[Congressional Record Volume 162, Number 147 (Wednesday, September 28, 2016)]
[Senate]
[Page S6238]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DAINES:
  S. 3453. A bill to amend provisions in the securities laws relating 
to regulation crowdfunding to raise the dollar amount limit and to 
clarify certain requirements and exclusions for funding portals 
established by such Act; to the Committee on Banking, Housing, and 
Urban Affairs.
  Mr. DAINES. Mr. President, entrepreneurship is a bedrock of Montana, 
a relationship well understicod by the Small Business Administration, 
SBA. In fact, the SBA recognizes over 115,000 small businesses in the 
state, making up 97.4 percent of all businesses. These organizations 
employ nearly 236,000 Montanans, or 67.4 percent of the state 
workforce.
  While there are many harmful regulations coming out of Washington 
these days, the Securities and Exchange Commission, SEC, issued a rule 
last October to give entrepreneurs an important tool in their belt to 
get their/dreams up and running. This rule was the crowdfunding rule, 
which allows entrepreneurs to raise up to $1 million annually without 
having to incur the costs of expensive SEC registration.
  With this rule, entrepreneurs can now raise capital to grow their 
business and create jobs without incurring expenses ordinarily reserved 
for established companies able to become publicly traded. In fact, 
Treasure State Internet & Telegraph is one startup in my home town of 
Bozeman, Montana that has been able to use this important new rule.
  I am pleased today to support Montana's entrepreneurs by introducing 
the Crowdfunding Enhancement Act. This bill will make it easier for 
startups using crowdfunding to grow by creating a ``longer runway'' for 
costly filings. In this way, startups won't be penalized with costly 
paperwork by growing too fast growth. This bill also makes it easier to 
attract more capital once it reaches the current crowdfunding limits. 
With passage, this bill is a win for Montana and all our entrepreneurs.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3453

       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 ``Crowdfunding Enhancement 
     Act''.

     SEC. 2. CROWDFUNDING VEHICLES.

       (a) Amendments to the Securities Act of 1933.--The 
     Securities Act of 1933 (15 U.S.C. 77a et seq.) is amended--
       (1) in section 4A(f)(3), by inserting ``by any of 
     paragraphs (1) through (14) of'' before ``section 3(c)''; and
       (2) in section 4(a)(6)(B), by inserting after ``any 
     investor'' the following: ``, other than a crowdfunding 
     vehicle (as defined in section 2(a) of the Investment Company 
     Act of 1940),''.
       (b) Amendments to the Investment Company Act of 1940.--The 
     Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) is 
     amended--
       (1) in section 2(a), by adding at the end the following:
       ``(55) The term `crowdfunding vehicle' means a company--
       ``(A) whose purpose (as set forth in its organizational 
     documents) is limited to acquiring, holding, and disposing 
     securities issued by a single company in one or more 
     transactions and made pursuant to section 4(a)(6) of the 
     Securities Act of 1933;
       ``(B) which issues only one class of securities;
       ``(C) which receives no compensation in connection with 
     such acquisition, holding, or disposition of securities;
       ``(D) no associated person of which receives any 
     compensation in connection with such acquisition, holding or 
     disposition of securities unless such person is acting as or 
     on behalf of an investment adviser registered under the 
     Investment Advisers Act of 1940 or registered as an 
     investment adviser in the State in which the investment 
     adviser maintains its principal office and place of business;
       ``(E) the securities of which have been issued in a 
     transaction made pursuant to section 4(a)(6) of the 
     Securities Act of 1933, where both the crowdfunding vehicle 
     and the company whose securities it holds are co-issuers;
       ``(F) which is current in its ongoing disclosure 
     obligations under Rule 202 of Regulation Crowdfunding (17 CFR 
     227.202);
       ``(G) the company whose securities it holds is current in 
     its ongoing disclosure obligations under Rule 202 of 
     Regulation Crowdfunding (17 CFR 227.202); and
       ``(H) is advised by an investment adviser registered under 
     the Investment Advisers Act of 1940 or registered as an 
     investment adviser in the State in which the investment 
     adviser maintains its principal office and place of 
     business.''; and
       (2) in section 3(c), by adding at the end the following:
       ``(15) Any crowdfunding vehicle.''.

     SEC. 3. CROWDFUNDING EXEMPTION FROM REGISTRATION.

       Section 12(g)(6) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78l(g)(6)) is amended--
       (1) by striking ``The Commission'' and inserting the 
     following:
       ``(A) In general.--The Commission'';
       (2) by striking ``section 4(6)'' and inserting ``section 
     4(a)(6)''; and
       (3) by adding at the end the following:
       ``(B) Treatment of securities issued by certain issuers.--
     An exemption under subparagraph (A) shall be unconditional 
     for securities offered by an issuer that had a public float 
     of less than $75,000,000 as of the last business day of the 
     issuer's most recently completed semiannual period, computed 
     by multiplying the aggregate worldwide number of shares of 
     the issuer's common equity securities held by non-affiliates 
     by the price at which such securities were last sold (or the 
     average bid and asked prices of such securities) in the 
     principal market for such securities or, in the event the 
     result of such public float calculation is zero, had annual 
     revenues of less than $50,000,000 as of the issuer's most 
     recently completed fiscal year.''.
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