[Congressional Record Volume 162, Number 174 (Monday, December 5, 2016)]
[House]
[Pages H7152-H7156]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CREATING FINANCIAL PROSPERITY FOR BUSINESSES AND INVESTORS ACT
Mr. GARRETT. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 6427) to improve the operation of United States capital
markets, and for other purposes.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 6427
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Creating
Financial Prosperity for Businesses and Investors Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I--SMALL BUSINESS CAPITAL FORMATION ENHANCEMENT
Sec. 101. Annual review of government-business forum on capital
formation.
TITLE II--SEC SMALL BUSINESS ADVOCATE
Sec. 201. Establishment of Office of the Advocate for Small Business
Capital Formation and Small Business Capital Formation
Advisory Committee.
TITLE III--SUPPORTING AMERICA'S INNOVATORS
Sec. 301. Investor limitation for qualifying venture capital funds.
TITLE IV--FIX CROWDFUNDING
Sec. 401. Crowdfunding vehicles.
Sec. 402. Crowdfunding exemption from registration.
TITLE V--FAIR INVESTMENT OPPORTUNITIES FOR PROFESSIONAL EXPERTS
Sec. 501. Definition of accredited investor.
TITLE VI--U.S. TERRITORIES INVESTOR PROTECTION
Sec. 601. Termination of exemption.
TITLE I--SMALL BUSINESS CAPITAL FORMATION ENHANCEMENT
SEC. 101. ANNUAL REVIEW OF GOVERNMENT-BUSINESS FORUM ON
CAPITAL FORMATION.
Section 503 of the Small Business Investment Incentive Act
of 1980 (15 U.S.C. 80c-1) is amended by adding at the end the
following:
``(e) The Commission shall--
``(1) review the findings and recommendations of the forum;
and
``(2) each time the forum submits a finding or
recommendation to the Commission, promptly issue a public
statement--
``(A) assessing the finding or recommendation of the forum;
and
``(B) disclosing the action, if any, the Commission intends
to take with respect to the finding or recommendation.''.
TITLE II--SEC SMALL BUSINESS ADVOCATE
SEC. 201. ESTABLISHMENT OF OFFICE OF THE ADVOCATE FOR SMALL
BUSINESS CAPITAL FORMATION AND SMALL BUSINESS
CAPITAL FORMATION ADVISORY COMMITTEE.
(a) Office of the Advocate for Small Business Capital
Formation.--Section 4 of the Securities Exchange Act of 1934
(15 U.S.C. 78d) is amended by adding at the end the
following:
``(j) Office of the Advocate for Small Business Capital
Formation.--
``(1) Office established.--There is established within the
Commission the Office of the Advocate for Small Business
Capital Formation (hereafter in this subsection referred to
as the `Office').
``(2) Advocate for small business capital formation.--
``(A) In general.--The head of the Office shall be the
Advocate for Small Business Capital Formation, who shall--
``(i) report directly to the Commission; and
``(ii) be appointed by the Commission, from among
individuals having experience in advocating for the interests
of small businesses and encouraging small business capital
formation.
``(B) Compensation.--The annual rate of pay for the
Advocate for Small Business Capital Formation shall be equal
to the highest rate of annual pay for other senior executives
who report directly to the Commission.
``(C) No current employee of the commission.--An individual
may not be appointed as the Advocate for Small Business
Capital Formation if the individual is currently employed by
the Commission.
``(3) Staff of office.--The Advocate for Small Business
Capital Formation, after consultation with the Commission,
may retain or employ independent counsel, research staff, and
service staff, as the Advocate for Small Business Capital
Formation determines to be necessary to carry out the
functions of the Office.
``(4) Functions of the advocate for small business capital
formation.--The Advocate for Small Business Capital Formation
shall--
``(A) assist small businesses and small business investors
in resolving significant problems such businesses and
investors may have with the Commission or with self-
regulatory organizations;
``(B) identify areas in which small businesses and small
business investors would benefit from changes in the
regulations of the Commission or the rules of self-regulatory
organizations;
``(C) identify problems that small businesses have with
securing access to capital, including any unique challenges
to minority-owned and women-owned small businesses;
``(D) analyze the potential impact on small businesses and
small business investors of--
``(i) proposed regulations of the Commission that are
likely to have a significant economic impact on small
businesses and small business capital formation; and
``(ii) proposed rules that are likely to have a significant
economic impact on small businesses and small business
capital formation of self-regulatory organizations registered
under this title;
``(E) conduct outreach to small businesses and small
business investors, including through regional roundtables,
in order to solicit views on relevant capital formation
issues;
``(F) to the extent practicable, propose to the Commission
changes in the regulations or orders of the Commission and to
Congress any legislative, administrative, or personnel
changes that may be appropriate to mitigate problems
identified under this paragraph and to promote the interests
of small businesses and small business investors;
``(G) consult with the Investor Advocate on proposed
recommendations made under subparagraph (F); and
``(H) advise the Investor Advocate on issues related to
small businesses and small business investors.
``(5) Access to documents.--The Commission shall ensure
that the Advocate for Small Business Capital Formation has
full access to the documents and information of the
Commission and any self-regulatory organization, as necessary
to carry out the functions of the Office.
``(6) Annual report on activities.--
``(A) In general.--Not later than December 31 of each year
after 2016, the Advocate for Small Business Capital Formation
shall submit to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives a report on the activities of
the Advocate for Small Business Capital Formation during the
immediately preceding fiscal year.
``(B) Contents.--Each report required under subparagraph
(A) shall include--
``(i) appropriate statistical information and full and
substantive analysis;
``(ii) information on steps that the Advocate for Small
Business Capital Formation has taken during the reporting
period to improve small business services and the
responsiveness of the Commission and self-regulatory
organizations to small business and small business investor
concerns;
``(iii) a summary of the most serious issues encountered by
small businesses and small business investors, including any
unique issues encountered by minority-owned and women-owned
small businesses and their investors, during the reporting
period;
``(iv) an inventory of the items summarized under clause
(iii) (including items summarized under such clause for any
prior reporting period on which no action has been taken or
that have not been resolved to the satisfaction of the
Advocate for Small Business Capital Formation as of the
beginning of the reporting period covered by the report) that
includes--
``(I) identification of any action taken by the Commission
or the self-regulatory organization and the result of such
action;
``(II) the length of time that each item has remained on
such inventory; and
``(III) for items on which no action has been taken, the
reasons for inaction, and an identification of any official
who is responsible for such action;
``(v) recommendations for such changes to the regulations,
guidance and orders of the Commission and such legislative
actions as may be appropriate to resolve problems with the
Commission and self-regulatory organizations encountered by
small businesses and small business investors and to
encourage small business capital formation; and
``(vi) any other information, as determined appropriate by
the Advocate for Small Business Capital Formation.
``(C) Confidentiality.--No report required by subparagraph
(A) may contain confidential information.
``(D) Independence.--Each report required under
subparagraph (A) shall be provided directly to the committees
of Congress listed in such subparagraph without any prior
review or comment from the Commission, any commissioner, any
other officer or employee of the Commission, or the Office of
Management and Budget.
``(7) Regulations.--The Commission shall establish
procedures requiring a formal response to all recommendations
submitted to the Commission by the Advocate for Small
[[Page H7153]]
Business Capital Formation, not later than 3 months after the
date of such submission.
``(8) Government-business forum on small business capital
formation.--The Advocate for Small Business Capital Formation
shall be responsible for planning, organizing, and executing
the annual Government-Business Forum on Small Business
Capital Formation described in section 503 of the Small
Business Investment Incentive Act of 1980 (15 U.S.C. 80c-1).
``(9) Rule of construction.--Nothing in this subsection may
be construed as replacing or reducing the responsibilities of
the Investor Advocate with respect to small business
investors.''.
(b) Small Business Capital Formation Advisory Committee.--
Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.) is amended by adding at the end the following:
``SEC. 40. SMALL BUSINESS CAPITAL FORMATION ADVISORY
COMMITTEE.
``(a) Establishment and Purpose.--
``(1) Establishment.--There is established within the
Commission the Small Business Capital Formation Advisory
Committee (hereafter in this section referred to as the
`Committee').
``(2) Functions.--
``(A) In general.--The Committee shall provide the
Commission with advice on the Commission's rules,
regulations, and policies with regard to the Commission's
mission of protecting investors, maintaining fair, orderly,
and efficient markets, and facilitating capital formation, as
such rules, regulations, and policies relate to--
``(i) capital raising by emerging, privately held small
businesses (`emerging companies') and publicly traded
companies with less than $250,000,000 in public market
capitalization (`smaller public companies') through
securities offerings, including private and limited offerings
and initial and other public offerings;
``(ii) trading in the securities of emerging companies and
smaller public companies; and
``(iii) public reporting and corporate governance
requirements of emerging companies and smaller public
companies.
``(B) Limitation.--The Committee shall not provide any
advice with respect to any policies, practices, actions, or
decisions concerning the Commission's enforcement program.
``(b) Membership.--
``(1) In general.--The members of the Committee shall be--
``(A) the Advocate for Small Business Capital Formation;
``(B) not fewer than 10, and not more than 20, members
appointed by the Commission, from among individuals--
``(i) who represent--
``(I) emerging companies engaging in private and limited
securities offerings or considering initial public offerings
(`IPO') (including the companies' officers and directors);
``(II) the professional advisors of such companies
(including attorneys, accountants, investment bankers, and
financial advisors); and
``(III) the investors in such companies (including angel
investors, venture capital funds, and family offices);
``(ii) who are officers or directors of minority-owned
small businesses or women-owned small businesses;
``(iii) who represent--
``(I) smaller public companies (including the companies'
officers and directors);
``(II) the professional advisors of such companies
(including attorneys, auditors, underwriters, and financial
advisors); and
``(III) the pre-IPO and post-IPO investors in such
companies (both institutional, such as venture capital funds,
and individual, such as angel investors); and
``(iv) who represent participants in the marketplace for
the securities of emerging companies and smaller public
companies, such as securities exchanges, alternative trading
systems, analysts, information processors, and transfer
agents; and
``(C) three non-voting members--
``(i) one of whom shall be appointed by the Investor
Advocate;
``(ii) one of whom shall be appointed by the North American
Securities Administrators Association; and
``(iii) one of whom shall be appointed by the Administrator
of the Small Business Administration.
``(2) Term.--Each member of the Committee appointed under
subparagraph (B), (C)(ii), or (C)(iii) of paragraph (1) shall
serve for a term of 4 years.
``(3) Members not commission employees.--Members appointed
under subparagraph (B), (C)(ii), or (C)(iii) of paragraph (1)
shall not be treated as employees or agents of the Commission
solely because of membership on the Committee.
``(c) Chairman; Vice Chairman; Secretary; Assistant
Secretary.--
``(1) In general.--The members of the Committee shall
elect, from among the members of the Committee--
``(A) a chairman;
``(B) a vice chairman;
``(C) a secretary; and
``(D) an assistant secretary.
``(2) Term.--Each member elected under paragraph (1) shall
serve for a term of 3 years in the capacity for which the
member was elected under paragraph (1).
``(d) Meetings.--
``(1) Frequency of meetings.--The Committee shall meet--
``(A) not less frequently than four times annually, at the
call of the chairman of the Committee; and
``(B) from time to time, at the call of the Commission.
``(2) Notice.--The chairman of the Committee shall give the
members of the Committee written notice of each meeting, not
later than 2 weeks before the date of the meeting.
``(e) Compensation and Travel Expenses.--Each member of the
Committee who is not a full-time employee of the United
States shall--
``(1) be entitled to receive compensation at a rate not to
exceed the daily equivalent of the annual rate of basic pay
in effect for a position at level V of the Executive Schedule
under section 5316 of title 5, United States Code, for each
day during which the member is engaged in the actual
performance of the duties of the Committee; and
``(2) while away from the home or regular place of business
of the member in the performance of services for the
Committee, be allowed travel expenses, including per diem in
lieu of subsistence, in the same manner as persons employed
intermittently in the Government service are allowed expenses
under section 5703 of title 5, United States Code.
``(f) Staff.--The Commission shall make available to the
Committee such staff as the chairman of the Committee
determines are necessary to carry out this section.
``(g) Review by Commission.--The Commission shall--
``(1) review the findings and recommendations of the
Committee; and
``(2) each time the Committee submits a finding or
recommendation to the Commission, promptly issue a public
statement--
``(A) assessing the finding or recommendation of the
Committee; and
``(B) disclosing the action, if any, the Commission intends
to take with respect to the finding or recommendation.
``(h) Federal Advisory Committee Act.--The Federal Advisory
Committee Act (5 U.S.C. App.) shall not apply with respect to
the Committee and its activities.''.
(c) Annual Government-Business Forum on Small Business
Capital Formation.--Section 503(a) of the Small Business
Investment Incentive Act of 1980 (15 U.S.C. 80c-1(a)) is
amended by inserting ``(acting through the Office of the
Advocate for Small Business Capital Formation and in
consultation with the Small Business Capital Formation
Advisory Committee)'' after ``Securities and Exchange
Commission''.
TITLE III--SUPPORTING AMERICA'S INNOVATORS
SEC. 301. INVESTOR LIMITATION FOR QUALIFYING VENTURE CAPITAL
FUNDS.
Section 3(c)(1) of the Investment Company Act of 1940 (15
U.S.C. 80a-3(c)(1)) is amended--
(1) by inserting after ``one hundred persons'' the
following: ``(or, with respect to a qualifying venture
capital fund, 250 persons)''; and
(2) by adding at the end the following:
``(C) The term `qualifying venture capital fund' means any
venture capital fund (as defined pursuant to section
203(l)(1) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-3(l)(1)) with no more than $10,000,000 in invested
capital, as such dollar amount is annually adjusted by the
Commission to reflect the change in the Consumer Price Index
for All Urban Consumers published by the Bureau of Labor
Statistics of the Department of Labor.''.
TITLE IV--FIX CROWDFUNDING
SEC. 401. 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;
[[Page H7154]]
``(F) which is current in its ongoing disclosure
obligations under Rule 202 of Regulation Crowdfunding (17
C.F.R. 227.202);
``(G) the company whose securities it holds is current in
its ongoing disclosure obligations under Rule 202 of
Regulation Crowdfunding (17 C.F.R. 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. 402. 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.''.
TITLE V--FAIR INVESTMENT OPPORTUNITIES FOR PROFESSIONAL EXPERTS
SEC. 501. DEFINITION OF ACCREDITED INVESTOR.
Section 2(a)(15) of the Securities Act of 1933 (15 U.S.C.
77b(a)(15)) is amended--
(1) by redesignating clauses (i) and (ii) as subparagraphs
(A) and (F), respectively; and
(2) in subparagraph (A) (as so redesignated), by striking
``; or'' and inserting a semicolon, and inserting after such
subparagraph the following:
``(B) any natural person whose individual net worth, or
joint net worth with that person's spouse, exceeds $1,000,000
(which amount, along with the amounts set forth in
subparagraph (C), shall be adjusted for inflation by the
Commission every 5 years to the nearest $10,000 to reflect
the change in the Consumer Price Index for All Urban
Consumers published by the Bureau of Labor Statistics) where,
for purposes of calculating net worth under this
subparagraph--
``(i) the person's primary residence shall not be included
as an asset;
``(ii) indebtedness that is secured by the person's primary
residence, up to the estimated fair market value of the
primary residence at the time of the sale of securities,
shall not be included as a liability (except that if the
amount of such indebtedness outstanding at the time of sale
of securities exceeds the amount outstanding 60 days before
such time, other than as a result of the acquisition of the
primary residence, the amount of such excess shall be
included as a liability); and
``(iii) indebtedness that is secured by the person's
primary residence in excess of the estimated fair market
value of the primary residence at the time of the sale of
securities shall be included as a liability;
``(C) any natural person who had an individual income in
excess of $200,000 in each of the two most recent years or
joint income with that person's spouse in excess of $300,000
in each of those years and has a reasonable expectation of
reaching the same income level in the current year;
``(D) any natural person who is currently licensed or
registered as a broker or investment adviser by the
Commission, the Financial Industry Regulatory Authority, or
an equivalent self-regulatory organization (as defined in
section 3(a)(26) of the Securities Exchange Act of 1934), or
the securities division of a State or the equivalent State
division responsible for licensing or registration of
individuals in connection with securities activities;
``(E) any natural person the Commission determines, by
regulation, to have demonstrable education or job experience
to qualify such person as having professional knowledge of a
subject related to a particular investment, and whose
education or job experience is verified by the Financial
Industry Regulatory Authority or an equivalent self-
regulatory organization (as defined in section 3(a)(26) of
the Securities Exchange Act of 1934); or''.
TITLE VI--U.S. TERRITORIES INVESTOR PROTECTION
SEC. 601. TERMINATION OF EXEMPTION.
(a) In General.--Section 6(a) of the Investment Company Act
of 1940 (15 U.S.C. 80a-6(a)) is amended by striking paragraph
(1).
(b) Effective Date and Safe Harbor.--
(1) Effective date.--Except as provided in paragraph (2),
the amendment made by subsection (a) shall take effect on the
date of the enactment of this Act.
(2) Safe harbor.--With respect to a company that is exempt
under section 6(a)(1) of the Investment Company Act of 1940
(15 U.S.C. 80a-6(a)(1)) on the day before the date of the
enactment of this Act, the amendment made by subsection (a)
shall take effect on the date that is 3 years after the date
of the enactment of this Act.
(3) Extension of safe harbor.--The Securities and Exchange
Commission, by rule and regulation upon its own motion, or by
order upon application, may conditionally or unconditionally,
under section 6(c) of the Investment Company Act of 1940 (15
U.S.C. 80a-6(c)), further delay the effective date for a
company described in paragraph (2) for a maximum of 3 years
following the initial 3-year period if, before the end of the
initial 3-year period, the Commission determines that such a
rule, regulation, motion, or order is necessary or
appropriate in the public interest and for the protection of
investors.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New
Jersey (Mr. Garrett) and the gentlewoman from New York (Ms. Velazquez)
each will control 20 minutes.
The Chair recognizes the gentleman from New Jersey.
General Leave
Mr. GARRETT. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days in which to revise and extend their remarks
and include extraneous materials on this bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from New Jersey?
There was no objection.
Mr. GARRETT. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise today in support of H.R. 6427, the Creating
Financial Prosperity for Businesses and Investors Act. It is a
compilation of legislative initiatives that the Financial Services
Committee has worked on in a very constructive and bipartisan manner
during the 114th Congress.
For 6 years, our committee, and, in particular, the Subcommittee on
Capital Markets and Government Sponsored Enterprises, has sought to
break through the bipartisan gridlock in Washington and to ensure that
the SEC, or the Securities and Exchange Commission, fulfills an
important part of its mission to facilitate capital formation.
For example, the JOBS Act of 2012, much of which originated in our
committee, has already been a measurable success, as hundreds of
companies have used its provisions to file for an initial public
offering, and other businesses have been able to raise well over $50
billion worth of capital through private channels.
Altogether, this translates to more growth, more innovation, and,
most importantly, more jobs here for Americans who have been struggling
in an economy that is producing only 1-2 percent growth, at best.
We didn't stop at the JOBS Act, and both Republicans and Democrats on
our committee came together and continued to generate good ideas that
modernize our Nation's security laws for the benefit of the small- and
medium-sized enterprises, which often pay a disproportionate share of
the costs that come along with regulation.
For example, during this Congress, our subcommittee has put forward
nearly 40 bills to do just that, the vast majority of which gained,
again, bipartisan support in both committee and here on the House
floor. A year ago this month, a number of these measures were signed
into law at the White House by the President.
Today, we bring together a package of another six bills on the House
floor with the hopes that we, once again, can improve the environment
in which entrepreneurs and small businesses can operate.
The provisions under H.R. 6427 include the following:
First, a bill from Mr. Carney and Mr. Duffy that would create an
Office of the Advocate for Small Business Capital Formation at the SEC.
For too long, Mr. Speaker, the SEC has operated in a bureaucratic silo
and ignored the needs of small and growing businesses and
entrepreneurs. So we have Mr. Duffy's bill, which gives small
businesses a permanent voice at the SEC, and it passed out of committee
unanimously by a vote of 56-0. It also passed in the House
overwhelmingly.
Secondly, Mr. Speaker, is a bill from Mr. Poliquin that would require
the SEC to respond to recommendations made at its annual government
small business forum, ensuring that the SEC no longer simply ignores
the ideas generated by small businesses at this event. This bill,
again, passed our committee by a vote of 55-1 and passed the House by a
vote of 390-1 earlier this year.
[[Page H7155]]
It also includes two bills from Mr. McHenry, who is on the floor and
will be speaking later, one which would fix some of the more unworkable
provisions of the crowd funding title of the JOBS Act, and a second
bill that would modernize the threshold for when venture capital funds
would have to register with the SEC. Again, there was huge bipartisan
support, both passing out of committee 57-2 and garnering near-
unanimous support here on the House floor.
There are two more.
Another title includes a bill from Dave Schweikert that would reform
the definition of an accredited investor for certain securities
offerings so that it is not just the wealthy or the well-connected who
are able to invest in these companies. This bill passed the House
earlier, again, with near-unanimous support.
Finally, we have a bill from our Democratic colleague, Ms. Velazquez,
that would make a technical correction to an outdated law that exempts
investment companies from having to register in U.S. territories.
In conclusion, Mr. Speaker, H.R. 6427 contains innovation and much-
needed legislation to help get our economy off the slow growth track
that it has been on for too long, and it continues the good
bipartisanship that our committee is known for.
I want to take this moment to thank all my colleagues over the years
for their hard work and willingness to work with us in a bipartisan
manner to move legislation like this.
{time} 1700
In particular, I thank our chairman, Jeb Hensarling, for his
tremendous leadership of our full Financial Services Committee and for
all the work that he has done to improve our capital markets in this
country and to create a financial system that works for the benefit of
all Americans.
Mr. Speaker, I reserve the balance of my time.
Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may
consume.
I rise in support of H.R. 6427, a bipartisan package of commonsense
measures that will help small businesses raise capital and better
protect investors and retirees of the U.S. territories.
Today's bill contains numerous bipartisan solutions to ensure the SEC
is more responsive to small business regulatory concerns. For example,
it creates a new Office of the Advocate for Small Business Capital
Formation and a new Small Business Advisory Committee. Taken together,
these efforts will ensure the agency is more responsive to
entrepreneurs' needs.
Furthermore, we have all heard that demand for small business capital
outstrips supply. H.R. 6427 makes targeted changes to attract more
investors to the small business market. By expanding definition of
accredited investor, raising the investor cap on small venture capital
funds, and making improvements to the equity crowdfunding rules
implemented under the JOBS Act, this bill will help more startups and
fast-growing businesses secure financing.
Beyond the small business provisions, today's bill will provide
investors and retirees in Puerto Rico and other U.S. territories the
same protections as their mainland counterparts. For 7 decades, the
Investment Company Act of 1940 provided U.S. investors with basic
safeguards, regulating everything from leverage limits to
capitalization levels, to preventing conflicts of interest.
Due to a historical artifact, however, all funds located in and sold
only to residents of U.S. territories are exempted from the act. The
reason is U.S. territories were deemed to be too geographically distant
from Washington, D.C. Obviously, the cost of air travel today is no
longer an issue. Regulators routinely travel to Hawaii and Alaska to
conduct oversight. In fact, SEC Chair White testified earlier this year
that the exemption should be removed.
To close the loophole and provide territorial residents with the
protections they deserve, I introduced the U.S. Territories Investor
Protection Act. Over the past year, we met with stakeholders, heard
their concerns and further fine-tuned the bill.
Investment companies will have an initial 3-year compliance period,
with an option at the approval of the SEC, for an additional 3 years.
This balances investor protections while granting more than reasonable
time for financial institutions to comply. It is important to note that
if investment companies need further relief, they are able to request
such a reprieve under existing law.
I thank Chairman Hensarling, Ranking Member Waters, and Congressman
Garrett for working with me on this provision. Their cooperation was
critical to developing an approach that would apply the act in a manner
sensitive to investors and investment companies alike.
In sum, I will argue that this is a strong bill. It will reduce
compliance costs, facilitate access to capital for thousands of small
businesses, and better protect investors and retirees in territories
like Puerto Rico.
I urge Members to support this legislation, and I reserve the balance
of my time.
Mr. GARRETT. Mr. Speaker, I yield such time as he may consume to the
gentleman from North Carolina (Mr. McHenry). I appreciate all of his
hard work for the JOBS Act and all the rest of his work as vice chair
of the committee and the time together that we had.
Mr. McHENRY. Mr. Speaker, I thank my colleague for his kind words and
for his leadership on important issues in the capital markets.
Today I rise to support the Creating Financial Prosperity for
Businesses and Investors Act.
Mr. Speaker, the title doesn't do the act justice. This is about
helping families, communities, small businesses, entrepreneurs, those
that are risk-takers in our society trying to make our society better,
more prosperous, and helping families and communities like the one I
represent in western North Carolina be better off. We need a growing
economy to help families, to help small businesses, to help make us
more prosperous as Americans.
So this act deals with a couple of those areas in particular for
families, small businesses, and entrepreneurs so they can gain greater
access to lending, to loans, to capital that they need to help
businesses grow and create jobs.
Two of those bills, to that end, I authored earlier this year, which
we passed with over 400 votes, as individual stand-alone items through
the House of Representatives. Those two bills, Supporting America's
Innovators Act, and the Fix Crowdfunding Act, in particular, amend
existing securities laws to make it easier for small businesses and
entrepreneurs to use innovative forms of capital formation. Investment
crowdfunding and angel investing are two of those areas, in particular,
to support those ideas that enable us to create jobs.
Those two bills were a part of the larger package, that are a part of
the innovation initiative that Leader McCarthy and I launched at the
beginning of this year. A number of bills have moved through the House
with wide bipartisan support that update outdated laws.
So, today, this package is an important step in the right direction;
but our work is not done. We have to continue to work with our Federal
regulators and Members on both sides of the aisle to ensure that we
update and ensure investment crowdfunding, angel investing, and other
areas of innovation can actually be better deployed across our society
and to more people.
I urge my colleagues to vote ``yes'' and ensure this bipartisan bill
has wide approval here in the House today.
Ms. VELAZQUEZ. Mr. Speaker, I continue to reserve the balance of my
time.
Mr. GARRETT. Mr. Speaker, I yield such time as he may consume to the
gentleman from Arizona (Mr. Schweikert).
Mr. SCHWEIKERT. Mr. Speaker, I am here to speak about one of the
ideas in this package that I have, shall we say, 5 or 6 years in; and
the interesting thing, it was a conversation back and forth with a
number of Democrats on the other side. It was one of those--it started
as sort of a philosophical debate.
Often you hear us fussing at each other here on the floor, and we
will get into these debates of, well, the concentration of wealth in
the country;
[[Page H7156]]
you know, the number of folks who now hold so much wealth.
Yet, if you take a step backwards and look at the way we have our
laws set up in this country, we don't decide that you get to invest in
certain types of activities because of your talent. We don't decide you
get to invest in certain activities because you are an expert in the
technology or the business model.
We actually have a series of rules that, if you have $1 million, you
and your wife have a certain income, then you are allowed to invest.
You think about that. So if I came to you right now and said, I am
going to judge you by the size of your bank account and not by your
competence, that would be pretty outrageous.
I guess for years and years, none of us had really sort of talked
about it, thought about it in that way, that the arbitrary rules that
the SEC and we had allowed to continue were a world where we judged
people by their wealth and then gave them additional opportunities
instead of handing those same opportunities to people because of their
expertise in investing or the technology, their expertise in
understanding the risk profile of such technology. I am hoping that is
where we are heading.
There was a number of compromises to make both sides feel
comfortable, and that is actually one of the reasons we had such a
bipartisan vote; and to that, I also thank my friend, Chairman Garrett.
I am going to miss you because you have worked hard to shepherd many of
these concepts through for years now.
I think this is a great start because we are going to start judging
our brothers and sisters by their talents and not necessarily their
bank account size, and that is why I am so happy on this one.
Ms. VELAZQUEZ. Mr. Speaker, I am prepared to close. I yield myself
such time as I may consume.
Mr. Speaker, access to capital is the lifeblood of every business. By
expanding the pool of accredited investors and venture capital firms,
improving the equity crowdfunding rules, and giving small business a
bigger voice in SEC decisionmaking, H.R. 6427 provides the tools
necessary to inject much-needed equity capital into our Main Street
businesses.
Finally, closing the U.S. territories loophole in the Investment
Company Act of 1940 will harmonize regulatory oversight and give
millions of investors and retirees, mostly in Puerto Rico, the peace of
mind that their hard-earned money will receive the same level of
protection afforded to those on the mainland.
I thank the chairman, ranking member, and all of the cosponsors for
their hard work in bringing this bipartisan package to the floor. I
urge Members to support this bill, and I yield back the balance of my
time.
Mr. GARRETT. Mr. Speaker, I yield myself such time as I may consume.
I rise again to support the legislation. It dawns on me also that, as
I rise today, this may be the last time that I rise on the floor. So
let me just say what an honor it has been to stand at this podium to
bring forth legislation like this, as I have done over the last 14
years, and to end where I began, to do so in a bipartisan manner, that
they tell me we should be able to pass through today in a pretty
overwhelmingly bipartisan manner as well.
The gentleman from Arizona ended his remarks with the statement:
Every day is a new beginning.
So I look at that as my days ahead. This legislation is a new
beginning for capital formation and is a new beginning for
bipartisanship in future legislation as well.
I thank my colleagues from the other side of the aisle that I have
had the honor and privilege to work with on this legislation and other
legislation as well. I thank my colleagues from my side of the aisle
that I have had similar opportunity to do so as well. We have gone
through challenging times, from good economic times and bad--maybe more
bad than good--but, through it all, I think we have done so with the
American public's interest in mind.
Behind me also are some of our members of our committee who I also
wish to recognize for their work as well. They have left a profound
impact on myself during the time that I have known them, and I thank
them humbly for their being willing to put up with me and to deal with
me throughout the years, but be able to work together for the benefit
of the American public as well.
I think that, together, we have done great things. I look forward to
watching what other great things will be done in a bipartisan manner as
well.
I think my time may be just about out, but let me also just say this
as well. I want to end where I began, which was thanking the chairman
of this committee, Mr. Jeb Hensarling, for his leadership and, most
importantly, for his friendship in the years I have known him in this
capacity.
I urge every Member to support the underlying legislation, and I
yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from New Jersey (Mr. Garrett) that the House suspend the
rules and pass the bill, H.R. 6427.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. GARRETT. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.
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