportunities for these businesses and many others to grow and drive 
and thrive in the marketplace.
  Extending these cost-saving provisions to smaller companies that 
large companies are currently able to enjoy is absolutely critical and 
can make the difference in their ability to issue an additional 
offering, expand their business, and create more jobs. The Accelerating 
Access to Capital Act will do just that.
  I urge the passage of this legislation.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Chair, I yield 3\1/2\ 
minutes to the gentleman from Maryland (Mr. Sarbanes).
  Mr. SARBANES. Mr. Chair, I thank the gentlewoman for yielding.
  I rise in opposition to H.R. 2357, the Accelerating Access to Capital 
Act.
  Mr. Chair, 7 weeks ago, the Republican majority recessed the House 
for the summer district work period--7 weeks. Seven weeks is a long 
time, time that we in Congress could have spent addressing the many 
pressing issues that are facing the country right now.
  The 7 weeks did, however, provide me and my colleagues an opportunity 
to go back to our districts, meet with our constituents, and learn 
about what their priorities are, what the priorities are that the 
American people have for the remainder of the 114th Congress.
  I, for one, heard from my constituents on a number of things. They 
are concerned about the arrival of Zika in the United States, and they 
want a more comprehensive Federal response to that outbreak.

                              {time}  1445

  They were shocked by the devastation in Flint, Michigan, and worried 
about their own water quality.
  They were bewildered that the gun lobby continues to block sensible 
gun safety reforms in the face of increasingly routine mass shootings 
and senseless gun violence on our streets.
  Incredibly now, Mr. Chairman, we have returned; and what are we doing 
in our first days? What are we doing? What are some of the first things 
that we are bringing up in spite of what the public has said its 
priorities are?
  Yet again, we are voting on a bill that is designed to roll back the 
important oversight of our financial markets and to eliminate critical 
consumer protections that guard against unscrupulous securities sales. 
This bill, H.R. 2357, the Accelerating Access to Capital Act--or, as I 
call it, the ``Wolf of Wall Street Enhancement Act''--would jump-start 
fraud in our capital markets. Each of the bill's three titles would 
reduce transparency, weaken consumer disclosure, and fuel fraud in our 
financial markets.
  I want to ask my colleagues: Who are the people out there who are 
asking for these changes in our securities law? Did anyone hear in a 
town hall that they did? Did anyone hear at those meetings this summer 
about the need to expand shelf registration for unproven companies? Who 
back home is clamoring for unregistered, undisclosed security 
offerings? Who wants to further tie the hands of the SEC's in adopting 
even the most modest disclosure requirements?
  Yet again, Congress' agenda has been warped by the undue influence of 
narrow special interests. Yet again, we are ignoring the real 
priorities of the American people. Mr. Chairman, we have more important 
business than this. I urge my colleagues to vote against this 
legislation.
  Mr. HENSARLING. Mr. Chairman, I yield 1 minute to the gentleman from 
California (Mr. McCarthy), the Republican leader and the leader of our 
Innovation Initiative.
  Mr. McCARTHY. I thank the gentleman for yielding.
  Mr. Chairman, innovation is the key to America's future. With it, 
America can continue to be the economic and cultural leader of the 
world while providing important and good-paying jobs here at home. With 
it, our government can spend more time and money in helping Americans 
who need it and less in supporting a wasteful, ineffective, and 
outdated bureaucracy. I have seen firsthand the power of innovation in 
America, and it is not just in Silicon Valley. Centers of innovation 
are growing across our country and are bringing with them new 
opportunities and second chances.
  I recently visited a company called ZeroFOX in south Baltimore. They 
provide social media security and they gather intelligence on the 
threats that are facing employees, businesses, and other organizations 
online. ZeroFOX is a bright spot in a city, like so many others in 
America, that was hit hard by a recession but that was struggling long 
before then. These communities were centers of industry--they 
manufactured and thousands were employed. Then some companies closed up 
shop; manufacturing declined; and people lost their livelihoods.
  But America is not a story of decline. Even today, you can see 
communities rising again, not by trying to recreate the past, but by 
looking to the future. New centers of innovation from south Baltimore 
to San Antonio and from North Carolina to Louisiana are spreading 
across America and are bringing with them new economic activity, new 
construction, new jobs, and, especially, new hope. That is what our 
country needs. That is what working people across America need.
  The package of bills we have before us today is part of the 
Innovation Initiative--our legislative project to bring innovation into 
government and to allow innovation to thrive in the private sector. 
What this package of bills does is to help innovators gain access to 
capital. You can ask any business owner or dreamer out there. They know 
that ideas and work ethic are fundamental but that it takes capital to 
be able to make those ideas a reality--to make even more success 
stories in communities across our country like in south Baltimore.
  I thank those Members who worked on these bills: Ann Wagner, Tom 
Emmer, Scott Garrett, and, especially, Chairman Jeb Hensarling. We need 
more practical solutions like these to create new opportunities for the 
American people, not in theory, but in their everyday lives.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Chairman, I yield myself 
such time as I may consume.
  I am really underscoring that my colleagues should vote against this 
bill because it rolls back investor protections.
  Why in the world do we want to roll back investor protections?
  We have heard some of my Republican colleagues suggest that, because 
the bill does not alter the securities laws regarding fraud, it has no 
bearing on fraud and will only help small businesses. This is wrong for 
a number of reasons. Let me try to explain this with a real life 
example.
  Robbie Dale Walker was a former police officer who was living with 
his mother in Dripping Springs, Texas. Mr. Walker approached his 
mother's best friend, Dolores ``Pokey'' Conn, and offered to sell her 
an investment in an oil and gas drilling program. Mrs. Conn was a 96-
year-old widow at the time of the solicitation. After gaining her 
trust, Mr. Walker sold Mrs. Conn an investment of $100,000 in an oil 
and gas drilling program. Later, he convinced her to invest another 
$100,000. Mr. Walker convinced two other individuals to invest an 
additional $55,000.
  In this case and in similar instances, State securities regulators 
often get calls asking whether an issuer or a dealer is selling 
legitimate securities. If the securities are not registered and have 
not filed a Form D with the SEC, the State securities regulators can 
warn investors about a potential red flag. In addition, the regulators' 
enforcement divisions can open investigations into the matters.
  If title II of H.R. 2357 is enacted, the Texas regulator in this case 
would not

[[Page H5193]]

be able to quickly provide a red flag to a concerned investor like Mrs. 
Conn because Mr. Walker would not have to provide any disclosures to 
investors or regulators.
  Although I don't doubt that the Texas regulator eventually would have 
caught Mr. Walker, the most likely outcome would have been that he and 
fraudsters like him would have been able to have run their schemes for 
several more years, further defrauding other seniors like Mrs. Conn. 
Today, Mr. Walker is serving a 25-year prison sentence for this fraud, 
and Congress should not be making it easier for the next Mr. Walker to 
defraud another grandmother.
  Again, I urge a ``no'' vote on this bill.
  Mr. Chairman, I reserve the balance of my time.
  Mr. HENSARLING. Mr. Chairman, I yield myself 30 seconds just to say, 
with regard to the gentlewoman's anecdote, if the gentleman engaged in 
fraud, apparently, he went to prison. Fraud is against the law, and 
people who perpetrate it should be in prison. Apparently, they are, and 
nothing in this bill changes that.
  I was also struck by the previous speaker from the Democratic side 
who cited all of these constituent priorities and who didn't once 
mention the plight of middle-income workers, who are falling behind, 
whose paychecks are stagnant, and whose savings have been decimated. 
The National Small Business Association has found that 20 percent of 
small businesses had to reduce the number of employees as a result of 
tight credit. That is why we are working to get access to capital for 
small businesses.

  Mr. Chairman, I yield 3 minutes to the gentleman from New Jersey (Mr. 
Garrett), the chairman of the Capital Markets and Government Sponsored 
Enterprises Subcommittee of the Financial Services Committee, and who 
also happens to be the author of H.R. 4852, the Private Placement 
Improvement Act.
  Mr. GARRETT. I thank the chairman.
  Mr. Chairman, I rise in support of H.R. 2357, the Accelerating Access 
to Capital Act of 2015.
  I also want to thank Mrs. Wagner, Mr. Emmer, and all of my colleagues 
on the Financial Services Committee who have continued to support 
legislation that will allow our economy to grow and to expand 
opportunities for all Americans across this country.
  Mr. Chairman, as I spend time with my constituents in the Fifth 
District, the message I hear from them is largely the same one I have 
been hearing for the last 8 years. People are concerned about jobs. 
They are concerned about their economic security and retirements. 
Perhaps, most importantly, they are concerned about whether their 
kids--their children--are going to have the same kinds of opportunities 
that they have enjoyed.
  You see, there is no more ambiguity remaining about the economic 
legacy of the Obama administration. Last month's news that the economy 
grew at an abysmal 1.1 percent during the second quarter merely 
confirms what we already knew: we are mired in the weakest economic 
recovery since World War II. Some economists now think we are heading 
into another recession. It appears that all of the promises that came 
with the passage of Dodd-Frank, ObamaCare, the $800 billion stimulus 
package, and the thousands of regulations in the last 8 years were just 
that: promises.
  Fortunately, for the last 5 years, the Financial Services Committee 
has been an oasis in a desert of bad ideas. Our committee has been at 
the forefront of putting forth job-creating, bipartisan legislation--
most notably, the JOBS Act of 2012, as well as a number of other 
important measures that were signed into law in 2015.
  Here we have H.R. 2357. It is a compilation of bills, if you will, 
that have passed our committee and would help empower entrepreneurs and 
small businesses, not bureaucrats and Washington insiders.
  First, we have Mrs. Wagner's bill, which would expand the number of 
companies that could take advantage of the short form registration. 
Allowing more companies to use the form would significantly reduce 
paperwork and man-hours. As she has indicated, last year, it would have 
saved 70,000 man-hours and over $84 million in compliance costs. 
Allowing expanded use has been a frequent recommendation of something 
called the SEC's Government-Businesses Forum on Small Business Capital 
Formation; but it is not surprising that the SEC has ignored those 
ideas year, after year, after year.
  H.R. 2357 also includes Mr. Emmer's ideas, under the Securities Act 
of 1933, to allow the so-called micro offerings. What this means in 
layman's terms is that a business would be allowed to stand up before a 
local Chamber of Commerce or Kiwanis Club and solicit an investment 
without running afoul of all of the securities laws. This really is an 
innovative idea, and it requires Congress to step in and facilitate it.
  Finally, you have mine. You have the Private Placement Improvement 
Act, which I authored. This is part of the package, and it would 
prohibit the SEC from implementing onerous, new regulations or 
requirements on companies that raise capital--how?--through private 
channels that they proposed back in 2013. As several experts have 
testified before our committee, the mere existence of these amendments 
by the SEC is preventing more job creation.
  Taken together, finally, Mr. Chairman, all of these bills continue 
the good work of the Financial Services Committee, under our chairman, 
Jeb Hensarling, over the last 5 years, to bring our capital markets 
into the 21st century and create opportunities for American businesses 
and their families.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Chairman, I yield myself 
such time as I may consume.
  I would like to respond to the chairman of the Financial Services 
Committee in that the point of these investor protections is to enable 
regulators to stop the abusive practices and fraud, as was being 
perpetrated on the friend of Mr. Walker's mother. Because they had 
disclosure requirements and he had not disclosed or filed with the SEC, 
they knew it was a fraud securities and were able to intercede and stop 
the fraud and arrest Mr. Walker.
  I feel that these rollbacks are really very dangerous to investors, 
and I cannot understand why anyone would want to make it easier for a 
``Mr. Walker'' to defraud grandmothers in this country.
  Mr. Chairman, I yield such time as she may consume to the gentlewoman 
from California (Ms. Maxine Waters), the distinguished ranking member.

                              {time}  1500

  Ms. MAXINE WATERS of California. Mr. Chairman, I certainly appreciate 
Congresswoman Maloney holding down the fort while I was away today, and 
I appreciate the work that she has put in this committee on these 
issues. I am very pleased to be here with her today.
  Mr. Chairman, I rise today in strong opposition to H.R. 2357, a toxic 
package of bills that would outright encourage fraud in our financial 
markets and put retail investors and small businesses at risk. Instead 
of addressing a host of critical issues facing the American people, 
including helping the people of Baton Rouge, for example, where there 
has been a loss of 160,000 homes, instead of helping to come together 
with this side of the aisle to deal with Zika, instead of helping to 
deal with the problem we have of water up in Flint, or dealing with the 
idea that we need to expand Social Security, here we are.
  Those people in Baton Rouge, who have just suffered all these 
devastating losses following the historic flooding last month, are 
looking to us for help and support. Here we are under the leadership of 
our Republicans prioritizing a bill that would make it easier for 
companies to scam investors by escaping regulatory scrutiny.
  In particular, H.R. 2357 would allow small companies that are not 
listed on a national stock exchange to publicly offer their stock as an 
accelerated filer, without first alerting the Securities and Exchange 
Commission or gaining its approval.
  Currently, this accelerated filer status is reserved for larger 
companies that meet the standards of and are traded on a national stock 
exchange. They also are closely followed by analysts, giving investors 
more insight into their activities. Small companies traded off exchange 
simply don't have the same safeguards in place.
  Providing this type of quick access to our securities markets without 
sufficient oversight and transparency would

[[Page H5194]]

lead to accounting fraud, market manipulation, insider trading, and 
sales of unofficially inflated stock. Anyone who has seen the movie, 
``The Wolf of Wall Street,'' can tell you just how bad this would be 
for our investors and their savings.
  Next, the bill would recreate a private securities offering that 
would be exempt from Federal and State securities laws. The bill would 
carve out a scenario where a private company could sell stock to 
certain investors without providing them or the SEC with any 
information. This stock could then be distributed to the public at 
large without restriction and, again, without any information.
  What is more troubling is that the SEC previously eliminated this 
exact type of offering exemption after concluding that it, in fact, 
facilitated fraud. Specifically, the exemption had been used frequently 
in fraudulent pump-and-dump schemes where these early investors 
aggressively promoted the stock to artificially inflate its price and 
then dump their shares on unsuspecting investors.
  The provision also ignores the fact that the JOBS Act created 
similar, yet responsible, exemptions to facilitate small company 
offerings under the crowdfunding rules in regulation A. As a result, 
this bill would simply create a big loophole for companies to secretly 
conduct public offerings and swindle investors.
  Lastly, the bill would stop the SEC dead in its tracks in advancing 
important investor protections in the trillion-dollar private 
securities market. In particular, it would block the Commission from 
requiring companies to file a short, simple notice of a sale to alert 
the SEC and State regulators to possible fraud.
  It also would prevent the SEC from stopping private equity funds and 
hedge funds from using misleading advertising materials. This would 
essentially allow bad actors to run wild and sell stock to unknowing 
investors about their true intentions.
  Mr. Chairman, it is clear that this bill represents reckless 
shortsightedness and woeful disregard for the history of fraud in the 
securities market by undoing much-needed disclosure requirements and 
investor protections. The administration has threatened to veto this 
bill saying it would ``undermine not only the health and integrity of 
our markets, but the very capital formation process they claim to 
promote.''
  I therefore strongly urge my colleagues to join me, investor 
advocates, and State securities regulators in opposing H.R. 2357.
  I close by raising the questions: Why is it, coming back from break, 
with all of these important issues facing the American public, do we 
move so quickly to protect Wall Street, to protect private equity, to 
protect hedge funds? Who are we looking out for in the Congress of the 
United States of America? Do we have to go back and remind people what 
happened in this country in 2008 when we put so many families and 
communities at risk because we didn't have the oversight, we didn't 
have the transparency, we didn't have the watchful eye of the cop on 
the block really doing the work we needed to protect our investors and 
our citizens? Why are we doing this? Why are we spending this time?
  I am hopeful that my colleagues will join me and vote against this 
bill and send a message to our citizens and our constituencies that we 
are on the side of Main Street, not Wall Street.
  Mr. HENSARLING. Mr. Chairman, I yield myself 30 seconds to answer the 
ranking member's question. We are here because we care about the plight 
of the working poor. We care about the fact that middle-income families 
are falling behind. The other side of the aisle has had 8 years of 
their economics, and we don't have a healthy economy. So we are growing 
the economy through this bill, and that is why it is so vitally 
important.
  I must say, Mr. Chairman, I think it is the first time since coming 
here as a Member of Congress that I have heard a Hollywood film cited 
as an authority. If I recall the film, the guy went to jail, as he well 
should have.
  I yield 3 minutes to the gentleman from Minnesota (Mr. Emmer), the 
author of H.R. 4850, the Micro Offering Safe Harbor Act which would 
give our very small businesses and startups more flexibility to raise 
funds and create jobs for a better economy.
  Mr. EMMER of Minnesota. Mr. Chairman, with real unemployment at 
almost 10 percent, labor force participation at an all-time low, and a 
mere 1 percent economic growth last quarter, it is clear that the 
American economy is just not working.
  Contributing to the problems are the regulatory burdens caused by the 
Dodd-Frank Wall Street Reform Act, which has reduced the number of 
credit unions and community banks in my State of Minnesota by nearly 25 
percent over the past 6 years.
  Because of this, it is increasingly difficult for entrepreneurs to 
find the capital they need to start a new business or expand an 
existing one. In fact, today there are 3 million fewer small business 
loans made annually than prior to the 2008 crisis.
  This is particularly alarming because small business creates roughly 
70 percent of the new jobs. And today's small businesses, as we all 
know, are tomorrow's Fortune 500 companies. Just think of all the great 
businesses in this country that started with a dream in a garage: 
Amazon, Apple, Microsoft, Disney, Harley Davidson, and Minnesota's own 
Medtronic.
  I fear that with our current lack of access to capital, many of them 
would not have gotten off the ground today. Who knows what future 
American success story we may not be able to witness due to these 
issues. In fact, according to the Kauffman Index, a measure that tracks 
business startups in each State, America has dropped from prerecession 
highs when it comes to starting new businesses.
  Our legislation, the Micro Offering Safe Harbor Act, which is 
included in this proposal before us, will fix the access to capital 
problem that is limiting sustainable growth in our communities. It will 
make it easier for entrepreneurs to borrow money from their friends and 
family. Minnesotans will be able to launch their business ideas and 
encourage the creation of jobs, wealth, and opportunity for everyone.
  Specifically, this legislation allows Americans to do a private 
security offering, free from any hoops to jump through by the SEC if 
they meet these three simple criteria: the investor has a substantive 
preexisting relationship with the owner; there are fewer than 35 
investors; and the aggregate amount from all investors is no more than 
$500,000.
  Not only will this help Americans, but the other two bills we are 
considering today are equally important. The Accelerating Access to 
Capital Act will make it easier for certain companies to register 
securities, and the Private Placement Improvement Act will make it less 
complicated to issue securities under regulation D.
  Together, these bills will generate economic prosperity, boost wages, 
and help Americans from all walks of life find good paying and 
rewarding jobs.
  I want to thank Congresswoman Wagner, Congressman Garrett, and 
Chairman Hensarling for their leadership on these issues.
  I urge all of my colleagues to support these proposals.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Chairman, I yield myself 
such time as I may consume.
  Again, I want to underscore that this bill is bad for investors, bad 
for the financial industry, and bad for our country. It moves us in the 
wrong direction. It treats investors terribly. They were treated 
awfully in the financial crisis where millions lost their jobs, 
millions lost their homes, and well over $15 trillion of private money 
evaporated from the economy of this great country.
  Now, investor protections are there to protect investors. I cannot 
understand any valid reason why anyone would want to roll back 
protections, some of which have been on the books since the Great 
Depression.
  Again, I urge a ``no'' vote on it.
  I would like to inform the chairman of the Financial Services 
Committee that I have no further speakers.
  I reserve the balance of my time.
  Mr. HENSARLING. Mr. Chairman, I yield 2\1/2\ minutes to the gentleman 
from Ohio (Mr. Chabot), the chairman of the House Small Business 
Committee who knows how desperately these bills are needed to aid our 
small business growth.
  Mr. CHABOT. Mr. Chairman, I rise today in support of H.R. 2357, the 
Accelerating Access to Capital Act of

[[Page H5195]]

2015. I especially want to voice my strong support for the Micro 
Offering Safe Harbor Act, which is now an integral part of this bill 
and which I was happy to cosponsor when it was first introduced.
  I want to thank Chairman Hensarling and all of the folks on the 
Financial Services Committee for working on behalf of small businesses 
all across the country. I happen to chair the House Small Business 
Committee, as was mentioned.
  Small businesses are hurting across America. There is no question 
about that. Access to capital is a critical issue for America's 28 
million small businesses.
  At the Small Business Committee, we like to acknowledge that every 
small business started with an idea. Those ideas can become jobs. In 
fact, those ideas create about 7 out of every 10 new jobs created in 
this country every year, but access to capital is the key ingredient.
  A lot of our existing laws and far too many Federal regulations make 
access to capital harder for small business. It is harder for them than 
it is for larger companies, larger corporations, and hedge funds. H.R. 
2357 takes an important step in addressing this problem. By clarifying 
the law in a way that allows small businesses to raise capital through 
limited, smaller scale, nonpublic offerings, we are cutting through the 
red tape that has kept far too many new investors just out of reach 
from a lot of our small businesses.

                              {time}  1515

  This legislation also addresses the unfair share of the Federal 
regulatory burden that our small businesses carry. At the Committee on 
Small Business, we hear countless examples of businesses that have to 
decide between meeting regulatory costs and meeting their payroll, and 
that affects many, many families, American families all across the 
country that depend on these small businesses.
  That is what happens when regulators don't consider the impact of 
what they are imposing on businesses of every size. A regulation that 
might be workable for a large company can prove devastating for a small 
business. The Small Business Regulatory Flexibility Improvements Act, 
which the House passed last year, addresses this problem. Today's 
legislation also fully recognizes that the Federal Government's 
regulatory approach cannot be a one-size-fits-all, especially where 
small businesses are concerned, and that is why I am here to support 
it.
  I again want to thank Mr. Hensarling and all the folks on the 
Committee on Financial Services for their hard work in this area. We 
have to do something about helping small businesses all across the 
country. The regulatory burdens that come out of this city, out of 
Washington, D.C., are killing companies all across America. They are 
killing jobs. Thank you very much for working hard on this legislation.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Chairman, I continue to 
reserve the balance of my time.
  Mr. HENSARLING. Mr. Chairman, I am very pleased to yield 3\1/2\ 
minutes to the gentleman from Virginia (Mr. Hurt), vice chairman of our 
Subcommittee on Capital Markets and Government Sponsored Enterprises.
  Mr. HURT of Virginia. Mr. Chairman, I rise today in support of the 
Accelerating Access to Capital Act. Like many of us here, when I first 
ran for Congress, I ran because I believed that Washington had become 
too far removed from the people it is supposed to represent. I was 
concerned then, as I am today, that Washington's policies are 
negatively impacting Fifth District Virginians and the future for our 
children and grandchildren.
  I represent a sweeping district along the Blue Ridge Mountains that 
spreads from Fauquier County south to the North Carolina border. Within 
our district, there are few areas with robust economic activity. In 
fact, most of our district is comprised of rural countryside and Main 
Street courthouse towns. Unfortunately, much of our district has 
suffered devastating unemployment, at times reaching double digits. 
That is why I am pleased with the work that we have done on the 
Committee on Financial Services under the leadership of Chairman 
Hensarling, as it has a real impact on the economic growth of our small 
companies and their access to our capital markets. Our Nation's small 
businesses are our most dynamic job creators, and helping them grow and 
expand ultimately creates jobs.
  This bill is not about Wall Street. This bill is, indeed, about Main 
Street. H.R. 2357 is comprised of three titles, the first being 
authored by Representative Wagner. This measure would amend the 
Securities and Exchange Commission's Form S-3 registration statement to 
expand eligibility to small reporting companies. The cost of securities 
regulation falls heaviest upon smaller companies, and title I 
eliminates unnecessary costs by expanding the use of Form S-3 to 
smaller reporting companies. This would lower compliance costs and 
would not eliminate the SEC's ability to bring enforcement actions. 
Every one of the investor protection provisions in Federal securities 
laws would remain unchanged.
  Title II of the legislation is Mr. Emmer's Micro Offering Safe Harbor 
Act. This measure would amend the Securities Act of 1933 to provide an 
exemption for small, private offerings of securities known as micro 
offerings. For this exemption to apply, each investor has to have a 
preexisting relationship with the owner, there must be 35 or fewer 
purchasers, and the amount cannot exceed $500,000. Again, the SEC still 
has the authority to bring enforcement actions, and every investor 
protection provision in the Federal securities laws remains intact.
  Finally, title III, Mr. Garrett's Private Placement Improvement Act, 
would direct the SEC to revise reg D to eliminate the SEC's harmful 
proposed rule that is hindering small businesses' ability to raise 
cash. As we all recall, the purpose of the bipartisan JOBS Act we 
passed in 2012 was to make it easier for startups to market their 
securities; but when the SEC implemented the new law, the SEC proposed 
a separate rule that would impose new regulatory requirements on small 
companies seeking to use the rule 506 to raise capital. This is not 
consistent with Congress' intent, and now companies seeking to raise 
capital using rule 506 would be required to submit additional form D 
filings on an ongoing basis. The SEC has not acted on this proposed 
rule, which is why it is incumbent upon Congress to prevent it from 
doing so.
  In closing, the SEC has the responsibility to facilitate capital 
formation while remaining true to its duty to protect investors. The 
legislative package before this body today is about ensuring that our 
Nation's small businesses are in the best position possible to do what 
they do best: to innovate, grow their businesses, and create jobs. 
These commonsense proposals will help them do just that.
  I urge my colleagues to support this good bill, and I thank the 
chairman for the time.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Chairman, I yield myself 
such time as I may consume.
  I include in the Record a letter from the North American Securities 
Administrators Association, where they come out strongly against this 
bill. They say that it shifts ``policies in the wrong direction, 
weakening the oversight of our capital markets and placing retail 
investors needlessly at risk.''

         North American Securities Administrators Association, 
           Inc.
                                Washington, DC, September 8, 2016.
     Hon. Paul Ryan,
     Speaker, House of Representatives,
     Washington, DC.
     Hon. Nancy Pelosi,
     Democratic Leader, House of Representatives, Washington, DC.

        Re H.R. 2357--Accelerating Access to Capital Act of 2016

       Dear Speaker Ryan and Leader Pelosi: On behalf of the North 
     American Securities Administrators Association (NASAA), I 
     write to express strong concern regarding H.R. 2357, the 
     Accelerating Access to Capital Act, which may be considered 
     by the House of Representatives this week. State securities 
     regulators have taken steps to help expand opportunities for 
     small businesses to access investment capital including 
     implementation of intrastate crowdfunding regimes and support 
     of the SEC's recent proposal to modernize Rule 147 and 
     increase the offering limits of Rule 504. We are, however, 
     very concerned that the provisions of the H.R. 2357 that are 
     discussed below would shift policies in the wrong direction, 
     weakening oversight of our capital markets and placing retail 
     investors needlessly at risk.

[[Page H5196]]

  



        Section 2: (The Micro-Offering Safe Harbor Act of 2016)

       Section 2 of the Accelerating Access to Capital Act would 
     amend Section 4 of the Securities Act to create a new 
     transactional exemption from registration for certain 
     securities offerings, including offers to retail investors. 
     As presently constituted, the bill would permit the offering 
     of private or unregistered securities to an unlimited number 
     of unaccredited investors that may lack financial 
     sophistication or wherewithal. For reasons that NASAA has 
     already discussed extensively in comments to the Financial 
     Services Committee regarding this legislation, state 
     securities regulators continue to question the practical 
     necessity of this proposed exemption and the nature of the 
     issuers it is intended to serve, We note that there are 
     already several provisions at the state and federal level 
     that small, microcap issuers can rely upon for limited 
     offerings to unaccredited investors, including intrastate 
     crowdfunding and other limited offering exemptions.
       Further, Section 2 would preempt state authority to review 
     securities offerings that are by their nature local, state-
     based offerings. Preemption for this type of localized 
     offering is inconsistent with investor protections afforded 
     by state review, and would handcuff the regulators best 
     positioned to regulate the marketplace for these offerings.


       Section 3: (The Private Placement Improvement Act of 2016)

       Section 3 of H.R. 2357 would prohibit the Securities and 
     Exchange Commission (``SEC'') from adopting proposed rules to 
     implement common-sense reforms for Regulation D, Rule 506 
     offerings.
       Title II of the Jumpstart Our Business Startups (``JOBS'') 
     Act repealed the long-established prohibition on general 
     solicitation and advertising of securities under Rule 506. 
     When the SEC adopted rules to implement Title II, on July 10, 
     2013, it also voted to propose rules that could mitigate the 
     risk to ordinary investors from 506 offerings, including by 
     requiring a pre-filing of ``Form D'' when issuers intend to 
     advertise Rule 506 securities to the general public, and by 
     imposing meaningful penalties on issuers who fail to file a 
     Form D. Section 3 of H.R. 2357 would effectively prohibit the 
     SEC from adopting these rules.
       State securities regulators, pursuant to their antifraud 
     authority, are the primary regulators of offerings under 
     Regulation D, Rule 506, and fraudulent offerings involving 
     Rule 506 offerings are routinely among the most frequent 
     violations reported by state securities regulators. The SEC's 
     proposal to require the timely filing of Form D and establish 
     consequences for issuers who fail to file a Form D when 
     conducting a Regulation D, Rule 506 offering, is a common-
     sense step that is long overdue.
       Form D is a short form that captures basic information 
     about the issuer including the issuer's business address, 
     officers, directors, business type, and minimal information 
     about the securities being offered. The information contained 
     in a Form D is crucial to state securities regulators, who 
     regularly encourage investors to ``investigate before you 
     invest.'' When investors contact their state regulators, 
     particularly after learning about an offering through an 
     advertisement or solicitation, Form D is often the only 
     information available about an issuer when an investor calls. 
     In addition to furnishing information that may allow 
     regulators to look for ``red flags'' indicative of a 
     fraudulent offering, Form D provides regulators with the only 
     direct source of information about the ``private placement'' 
     market generally. The modest burden that Form D may impose on 
     issuers is vastly outweighed by the essential role that it 
     plays in state and federal efforts to understand and police 
     the Rule 506 marketplace.
       State securities regulators oppose Section 3 of H.R. 2357 
     or any action by Congress that would further diminish the 
     ability of regulators to effectively regulate the private 
     placement marketplace, effectively address investor 
     protection concerns associated with these offerings, or 
     gather important data that provides minimal transparency of 
     this otherwise opaque market.
       Thank you for your consideration of NASAA's views. Please 
     do not hesitate to contact me or Michael Canning, NASAA's 
     Director of Policy, if we may be of any additional 
     assistance.

           Sincerely,

                                               Judith M. Shaw,

                                        NASAA President and Marine
                                         Securities Administrator.
  Mrs. CAROLYN B. MALONEY of New York. Again, I urge a ``no'' vote on 
this. I feel it is a very dangerous bill, but I would also like to 
point out to my good friends on the other side of the aisle that keep 
talking about the economy, and I would like to point out that when 
President Obama took office, this country was shedding 700,000 jobs a 
month, and because of his leadership and Democratic policies, we have 
climbed out of that deep red valley of job loss and we are gaining 
jobs. Since March of 2010, this country has gained 14.6 million private 
sector jobs. That is a lot better than losing 700,000 jobs a month.
  When President Obama walked into office, we were at 10 percent 
unemployment. We are now at 4.9 percent unemployment. I can assure you, 
no Democrat will be satisfied until every American who wants a job has 
a good American job, but this is a shift in the right direction of an 
improved economy. We have had well over 74 months of private sector job 
growth and, again, we are climbing--we would like to be doing better, 
but, again, it is a lot better than shedding 700,000 jobs a month.
  One of the ways that we grow an economy is by having safety and 
soundness in our financial institutions, trust in our financial 
institutions, trust that investors will be protected, and that is why I 
feel so strongly that this bill is going in the wrong direction. We 
should be protecting investors, not putting them more at risk.
  Mr. Chairman, I reserve the balance of my time.
  Mr. HENSARLING. Mr. Chairman, I would like to inquire how much time 
is remaining on each side, please.
  The CHAIR. The gentleman from Texas has 6\1/2\ minutes remaining. The 
gentlewoman from New York has 3 minutes remaining.
  Mr. HENSARLING. Mr. Chairman, I yield 2 minutes to the gentleman from 
Arizona (Mr. Schweikert), a distinguished member of our Committee on 
Financial Services.
  Mr. SCHWEIKERT. Mr. Chairman, I was just listening to my friend from 
New York, and I would like just sort of a little consistency. At one 
point we talk about job growth and the desperate need for more job 
growth, but then how many have come behind the microphones today and 
talked about a little technical problem we have. We are shedding--
closing--more small businesses than we are opening, and this has been 
going on for years now.
  So those of us who were involved in the JOBS Act a few years ago--and 
remember, it was a bipartisan discussion saying we desperately need to 
find ways to move capital to the little businesses that are just trying 
to find some cash, some way to grow, some way to expand. And then you 
look at a piece of legislation like this, and let's be brutally honest 
with each other, these are little tiny things that do good, but this 
isn't necessarily a revolution of Dodd-Frank. It is not a revolution of 
the capital markets. These are silly--excuse me, these are simple--
simple--logical, obvious steps.
  Let's take a look at some of the small offerings. If I am reaching 
out to people who know me, know my business, it is limited to, what, 
35? That is somehow a risk to the financial stability of the country 
that I am a small entrepreneur and I may be able to reach out to people 
who know me and my business and ask them to invest in my capital 
formation so I can grow and create those jobs and expand the business 
as I desperately need?
  How about cleaning up what we all agreed to, what, 4 or 5 years ago 
in regards to reg D offerings of how it mechanically was going to work? 
Remember, we sat there over and over for weeks discussing how reg Ds 
were going to work, and then the SEC decides they are going to change 
what we all thought the understanding was. How is that a danger to 
capital markets, fixing where we already thought we were?
  The CHAIR. The time of the gentleman has expired.
  Mr. HENSARLING. Mr. Chairman, I yield the gentleman an additional 30 
seconds.
  Mr. SCHWEIKERT. In some ways it breaks my heart, and I wish we could 
get over this game we play around here where it is a Republican piece 
of legislation, and a couple of my friends on the left feel obligated 
to stand up and oppose it, even though you and I know when we had the 
conversations of building parts of this just 4 years ago, 5 years ago, 
these were the very things we talked about we were agreeing to.
  We desperately need economic expansion if we are going to keep the 
social entitlement promises of this society, and to stand in front of 
even the small attempts to expand the economy--we need to get on the 
same page here.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Chairman, I yield myself 
such time as I may consume to respond to my good friend on the other 
side of the aisle.
  Democrats certainly support expanding and growing capital markets and 
liquidity in the markets. I was one of the lead sponsors on portions of 
the

[[Page H5197]]

JOBS Act, and I supported the JOBS Act, but I do not support rolling 
back protections for investors.
  The protections that are in the law now, that they are attempting to 
roll back--which they will not be able to because the President has 
said he will veto it--these protections are not Dodd-Frank. These have 
nothing to do with Dodd-Frank, although I understand there will be a 
markup totally repealing it next week, so I have been told. But these 
are protections that have been on the books for decades. Title III, in 
particular, concerns a $2.1 trillion market. Now, that is not a small 
deal. $2.1 trillion is a lot of money.
  We just are recovering from massive rollbacks of regulations which 
economists say led to the worst economic downturn in the history of 
this country. Christina Romer testified before this Congress that the 
economic shocks at the time she was the head of the President's Council 
of Economic Advisers were three times deeper and stronger than the 
Great Depression. So I am mystified why anyone would want to roll back 
protections for investors that have worked well for people in this 
country.
  We have the strongest markets in the world. More people invest here, 
come here because they trust our markets. Why in the world do we want 
to undermine that trust? I would say that the best way to stimulate 
investment is to treat investors well, and that means strong investor 
protections.
  I yield such time as she may consume to the gentlewoman from 
California (Ms. Maxine Waters), the distinguished ranking member of the 
Committee on Financial Services.
  Ms. MAXINE WATERS of California. Mr. Chairman, I simply want a little 
colloquy with the gentlewoman from New York about what she just alluded 
to. I think she said something about we will be faced with legislation 
very soon that would roll back all of the work we have done with Dodd-
Frank? Did I hear her say something like that?
  Mrs. CAROLYN B. MALONEY of New York. As the ranking member knows, 
there is a bill before the Committee on Financial Services which would 
completely roll back Dodd-Frank. I was clarifying that these rollbacks 
have nothing to do with Dodd-Frank.

                              {time}  1530

  These are protections that have been on the books since we recovered 
from the Great Depression. But, apparently, that is on the agenda, or 
so I have been told. I am not in charge. The gentleman across is the 
chairman. He knows the schedule, but I have been told that that will be 
before the committee next week.
  Mr. Chair, I yield back the balance of my time.
  Mr. HENSARLING. Mr. Chair, I yield 2 minutes to the gentleman from 
Georgia (Mr. Loudermilk).
  Mr. LOUDERMILK. I thank the gentleman from the great State of Texas 
for yielding.
  Mr. Chair, we are at a time when the American people are forced to 
comply with crushing regulations that stifle business growth and strip 
Americans of their livelihood. At this time, Congress must take steps 
to reduce the red tape in the private sector.
  Earlier this year, the American Action Forum reported that the Dodd-
Frank Act is costing Americans and consumers more now than any time 
since it was enacted. What ObamaCare has done to the cost of health 
care, Dodd-Frank has done to our financial sector.
  Since it was enacted, this law has resulted in 73 million hours of 
paperwork and $36 billion of harmful costs riding on the backs of 
taxpayers. In fact, The Wall Street Journal reports that regulatory 
compliance is now the fastest growing job field in the financial 
services sector.
  To put that in perspective, Dodd-Frank takes 37,000 full-time 
employees just to comply with the law for 1 year. These statistics are 
evidence of Ronald Reagan's warning that ``government is not the 
solution to our problem; government is the problem.''
  H.R. 2357, the Accelerating Access to Capital Act, would expand the 
number of companies that are eligible to use a simplified registration 
form for public offerings, which will allow companies to obtain SEC 
approval in a matter of days instead of months.
  For too long, the SEC has been a barrier to investment capital, which 
is contrary to its mission. This change would allow private companies 
to focus more on growing their businesses and creating jobs and less on 
complying with excessive regulations.
  Mr. Chair, at a time when our Nation is in the slowest economic 
recovery since the Great Depression, we must take bold and decisive 
steps to reduce the excessive reach of government in our lives and 
foster a healthy economy. H.R. 2357 achieves these goals, and I 
encourage my colleagues to support the legislation.
  Mr. HENSARLING. Mr. Chairman, I yield myself the balance of my time.
  Mr. Chairman, the American people continue to suffer in this 
lackluster economy.
  I don't care what happy talk there is from Washington politicians, 
the American people know the economy is not working for them. They have 
anxiety about how they are going to pay their bills. Their paychecks 
are stagnant. Their savings have been decimated. And they look around, 
and where is the economic opportunity? Small business has been 
decimated in America. The job engine of America has been decimated.
  As one of my constituents from Henderson County told me, when 
regulations get out of control, they put many small businesses out of 
business. And that is what we are seeing today, Mr. Chairman. People 
aren't getting ahead.
  We need to unlock capital for our innovators, for our entrepreneurs, 
for our small businesses. We have three modest bills today that are 
doing just that. And yet we are being fought tooth and nail by those 
who want to grow Washington's economy and not the Main Street economy; 
those who believe that Washington bureaucrats always know what is best.
  This House must enact the Accelerating Access to Capital Act. You 
can't have capitalism without capital. Small businesses can't get it, 
innovators can't get it, entrepreneurs can't get it.
  So it is time that we move forward. And there is great news for the 
minority, who must not realize--I wish they would study and see this--
we still have the Securities Act of 1933, the Securities Exchange Act 
of 1934, Investment Company Act of 1940, and it goes on.
  You can't have an effective market without consumer protection. But 
guess what? We also must have capital formation if we are going to have 
a healthy economy for working families that are falling behind after 8 
years of Obamanomics. We must pass H.R. 2357, the Accelerating Access 
to Capital Act.
  Mr. Chair, I yield back the balance of my time.
  Mr. HILL. Mr. Chair, today I rise in support of H.R. 2357, the 
Accelerating-Access to Capital Act, which continues to build on the 
successes of the JOBS Act to stimulate capital formation for small 
businesses to help grow the economy and create good-paying jobs.
  Last week, I visited the Venture Center in Little Rock, Arkansas, 
with my good friend Mrs. Wagner, the lead sponsor of this bill.
  The Venture Center has been working with the public financial 
services IT company, Fidelity Information Systems (FIS) to launch the 
VC FinTech Accelerator, a program that will bring innovators and 
entrepreneurs from across the world to Little Rock.
  I had the pleasure of attending their Demo Day last month, where FIS 
and the Governor of Arkansas announced a two-year partnership with the 
program.
  This exciting program has only been active for a short time, but has 
already proven its ability to assist in our efforts to grow new 
technology jobs across the region.
  These start-ups, however, often face significant and costly hurdles 
to obtain funding in the capital markets that is necessary to continue 
to grow or go public, as the cost of securities regulation 
disproportionally falls on small companies.
  H.R. 2357 helps reduce some of this regulatory burden by making it 
easier for small companies to register with the Securities and Exchange 
Commission and creates a cost-effective way for small companies to 
raise capital through ``micro-offerings,'' so long as the sale meets 
certain criteria.
  It also prevents the SEC's costly and complex proposed Regulation D 
rules from taking effect, which are inconsistent with the JOBS Act and 
Congress' intent to make it easier for small businesses to raise 
capital.
  We need regulation in our capital markets, but we need smart 
regulation that does not unduly burden startups across the nation, who 
are at the forefront of innovation and job creation.
  I thank my colleagues on the Committee--Mrs. Wagner, Mr. Emmer, and 
Capital Markets Subcommittee Chairman Garrett--for

[[Page H5198]]

their work on this thoughtful legislation, and I urge my colleagues to 
support.
  The CHAIR. All time for general debate has expired.
  Pursuant to the rule, the bill shall be considered for amendment 
under the 5-minute rule.
  It shall be in order to consider as an original bill for the purpose 
of amendment under the 5-minute rule an amendment in the nature of a 
substitute consisting of the text of Rules Committee Print 114-62. That 
amendment in the nature of a substitute shall be considered as read.
  The text of the amendment in the nature of a substitute is as 
follows:

                               H.R. 2357

       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 ``Accelerating Access to 
     Capital Act of 2016''.

                TITLE I--ACCELERATING ACCESS TO CAPITAL

     SEC. 1. EXPANDED ELIGIBILITY FOR USE OF FORM S-3.

       Not later than 45 days after the date of the enactment of 
     this Act, the Securities and Exchange Commission shall revise 
     Form S-3--
       (1) so as to permit securities to be registered pursuant to 
     General Instruction I.B.1. of such form provided that 
     either--
       (A) the aggregate market value of the voting and non-voting 
     common equity held by non-affiliates of the registrant is 
     $75,000,000 or more; or
       (B) the registrant has at least one class of common equity 
     securities listed and registered on a national securities 
     exchange; and
       (2) so as to remove the requirement of paragraph (c) from 
     General Instruction I.B.6. of such form.

                  TITLE II--MICRO-OFFERING SAFE HARBOR

     SEC. 2. EXEMPTIONS FOR MICRO-OFFERINGS.

       (a) In General.--Section 4 of the Securities Act of 1933 
     (15 U.S.C. 77d) is amended--
       (1) in subsection (a), by adding at the end the following:
       ``(8) transactions meeting the requirements of subsection 
     (f).''; and
       (2) by adding at the end the following:
       ``(f) Certain Micro-Offerings.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     transactions referred to in subsection (a)(8) are 
     transactions involving the sale of securities by an issuer 
     (including all entities controlled by or under common control 
     with the issuer) that meet all of the following requirements:
       ``(A) Pre-existing relationship.--Each purchaser has a 
     substantive pre-existing relationship with an officer of the 
     issuer, a director of the issuer, or a shareholder holding 10 
     percent or more of the shares of the issuer.
       ``(B) 35 or fewer purchasers.--There are no more than, or 
     the issuer reasonably believes that there are no more than, 
     35 purchasers of securities from the issuer that are sold in 
     reliance on the exemption provided under subsection (a)(8) 
     during the 12-month period preceding such transaction.
       ``(C) Small offering amount.--The aggregate amount of all 
     securities sold by the issuer, including any amount sold in 
     reliance on the exemption provided under subsection (a)(8), 
     during the 12-month period preceding such transaction, does 
     not exceed $500,000.
       ``(2) Disqualification.--
       ``(A) In general.--The exemption provided under subsection 
     (a)(8) shall not be available for a transaction involving a 
     sale of securities if any person described in subparagraph 
     (B) would have triggered disqualification pursuant to section 
     230.506(d) of title 17, Code of Federal Regulations.
       ``(B) Persons described.--The persons described in this 
     subparagraph are the following:
       ``(i) The issuer.
       ``(ii) Any predecessor of the issuer.
       ``(iii) Any affiliated issuer.
       ``(iv) Any director, executive officer, other officer 
     participating in the offering, general partner, or managing 
     member of the issuer.
       ``(v) Any beneficial owner of 20 percent or more of the 
     issuer's outstanding voting equity securities, calculated on 
     the basis of voting power.
       ``(vi) Any promoter connected with the issuer in any 
     capacity at the time of such sale.
       ``(vii) Any investment manager of an issuer that is a 
     pooled investment fund.
       ``(viii) Any person that has been or will be paid (directly 
     or indirectly) remuneration for solicitation of purchasers in 
     connection with such sale of securities.
       ``(ix) Any general partner or managing member of any such 
     investment manager or solicitor.
       ``(x) Any director, executive officer, or other officer 
     participating in the offering of any such investment manager 
     or solicitor or general partner or managing member of such 
     investment manager or solicitor.''.
       (b) Exemption Under State Regulations.--Section 18(b)(4) of 
     the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is amended--
       (1) in subparagraph (F), by striking ``or'' at the end;
       (2) in subparagraph (G), by striking the period and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(H) section 4(a)(8).''.

                TITLE III--PRIVATE PLACEMENT IMPROVEMENT

     SEC. 3. REVISIONS TO SEC REGULATION D.

       Not later than 45 days following the date of the enactment 
     of this Act, the Securities and Exchange Commission shall 
     revise Regulation D (17 C.F.R. 501 et seq.) in accordance 
     with the following:
       (1) The Commission shall revise Form D filing requirements 
     to require an issuer offering or selling securities in 
     reliance on an exemption provided under Rule 506 of 
     Regulation D to file with the Commission a single notice of 
     sales containing the information required by Form D for each 
     new offering of securities no earlier than 15 days after the 
     date of the first sale of securities in the offering. The 
     Commission shall not require such an issuer to file any 
     notice of sales containing the information required by Form D 
     except for the single notice described in the previous 
     sentence.
       (2) The Commission shall make the information contained in 
     each Form D filing available to the securities commission (or 
     any agency or office performing like functions) of each State 
     and territory of the United States and the District of 
     Columbia.
       (3) The Commission shall not condition the availability of 
     any exemption for an issuer under Rule 506 of Regulation D 
     (17 C.F.R. 230.506) on the issuer's or any other person's 
     filing with the Commission of a Form D or any similar report.
       (4) The Commission shall not require issuers to submit 
     written general solicitation materials to the Commission in 
     connection with a Rule 506(c) offering, except when the 
     Commission requests such materials pursuant to the 
     Commission's authority under section 8A or section 20 of the 
     Securities Act of 1933 (15 U.S.C. 77h-1 or 77t) or section 9, 
     10(b), 21A, 21B, or 21C of the Securities Exchange Act of 
     1934 (15 U.S.C. 78i, 78j(b), 78u-1, 78u-2, or 78u-3).
       (5) The Commission shall not extend the requirements 
     contained in Rule 156 to private funds.
       (6) The Commission shall revise Rule 501(a) of Regulation D 
     to provide that a person who is a ``knowledgeable employee'' 
     of a private fund or the fund's investment adviser, as 
     defined in Rule 3c-5(a)(4) (17 C.F.R. 270.3c-5(a)(4)), shall 
     be an accredited investor for purposes of a Rule 506 offering 
     of a private fund with respect to which the person is a 
     knowledgeable employee.

  The CHAIR. No amendment to that amendment in the nature of a 
substitute shall be in order except those printed in part A of House 
Report 114-725. Each such amendment may be offered only in the order 
printed in the report, by a Member designated in the report, shall be 
considered as read, shall be debatable for the time specified in the 
report equally divided and controlled by the proponent and an opponent, 
shall not be subject to amendment, and shall not be subject to a demand 
for division of the question.
  The Chair understands that amendment No. 1 and amendment No. 2 will 
not be offered.
  The question is on the amendment in the nature of a substitute.
  The amendment was agreed to.
  The CHAIR. Under the rule, the Committee rises.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Loudermilk) having assumed the chair, Mr. Duncan of Tennessee, Chair of 
the Committee of the Whole House on the state of the Union, reported 
that that Committee, having had under consideration the bill (H.R. 
2357) to direct the Securities and Exchange Commission to revise Form 
S-3 so as to add listing and registration of a class of common equity 
securities on a national securities exchange as an additional basis for 
satisfying the requirements of General Instruction I.B.1. of such form 
and to remove such listing and registration as a requirement of General 
Instruction I.B.6. of such form, and, pursuant to House Resolution 844, 
he reported the bill back to the House with an amendment adopted in the 
Committee of the Whole.
  The SPEAKER pro tempore. Under the rule, the previous question is 
ordered.
  The question is on the amendment in the nature of a substitute.
  The amendment was agreed to.
  The SPEAKER pro tempore. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


                           Motion to Recommit

  Mr. KILMER. Mr. Speaker, I have a motion to recommit at the desk.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. KILMER. I am opposed.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mr. Kilmer moves to recommit the bill H.R. 2357 to the 
     Committee on Financial Services with instructions to report 
     the same back to the House forthwith with the following 
     amendment:
       Add at the end of title III the following:
       (7) Cybersecurity risk disclosure.--The Commission shall 
     revise Rule 506 of Regulation D to condition the availability 
     of the

[[Page H5199]]

     exemption under such Rule on an issuer's disclosure to the 
     Commission of the issuer's cybersecurity risks. The 
     Commission is authorized to tailor such disclosure 
     requirement based on the size of the issuer making the 
     disclosure.

  The SPEAKER pro tempore. The gentleman from Washington is recognized 
for 5 minutes.
  Mr. KILMER. Mr. Speaker, this is the final amendment to the bill, 
which will not kill the bill or send it back to committee. If adopted, 
the bill will immediately proceed to final passage as amended.
  Mr. Speaker, I rise today to encourage my colleagues to support the 
motion to recommit, which is about protecting the personal information 
of the American people. It would require that those who are soliciting 
investments directly from individuals to develop a plan to ensure their 
personal financial data is protected against cyberattacks.
  Before coming to Congress, I spent a decade working in economic 
development professionally, and before that, I was a business 
consultant advising some of the Nation's leading technology companies. 
I actually agree with my Republican colleagues that we need to help 
small, innovative companies raise additional capital so that they can 
grow, bring their ideas to market, and create jobs. However, we need to 
make sure that these new companies are taking seriously the risk of 
cybersecurity to ensure that those who are putting up capital to fund 
these companies aren't subject to identity theft or other cybercrimes.
  Last month, I met with a group of cyber professionals from my State 
who told me that the threat of cybercrime is growing exponentially. 
According to these experts, every single business that has access to 
confidential personal data should have a plan in place to protect that 
data and to quickly respond in the event of a cyber attack.
  This isn't just anecdotal. We can look at the statistics. In 2005, 
cybercrime cost the average business just $24,000. By 2015, that number 
had jumped to over $1.5 million for the average American business.
  We all want small and emerging companies to succeed. We also need to 
be sure that they are prepared to deal with the growing threat of 
cybercrime so that the personal information of their investors is 
protected.
  We also know that the financial services industry is a particularly 
ripe target for cybercriminals. The Securities and Exchange Commission 
is already taking action on a case that resulted in the private records 
of more than 100,000 individuals being compromised. Commission Chair 
Mary Jo White has called cybersecurity the biggest risk to the 
financial system.
  We also know the impacts of cybercrime can be real. For an 
individual, a stolen identity can be devastating. It can lead to 
financial losses, lost time at work or with family dedicated to the 
stressful and extensive effort of clearing up financial records. These 
impacts are even greater when the victim is a senior citizen, who are 
often targets of cybercrimes.
  We need action for the future growth of our economy and to give 
investors confidence that their personal information will remain 
secure. The motion to recommit would do that. It would require 
companies taking advantage of rules that allow them to solicit 
investments directly from wealthy individuals to disclose their 
cybersecurity risks to the Securities and Exchange Commission. This 
will provide the SEC with a better approach to helping smaller 
companies deal with the threat of cybercrime.
  The MTR is sensitive to the needs of smaller companies by allowing 
them to develop a plan that can be tailored to the size and risk 
profile of the company.
  Mr. Speaker, this is a sensible approach to addressing a real and 
growing threat. It allows small companies to continue to take advantage 
of expedited procedures while protecting investors from identity theft 
and other crimes.
  I encourage my colleagues to adopt the motion to recommit.
  Mr. Speaker, I yield back the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I claim the time in opposition.
  The SPEAKER pro tempore. The gentleman from Texas is recognized for 5 
minutes.
  Mr. HENSARLING. Mr. Speaker, I have some good news for my colleague 
from Washington. The Financial Services Committee has already passed a 
robust cybersecurity bill, and passed it on a strong bipartisan basis: 
46-9. We look forward to working with all of our colleagues in the 
House to forwarding this bill, working with our colleagues on House 
Energy and Commerce Committee and others. It is a serious topic.
  But I would also point out, Mr. Speaker, with respect to this extra 
disclosure, if cybersecurity is material, it already must be disclosed 
under current law. And I would add that, yet again, this is just one 
more burden, the subject matter of the motion to recommit, when we are 
trying to ease burdens on capital formation.
  I would remind all of my colleagues again that a recent report from 
the National Small Business Association released just this week showed 
that 41 percent of small businesses said that the lack of capital is 
hindering their ability to grow their business. If they can't grow 
their business, they can't give raises, they can't expand, they can't 
promote. Twenty percent said they had to reduce--actually lay off 
employees--as a result of tighter credit. That is the whole purpose, 
Mr. Speaker, of why we are passing this bill today. It is to grant 
greater access to capital.
  We have heard from so many small businesses and angel investors 
across the Nation about the need for capital formation for our 
entrepreneurs, for our small businesses, for our innovators. We have 
heard from the cofounder and CEO of NextSeed: ``Obtaining traditional 
financing from banks is still a tall order for many small businesses, 
especially for smaller amounts.''
  Well, we want to respond to that.

                              {time}  1545

  We don't need yet one more hurdle from the motion to recommit to get 
in the way of small businesses' end capital. It is also one more out-
of-pocket cost. We heard from the senior partner at Centerfield 
Capital: ``These out-of-pocket costs and time spent by our 
professionals on SEC registration and compliance detract from our 
mission of empowering small businesses to grow.''
  We want to empower small businesses on Main Street to grow, yet the 
motion to recommit would do just the opposite.
  Nothing could be more obvious than a quote from the gentleman, the 
CEO of Wilde & Company: ``When corporations access capital, they hire 
people.''
  We want people hired. We want people promoted. We want people on good 
career tracks. We want middle-income people to rise. We want the 
working poor to become members of middle-income America, and they can't 
do that unless we access capital.
  The choice again is: Are we going to have another top-down, 
Washington-grown economy, or are we going to build our economy from 
Main Street up?
  House Republicans say it is time to build it from Main Street up. So 
it is time that we reject the motion to recommit and assure that our 
small businesses can access capital so that we can grow this economy, 
grow the family economy, and have a better America.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. KILMER. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair 
will reduce to 5 minutes the minimum time for any electronic vote on 
the question of the passage of the bill.
  The vote was taken by electronic device, and there were--yeas 180, 
nays 233, not voting 18, as follows:

                             [Roll No. 492]

                               YEAS--180

     Adams
     Aguilar
     Ashford
     Bass
     Beatty
     Becerra
     Bera
     Beyer
     Blumenauer
     Bonamici
     Boyle, Brendan F.
     Brady (PA)
     Brownley (CA)
     Bustos

[[Page H5200]]


     Butterfield
     Capps
     Cardenas
     Carney
     Carson (IN)
     Cartwright
     Castor (FL)
     Castro (TX)
     Chu, Judy
     Cicilline
     Clark (MA)
     Clarke (NY)
     Clay
     Cleaver
     Clyburn
     Cohen
     Connolly
     Conyers
     Cooper
     Costa
     Courtney
     Crowley
     Cuellar
     Cummings
     Davis (CA)
     Davis, Danny
     DeFazio
     DeGette
     Delaney
     DeLauro
     DelBene
     DeSaulnier
     Deutch
     Dingell
     Doggett
     Doyle, Michael F.
     Duckworth
     Edwards
     Ellison
     Engel
     Eshoo
     Esty
     Farr
     Foster
     Frankel (FL)
     Fudge
     Gabbard
     Gallego
     Garamendi
     Graham
     Grayson
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hahn
     Hastings
     Heck (WA)
     Higgins
     Himes
     Hinojosa
     Honda
     Hoyer
     Huffman
     Israel
     Jackson Lee
     Jeffries
     Johnson (GA)
     Johnson, E. B.
     Kaptur
     Keating
     Kelly (IL)
     Kennedy
     Kildee
     Kilmer
     Kind
     Kirkpatrick
     Kuster
     Langevin
     Larsen (WA)
     Larson (CT)
     Lawrence
     Lee
     Levin
     Lewis
     Lieu, Ted
     Lipinski
     Loebsack
     Lofgren
     Lowenthal
     Lowey
     Lujan Grisham (NM)
     Lujan, Ben Ray (NM)
     Maloney, Carolyn
     Maloney, Sean
     Matsui
     McCollum
     McDermott
     McGovern
     McNerney
     Meeks
     Meng
     Moore
     Moulton
     Murphy (FL)
     Nadler
     Napolitano
     Neal
     Nolan
     Norcross
     O'Rourke
     Pallone
     Pascrell
     Payne
     Pelosi
     Perlmutter
     Peters
     Peterson
     Pingree
     Pocan
     Polis
     Price (NC)
     Quigley
     Rangel
     Rice (NY)
     Richmond
     Roybal-Allard
     Ruiz
     Ruppersberger
     Rush
     Ryan (OH)
     Sanchez, Linda T.
     Sarbanes
     Schakowsky
     Schiff
     Schrader
     Scott (VA)
     Scott, David
     Serrano
     Sewell (AL)
     Sherman
     Sinema
     Sires
     Slaughter
     Smith (WA)
     Speier
     Takano
     Thompson (CA)
     Thompson (MS)
     Titus
     Tonko
     Torres
     Tsongas
     Van Hollen
     Vargas
     Veasey
     Vela
     Velazquez
     Visclosky
     Walz
     Wasserman Schultz
     Waters, Maxine
     Watson Coleman
     Welch
     Wilson (FL)
     Yarmuth

                               NAYS--233

     Abraham
     Aderholt
     Allen
     Amash
     Amodei
     Babin
     Barletta
     Barr
     Barton
     Benishek
     Bilirakis
     Bishop (MI)
     Bishop (UT)
     Black
     Blackburn
     Blum
     Bost
     Boustany
     Brady (TX)
     Brat
     Bridenstine
     Brooks (AL)
     Brooks (IN)
     Buchanan
     Buck
     Bucshon
     Burgess
     Byrne
     Calvert
     Carter (GA)
     Carter (TX)
     Chabot
     Chaffetz
     Clawson (FL)
     Coffman
     Cole
     Collins (GA)
     Collins (NY)
     Comstock
     Conaway
     Cook
     Costello (PA)
     Cramer
     Crawford
     Crenshaw
     Culberson
     Curbelo (FL)
     Davidson
     Davis, Rodney
     Denham
     Dent
     DeSantis
     Diaz-Balart
     Dold
     Donovan
     Duffy
     Duncan (SC)
     Duncan (TN)
     Ellmers (NC)
     Emmer (MN)
     Farenthold
     Fincher
     Fitzpatrick
     Fleischmann
     Fleming
     Flores
     Forbes
     Fortenberry
     Foxx
     Franks (AZ)
     Frelinghuysen
     Garrett
     Gibbs
     Gibson
     Gohmert
     Goodlatte
     Gosar
     Gowdy
     Granger
     Graves (GA)
     Graves (LA)
     Graves (MO)
     Griffith
     Grothman
     Guthrie
     Hanna
     Hardy
     Harper
     Harris
     Hartzler
     Heck (NV)
     Hensarling
     Herrera Beutler
     Hice, Jody B.
     Hill
     Holding
     Hudson
     Huelskamp
     Huizenga (MI)
     Hultgren
     Hunter
     Hurd (TX)
     Hurt (VA)
     Issa
     Jenkins (KS)
     Jenkins (WV)
     Johnson (OH)
     Jolly
     Jones
     Jordan
     Joyce
     Kelly (MS)
     Kelly (PA)
     King (IA)
     King (NY)
     Kinzinger (IL)
     Kline
     Knight
     Labrador
     LaHood
     LaMalfa
     Lamborn
     Lance
     Latta
     LoBiondo
     Long
     Loudermilk
     Love
     Lucas
     Luetkemeyer
     Lummis
     MacArthur
     Marchant
     Marino
     Massie
     McCarthy
     McCaul
     McClintock
     McHenry
     McKinley
     McMorris Rodgers
     McSally
     Meadows
     Meehan
     Messer
     Mica
     Miller (FL)
     Miller (MI)
     Moolenaar
     Mooney (WV)
     Mullin
     Mulvaney
     Murphy (PA)
     Neugebauer
     Newhouse
     Noem
     Nunes
     Olson
     Palmer
     Paulsen
     Pearce
     Perry
     Pittenger
     Pitts
     Poe (TX)
     Poliquin
     Pompeo
     Posey
     Price, Tom
     Ratcliffe
     Reed
     Renacci
     Ribble
     Rice (SC)
     Rigell
     Roby
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rohrabacher
     Rokita
     Ros-Lehtinen
     Roskam
     Rothfus
     Rouzer
     Royce
     Russell
     Salmon
     Sanford
     Scalise
     Schweikert
     Scott, Austin
     Sensenbrenner
     Sessions
     Shimkus
     Shuster
     Simpson
     Smith (MO)
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Stefanik
     Stewart
     Stutzman
     Thompson (PA)
     Thornberry
     Tiberi
     Tipton
     Trott
     Turner
     Upton
     Valadao
     Wagner
     Walberg
     Walden
     Walker
     Walorski
     Weber (TX)
     Webster (FL)
     Wenstrup
     Westerman
     Williams
     Wilson (SC)
     Wittman
     Womack
     Woodall
     Yoder
     Yoho
     Young (AK)
     Young (IA)
     Young (IN)
     Zeldin
     Zinke

                             NOT VOTING--18

     Bishop (GA)
     Brown (FL)
     Capuano
     DesJarlais
     Guinta
     Johnson, Sam
     Katko
     Lynch
     Nugent
     Palazzo
     Reichert
     Rooney (FL)
     Ross
     Sanchez, Loretta
     Stivers
     Swalwell (CA)
     Walters, Mimi
     Westmoreland

                              {time}  1608

  Messrs. DENHAM, ZINKE, Mrs. BLACK, Messrs. ROSKAM, AUSTIN SCOTT of 
Georgia, WEBSTER of Florida, NEWHOUSE, Mrs. LOVE, and Mr. POLIQUIN 
changed their vote from ``yea'' to ``nay.''
  Ms. JACKSON LEE changed her vote from ``nay'' to ``yea.''
  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I demand a recorded 
vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 236, 
noes 178, not voting 17, as follows:

                             [Roll No. 493]

                               AYES--236

     Abraham
     Aderholt
     Allen
     Amash
     Amodei
     Babin
     Barletta
     Barr
     Barton
     Benishek
     Bilirakis
     Bishop (MI)
     Bishop (UT)
     Black
     Blackburn
     Blum
     Bost
     Boustany
     Brady (TX)
     Brat
     Bridenstine
     Brooks (AL)
     Brooks (IN)
     Buchanan
     Buck
     Bucshon
     Burgess
     Byrne
     Calvert
     Carter (GA)
     Carter (TX)
     Chabot
     Chaffetz
     Clawson (FL)
     Coffman
     Cole
     Collins (GA)
     Collins (NY)
     Comstock
     Conaway
     Cook
     Costello (PA)
     Cramer
     Crawford
     Crenshaw
     Cuellar
     Culberson
     Curbelo (FL)
     Davidson
     Davis, Rodney
     Denham
     Dent
     DeSantis
     Diaz-Balart
     Dold
     Donovan
     Duffy
     Duncan (SC)
     Duncan (TN)
     Ellmers (NC)
     Emmer (MN)
     Farenthold
     Fincher
     Fitzpatrick
     Fleischmann
     Fleming
     Flores
     Forbes
     Fortenberry
     Foxx
     Franks (AZ)
     Frelinghuysen
     Garrett
     Gibbs
     Gibson
     Gohmert
     Goodlatte
     Gosar
     Gowdy
     Granger
     Graves (GA)
     Graves (LA)
     Graves (MO)
     Griffith
     Grothman
     Guthrie
     Hanna
     Hardy
     Harper
     Harris
     Hartzler
     Heck (NV)
     Hensarling
     Herrera Beutler
     Hice, Jody B.
     Hill
     Holding
     Hudson
     Huelskamp
     Huizenga (MI)
     Hultgren
     Hunter
     Hurd (TX)
     Hurt (VA)
     Issa
     Jenkins (KS)
     Jenkins (WV)
     Johnson (OH)
     Jolly
     Jordan
     Joyce
     Katko
     Kelly (MS)
     Kelly (PA)
     King (IA)
     King (NY)
     Kinzinger (IL)
     Kline
     Knight
     Labrador
     LaHood
     LaMalfa
     Lamborn
     Lance
     Latta
     LoBiondo
     Long
     Loudermilk
     Love
     Lucas
     Luetkemeyer
     Lummis
     MacArthur
     Marchant
     Marino
     Massie
     McCarthy
     McCaul
     McClintock
     McHenry
     McKinley
     McMorris Rodgers
     McSally
     Meadows
     Meehan
     Messer
     Mica
     Miller (FL)
     Miller (MI)
     Moolenaar
     Mooney (WV)
     Mullin
     Mulvaney
     Murphy (PA)
     Neugebauer
     Newhouse
     Noem
     Nunes
     Olson
     Palmer
     Paulsen
     Pearce
     Perry
     Peterson
     Pittenger
     Pitts
     Poe (TX)
     Poliquin
     Pompeo
     Posey
     Price, Tom
     Ratcliffe
     Reed
     Renacci
     Ribble
     Rice (SC)
     Rigell
     Roby
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rohrabacher
     Rokita
     Ros-Lehtinen
     Roskam
     Rothfus
     Rouzer
     Royce
     Russell
     Salmon
     Sanford
     Scalise
     Schweikert
     Scott, Austin
     Sensenbrenner
     Sessions
     Shimkus
     Shuster
     Simpson
     Smith (MO)
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Stefanik
     Stewart
     Stivers
     Stutzman
     Thompson (PA)
     Thornberry
     Tiberi
     Tipton
     Trott
     Turner
     Upton
     Valadao
     Wagner
     Walberg
     Walden
     Walker
     Walorski
     Weber (TX)
     Webster (FL)
     Wenstrup
     Westerman
     Williams
     Wilson (SC)
     Wittman
     Womack
     Woodall
     Yoder
     Yoho
     Young (AK)
     Young (IA)
     Young (IN)
     Zeldin
     Zinke

                               NOES--178

     Adams
     Aguilar
     Bass
     Beatty
     Becerra
     Bera
     Beyer
     Blumenauer
     Bonamici
     Boyle, Brendan F.
     Brady (PA)
     Brownley (CA)
     Bustos
     Butterfield
     Capps
     Capuano
     Cardenas
     Carney
     Carson (IN)
     Cartwright
     Castor (FL)
     Castro (TX)
     Chu, Judy
     Cicilline
     Clark (MA)
     Clarke (NY)
     Clay
     Cleaver
     Clyburn
     Cohen
     Connolly
     Conyers
     Cooper
     Costa
     Courtney
     Crowley
     Cummings
     Davis (CA)
     Davis, Danny
     DeFazio
     DeGette
     Delaney
     DeLauro
     DelBene
     DeSaulnier
     Deutch
     Dingell
     Doggett
     Doyle, Michael F.
     Duckworth
     Edwards
     Ellison
     Engel
     Eshoo
     Esty
     Farr
     Foster
     Frankel (FL)
     Fudge
     Gabbard
     Gallego
     Garamendi
     Graham
     Grayson
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hahn
     Hastings
     Heck (WA)
     Himes
     Hinojosa
     Honda
     Hoyer
     Huffman
     Israel
     Jackson Lee
     Jeffries
     Johnson (GA)
     Johnson, E. B.
     Jones
     Kaptur
     Keating
     Kelly (IL)

[[Page H5201]]


     Kennedy
     Kildee
     Kilmer
     Kind
     Kirkpatrick
     Kuster
     Langevin
     Larsen (WA)
     Larson (CT)
     Lawrence
     Lee
     Levin
     Lewis
     Lieu, Ted
     Lipinski
     Loebsack
     Lofgren
     Lowenthal
     Lowey
     Lujan Grisham (NM)
     Lujan, Ben Ray (NM)
     Maloney, Carolyn
     Maloney, Sean
     Matsui
     McCollum
     McDermott
     McGovern
     McNerney
     Meeks
     Meng
     Moore
     Moulton
     Murphy (FL)
     Nadler
     Napolitano
     Neal
     Nolan
     Norcross
     O'Rourke
     Pallone
     Pascrell
     Payne
     Pelosi
     Perlmutter
     Peters
     Pingree
     Pocan
     Polis
     Price (NC)
     Quigley
     Rangel
     Rice (NY)
     Richmond
     Roybal-Allard
     Ruiz
     Ruppersberger
     Rush
     Ryan (OH)
     Sanchez, Linda T.
     Sarbanes
     Schakowsky
     Schiff
     Schrader
     Scott (VA)
     Scott, David
     Serrano
     Sewell (AL)
     Sherman
     Sinema
     Sires
     Slaughter
     Smith (WA)
     Speier
     Takano
     Thompson (CA)
     Thompson (MS)
     Titus
     Tonko
     Torres
     Tsongas
     Van Hollen
     Vargas
     Veasey
     Vela
     Velazquez
     Visclosky
     Walz
     Wasserman Schultz
     Waters, Maxine
     Watson Coleman
     Welch
     Wilson (FL)
     Yarmuth

                             NOT VOTING--17

     Ashford
     Bishop (GA)
     Brown (FL)
     DesJarlais
     Guinta
     Higgins
     Johnson, Sam
     Lynch
     Nugent
     Palazzo
     Reichert
     Rooney (FL)
     Ross
     Sanchez, Loretta
     Swalwell (CA)
     Walters, Mimi
     Westmoreland


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (during the vote). There are 2 minutes 
remaining.

                              {time}  1616

  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________