[Congressional Record Volume 163, Number 6 (Tuesday, January 10, 2017)]
[House]
[Pages H259-H266]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  HELPING ANGELS LEAD OUR STARTUPS ACT


                             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. 79, to clarify the 
definition of general solicitation under Federal securities laws, and 
for other purposes.
  The SPEAKER pro tempore (Mr. Hultgren). Is there objection to the 
request of the gentleman from Texas?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to House Resolution 33 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. 79.
  The Chair appoints the gentleman from Illinois (Mr. Bost) to preside 
over the Committee of the Whole.

                              {time}  1408


                     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. 79) to clarify the definition of general solicitation under 
Federal securities law, with Mr. Bost 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 gentleman from 
Missouri (Mr. Clay) 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, I rise in strong support of H.R. 79, the Helping Angels 
Lead Our Startups Act, also known as the HALOS Act.
  I remind all Members that the House passed this bill just a few 
months ago with overwhelming support from both Republicans and 
Democrats by a vote of 325-89, Mr. Chairman, almost 4 to 1. It is hard 
to get more bipartisan than that.
  It has received overwhelming bipartisan support because then and now 
the HALOS Act will help create needed jobs and grow our economy. I 
think we all know, Mr. Chairman, from listening to our constituents, 
jobs in the economy continue to be the number one issue of concern of 
the American people.
  I commend the bipartisan sponsors of this bill, Mr. Chabot, the 
chairman of the Small Business Committee, who we will hear from soon, 
and Ms. Sinema, who serves with me on the Financial Services Committee. 
I also thank the six Republicans and four Democrats who joined them as 
original cosponsors.
  These Members reached across the aisle and produced legislation that 
is especially important to America's small businesses. Let's remember, 
Mr. Chairman, that half--half--the people who work in this country earn 
or work at small businesses, which historically create two-thirds of 
all the new jobs in America. So small business--small business--is the 
job engine of America.
  Our economy clearly works better for working Americans when small 
businesses thrive and they can focus on creating jobs rather than 
navigating bureaucratic red tape, red tape that disproportionately 
hurts the small businesses and startup companies that we are counting 
on to create jobs for our constituents.
  Burdensome regulations make it harder for entrepreneurs to access 
startup capital, and they place credit out of reach for many who wish 
to start up a small business. Many of these harmful regulations arise 
from complicated laws, like the Dodd-Frank Act. Overall, small business 
loans are at a 25-year low, in large part due to regulatory burdens on 
our community banks and credit unions.
  Even the former Director of the Small Business Administration, 
appointed by President Obama, admitted as much when she said: ``Small 
banks have been laden with excessive costs and confusion from 
overlapping regulations, which are getting in the way of their ability 
to make small business loans.''
  We simply must not allow our security laws to inhibit the free flow 
of investment capital to Main Street. The HALOS Act provides an 
important regulatory solution to make it easier for small businesses to 
attract investments and put both the ``open for business'' and ``we are 
hiring'' signs on their front doors.
  The bill provides a clear path for startups to connect with angel 
investors and allows investors to make their own informed decisions. 
Angel investors, Mr. Chairman, have a huge impact on economic growth. 
Famous companies like Amazon, Costco, Google, Facebook, and Starbucks 
were all first funded by angel investors. That is just how important 
this matter is. Today, approximately 600,000 employees earn their 
paychecks from working for these specific companies.
  Unfortunately, when Washington bureaucrats get involved, we often see 
the dreaded ``unintended consequences'' of red tape. Five years ago, 
Congress passed the bipartisan JOBS Act to make it easier for business 
startups to gain access to critical capital. But the Securities and 
Exchange Commission instead issued regulations on angel investors that 
have the complete opposite effect. This is a problem Congress can 
easily fix by passing a bipartisan HALOS Act, which will ensure that 
funding from angel investors remains available to small business 
startups.
  Mr. Chairman, you cannot have employees, unless you first have 
employers. You cannot have jobs without job creators. And that is what 
this bill is all about--jobs. It is about helping small businesses 
overcome misguided Washington red tape so they can create jobs.
  I urge all Members to support this commonsense bipartisan bill.
  I reserve the balance of my time.
  Mr. CLAY. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I rise in opposition to H.R. 79, the Helping Angels 
Lead Our Startups Act. This bill, under the guise of helping angel 
groups attract additional investors for small businesses and startups, 
would alter the balance between capital formation and investor 
protection that we sought to achieve in the JOBS Act.
  Let me remind my colleagues of what we did in the wake of the 
financial crisis when bank lending was scarce. Our Nation's startups 
had trouble getting off the ground and attracting new capital. 
Previously, they had done so using rule 506, which allows companies to 
sell private securities to accredited investors who are financially 
savvy and have the means to bear their heightened risks and lack of SEC 
oversight. As a condition to using rule 506, however, companies could 
not solicit purchasers from or advertise to the general public.

                              {time}  1415

  This condition was viewed as a barrier to capital formation for 
startups. Therefore, Democrats worked with Republicans to provide 
companies in the JOBS Act with an alternative so that they could 
broadly advertise and solicit new investors.
  Recognizing the need to balance investor protection with this 
expansion, Ranking Member Waters offered an amendment requiring 
companies to take reasonable steps to verify that the ultimate 
purchaser was an accredited investor. This verification requirement is 
a necessary investor protection designed to prevent unsophisticated 
investors from purchasing--either accidentally or by fraudulent means--
risky, illiquid, and lightly regulated Rule 506 securities.

[[Page H260]]

  I would remind my Republican colleagues that this amendment was 
agreed to unanimously, in part because the amended provision struck the 
appropriate balance between capital formation and investor protection. 
Nevertheless, here we are today seeking to alter it in H.R. 79.
  This bill would remove the verification requirement and allow 
companies to broadly solicit and advertise their private stock at any 
event sponsored by a college, nonprofit, government organization, angel 
investor group, or other group. That means that America's college 
students can walk into an event on campus and be talked into buying 
stock that they don't understand and may not ever be able to sell. 
Having created this initial relationship, the company can then sell the 
students stock without ever checking if they are accredited investors.
  What is more, the bill would make it much easier for fraudsters to 
swindle unsophisticated investors by, for example, encouraging the 
unsophisticated investors to buy stock in a fake or failing company, 
only to sell off their own stock at artificially inflated prices.
  Republicans claim that the bill is merely a clarification; that these 
demo days are not merely solicitations or advertisements in and of 
themselves and can be used by companies to generally discuss investment 
opportunities along with their products and services with the general 
public. But that is not the case.
  Companies can already go to a broadly advertised, widely attended 
demo day and discuss their businesses and not implicate the securities 
laws if they don't offer securities for sale or otherwise condition the 
market for their security, but the bill would allow them to offer 
securities or condition the market by describing the type and amount of 
stock they are offering, the intended use of the proceeds, or any of 
the other information in subsection (a)(4) of the bill.
  Therefore, today, a company discussing such information would have 
two options: one, to ensure that the event is limited to persons with 
whom they or the event organizer has a preexisting, substantive 
relationship or have been contacted through an informal personal 
network; or two, verify at the time of purchase that their investors 
are accredited by, for example, looking at bank statements, W-2s, or 
third-party verification letters.
  The bill would allow companies to avoid both options and broadly 
advertise their stock, solicit purchases from the general public, and 
never check to make sure they are financially sophisticated, accredited 
investors. The only limitation--that the stock offerings only be at 
events sponsored by certain groups--does not provide a meaningful 
investor protection. Phony private universities or nonprofits that may 
be guilty of fraud themselves can hardly be held accountable for 
policing it in stock offerings.
  So rather than clarify existing law and preserve the compromise we 
struck in the JOBS Act, H.R. 79 provides a potential loophole that is 
overbroad and harmful to investors.
  Mr. Chairman, I am even more troubled that Republicans have brought 
this bill and another Financial Services Committee bill to the floor 
this week without a hearing or a committee markup. In fact, there are 
10 new Republican Members and 4 new Democratic Members on our committee 
that have never even considered this bill.
  Collectively, they represent millions of Americans that are being 
denied the right to better understand this legislation. It is deeply 
troubling that Republicans have decided to use their newfound power to 
rush through changes under cover of night without the benefits of an 
open, public process.
  For these reasons, I oppose H.R. 79.
  Mr. Chairman, I reserve the balance of my time.
  Mr. HENSARLING. Mr. Chairman, I yield myself 10 seconds just to say 
that hearings have been held in a markup in the last Congress on this 
bill and the 10 new Republican Members are anxious to vote on this. I 
am unaware of any new Democrat Members having been appointed to our 
committee as of yet.
  I am now very happy to yield 3 minutes to the gentleman from Ohio 
(Mr. Chabot), coauthor of the HALOS Act, a champion for small business 
because he is, indeed, the distinguished chairman of the Small Business 
Committee.
  Mr. CHABOT. Mr. Chair, I thank the gentleman for yielding and for his 
leadership on this issue. I rise in strong support of H.R. 79, the 
bipartisan HALOS Act.
  As the chairman of the House Small Business Committee, I have the 
honor and pleasure of hearing and speaking with many of America's 
small-business owners and their employees almost every day. I hear case 
after case of small-business owners working days and nights and 
weekends. I hear stories of sacrifice. I hear inspiring stories of 
success.
  But all too often, I hear about how the government continues to make 
it difficult for small businesses to prosper and grow and create more 
jobs, which is, obviously, very important to our Nation and its 
economy.
  Perhaps one of the most common and most alarming concerns is just how 
difficult it is for entrepreneurs who are starting out to access the 
capital they need in order to grow. We must provide entrepreneurs a 
better way to build their businesses. The HALOS Act does just that.
  The Helping Angels Lead Our Startups Act expands access to capital by 
ensuring small businesses are able to continue to connect and interact 
with angel investors. One popular way in which small businesses connect 
with angel investors is through demo days. These exciting events are 
sponsored by universities, nonprofits, local governments, and many 
other groups that allow entrepreneurs to showcase their products and 
informally meet investors and customers. However, SEC regulations are 
threatening to force these events out of business by imposing unwieldy 
regulations that dictate who is and who is not allowed to simply 
attend.

  These ill-considered regulations would force everybody who merely 
walks through the door to go through what is essentially a full 
financial examination--handing over tax documents, bank statements, 
paycheck information, and on and on. This just doesn't make sense. We 
should be encouraging participation in demo days, not creating 
obstacles. We should be allowing the largest group of attendees to 
gather in the room, not be limiting who can walk through the door. 
After all, not only are these events places to connect people with our 
communities' small businesses, but they also provide a great 
opportunity for our next generation of entrepreneurs to ask questions 
and learn what it takes for a business to open its doors and be 
successful.
  I thank Chairman Hensarling for his leadership as well as 
Representatives Sinema and Schneider for working in a cooperative and 
bipartisan manner.
  An identical bill, as the chairman mentioned, passed this House in 
the last session of Congress in an overwhelmingly bipartisan fashion. 
We must continue to work together to create an environment in which our 
small businesses--the engines of our economy--grow and flourish. This 
bill is one more step in that direction.
  I urge my colleagues to support H.R. 79.
  Mr. CLAY. Mr. Chairman, I reserve the balance of my time.
  Mr. HENSARLING. Mr. Chairman, I yield 5 minutes to the gentleman from 
Michigan (Mr. Huizenga), the distinguished chairman of the Capital 
Markets and Government Sponsored Enterprises Subcommittee of the 
Financial Services Committee.
  Mr. HUIZENGA. I thank the chairman for his leadership.
  Mr. Chairman, we all know that small businesses and entrepreneurs are 
what drive the American economy. We meet them in our districts and we 
see firsthand the benefits that their dreams and hard work provide to 
our constituents and to our communities.
  These innovators, entrepreneurs, and risk-takers are really small-
business people who are critical for our country's economic prosperity. 
Small businesses helped to create more than 60 percent of the Nation's 
net new jobs over the past two decades. So if our Nation is going to 
have an economy that provides opportunities for every American, then we 
must promote and encourage the success and growth of our small 
businesses and our startups.
  In order to succeed, these companies need capital and credit--the 
lifeblood for growth, expansion, and job creation. Yet, the government 
continues

[[Page H261]]

to construct arbitrary walls that cut them off from essential financing 
as smaller companies are caught up in red tape that was created, 
frankly, for the largest public companies, but those public companies 
have the financial means to hire lawyers and accountants and management 
consultants and all of those things that would then guide them through 
the sheer weight, volume, and complexity of the Federal securities 
laws.
  Congress has made strides in tailoring the regulatory environment for 
smaller companies, most notably when we passed with strong bipartisan 
support the Jumpstart Our Business Startups, or JOBS Act, in 2012. The 
JOBS Act's benefits are notable as more and more companies use its 
provisions to raise investment capital in both the public and private 
markets.
  One essential form of capital for many startups comes from angel 
investors--sophisticated, high net-worth individuals who invest their 
own money into startups and other early stage companies. Not many 
college students of whom I am aware would fit that definition of a 
sophisticated, high net-worth individual. In 2015, angel investors 
deployed over $24 billion to about 71,000 startups--many of these 
investments going to companies in their own communities and States. 
Beyond capital, angels provide advice and guidance to help these 
companies succeed and create jobs.
  Mr. Chairman, I believe that it is important to note that companies 
such as Amazon, Costco, Facebook, Google, and Starbucks, among a myriad 
of others that we have not necessarily heard of as public names, were 
all initially funded by angel investors. Without angel investors, these 
very successful companies would have never gotten off the ground.
  Yet, the Securities and Exchange Commission, whose neglect of its 
statutory mission to facilitate capital formation necessitated that 
Congress pass the JOBS Act in the first place, has further restricted 
startups from interacting with angel investors at demo days and similar 
pitch events. Startups rely on demo days and similar events to build 
relationships with angels and other investors and generate interest in 
their companies and their ideas. These events existed prior to the JOBS 
Act, but the SEC's rules jeopardize their future.
  H.R. 79, the Helping Angels Lead Our Startups, or HALOS Act, is a 
commonsense, bipartisan bill that is aimed at removing a significant 
regulatory hurdle for innovative companies and startups that seek early 
stage equity investments. Specifically, the HALOS Act would clarify 
that these demo days, which are sponsored by angel investor groups, 
universities, municipalities, and nonprofits, are not considered to be 
general solicitations and would, instead, ensure that angel funding 
remains available to those businesses that seek investment capital. 
These are really educational opportunities.

                              {time}  1430

  Mr. Speaker, some of our colleagues on the other side of the aisle 
will claim that the HALOS Act guts critical investor protections and 
will subject honest, hardworking Americans to rampant fraud. We just 
had an example of college students being brought up. That is simply not 
true.
  A company that offers securities to investors under these rules may 
only sell their securities to sophisticated or accredited investors. If 
these individuals do not meet the standards of an accredited investor, 
they are not then eligible or even allowed to invest in these types of 
startups that would participate in a demo day.
  Instead, the HALOS Act is a simple, bipartisan, bicameral, and, I 
might add, short bill that will provide small innovative companies and 
startups the ability to interact with angels and other investors who 
can provide the capital that they need to succeed, grow, and create 
jobs.
  Indeed, Senator Chris Murphy of Connecticut said it best when he 
introduced the HALOS Act last Congress: ``I have heard from local 
entrepreneurs and interested backers alike that the most important 
thing we can do to help these businesses is to make it easier for angel 
investors to put capital behind them--and that is exactly what our 
bipartisan HALOS Act will do.''
  The CHAIR. The time of the gentleman has expired.
  Mr. HENSARLING. Mr. Chair, I yield an additional 30 seconds to the 
gentleman.
  Mr. HUIZENGA. Mr. Chair, that was Senator Chris Murphy of 
Connecticut.
  I commend the efforts of Representatives Chabot and Sinema for 
working together across the aisle on a bipartisan, positive solution.
  Last Congress, the HALOS Act passed this very body with an 
overwhelming bipartisan vote of 325-89. I have high hopes that H.R. 79 
will enjoy another strong, bipartisan vote.
  I encourage all my colleagues to support its adoption.
  Mr. CLAY. Mr. Chair, I reserve the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, I yield 3 minutes to the gentleman from 
Illinois (Mr. Hultgren).
  Mr. HULTGREN. Mr. Chairman, I thank the gentleman from the 
Subcommittee on Capital Markets and Government Sponsored Enterprises 
for yielding to me and, also, thank Chairman Hensarling for his work.
  Today, I am proud to speak in support of the Helping Angels Lead Our 
Startups, or HALOS Act. I would also thank Chairman Chabot and 
Congressman Sinema for putting forth this important bipartisan 
legislation, and I am a proud cosponsor.
  I am fortunate enough to regularly hear from innovators across 
Illinois and through my work on the House Science, Space, and 
Technology Committee. These are the people who harness technology to 
accomplish the impossible, whether that is making life-changing medical 
breakthroughs or just finding a better way to do everyday tasks.
  As we all know, startups are the job creators that drive our economy 
by creating new jobs that can get our constituents back to work.
  Angel investors play a key role in the earliest stages of these 
startups. They provide the initial rounds of funding to help these 
life-changing ideas get off the ground. We shouldn't have unnecessary 
barriers in place for our innovators to have access to the capital they 
need to grow.
  The situation we currently find ourselves facing is frustrating for 
startups and potential investors. There is some regulatory uncertainty 
from implementation of the JOBS Act. In short, Regulation D may imply a 
demo day is a general solicitation, which would require companies to 
identify if investors meet the definition of accredited.
  If demo days are treated as general solicitations, startups and 
investors are required to comply with burdensome, third-party 
verification rules. However, the purpose of these demo days is not to 
seek investors. It simply is to promote good ideas. No solicitations or 
sales of securities take place. This confusion may prevent any 
conversation--even a very informal one--between angel investors and 
startups from happening. This can be easily clarified by the 
legislation under consideration today.
  As I mentioned, startup companies frequently participate in demo days 
to increase the visibility of their company, explain their ideas, and 
hope to informally attract investors. These demo days are sponsored by 
a variety of organizations interested in promoting innovation and job 
creation. For example, the University of Illinois' Research Park told 
me that this bill would make things like the Cozad New Venture 
Competition, Urbana-Champaign Angel Network or UCAN angel 
presentations, the Share the Vision technology showcase, pitch practice 
at EnterpriseWorks, and other public forums for startups in Illinois 
problematic. They want to encourage showcases of startups without fear 
of these programs constituting a formal fundraising solicitation to 
report to the SEC.
  The bill simply clarifies SEC regulations to ensure startups may 
participate in educational demo days without having to verify that 
attendees are accredited investors. That is a commonsense, technical 
fix, and it is no surprise that we had such a strong bipartisan vote of 
approval in the House last Congress.
  I encourage all of my colleagues to support this job-creating 
legislation.
  Mr. CLAY. Mr. Chair, I reserve the balance of my time.
  Mr. HUIZENGA. Mr. Chair, I yield 2 minutes to the gentleman from 
Texas (Mr. Williams).
  Mr. WILLIAMS. Mr. Chair, I rise today not only in strong support of 
the

[[Page H262]]

HALOS Act but for the entrepreneurs everywhere in this country.
  The facts are simple. Angel investors provide vital, often necessary 
capital for startup companies. Unfortunately, after the passage of the 
JOBS Act, the SEC made this more difficult, placing unnecessary burdens 
on companies who are just starting out.

  Mr. Speaker, the positive impact these startups often have on a 
community are staggering. In the City of Austin, which I am proud to 
represent, startup companies provide more than just new technologies. 
They provide jobs, they generate taxes, and they give back to their 
local community. In 2015 alone, tech companies in Austin were able to 
raise almost a billion dollars in new capital. With our economy still 
on the mend from the financial collapse in 2007, it is time to give 
businesses, both large and small, the resources they need to compete in 
an often competitive environment.
  H.R. 79 rightly amends the SEC Act of 1933 to formally define an 
angel investor group and exempts them from having to comply with 
burdensome, third-party verification rules. The HALOS Act provides 
essential protection for trade associations that often facilitate such 
meetings between investors and fund managers, continuing to cultivate 
small business capital formation relationships. This change may be 
small, but the impact will be great.
  Mr. Speaker, I will end my remarks by saying this: If the 115th 
Congress is serious about jobs, serious about turning our economy 
around, and serious about real change, passing bills like the HALOS Act 
will be paramount to our success.
  I urge all Members to support Chairman Chabot's bill.
  Mr. CLAY. Mr. Chair, I continue to reserve the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, I yield 2 minutes to the gentleman from 
Tennessee (Mr. Kustoff), a new member of the House Financial Services 
Committee.
  Mr. KUSTOFF of Tennessee. Mr. Chairman, I rise today in support of 
H.R. 79, the Helping Angels Lead Our Startups Act. This important 
legislation has the ability to produce real results that Congress 
continually promises their constituents.
  When I decided to seek office, a major driving force was the 
governmental overreach that I saw at home in west Tennessee. The 
financial crisis of 2008 crushed the middle class and lower classes 
across America.
  West Tennesseans were hit hard. Far too many faced unemployment, 
struggled to pay their bills, and lost their homes and businesses that 
meant everything to their livelihoods. There has been no doubt that it 
has been a slow recovery under these last 8 years. Thankfully, many 
areas of the country have begun to bounce back.
  West Tennessee, my home, still needs strong workforce development so 
we, too, can bounce back. As I traveled throughout the Eighth District 
of Tennessee last year, I met amazing people, great Americans who were 
ready to work hard to provide for their families and for their 
communities. Too often, I heard stories of burdensome mandates and 
regulations that are preventing these hardworking Tennesseans from 
moving forward.
  With this legislation, we can keep our promise to help alleviate the 
burden of Federal regulations on small businesses. There is no doubt 
that angel investors are the backbone of startups; and unless we find a 
solution to unreasonable restrictions, small businesses could continue 
to suffer as they struggle to compete with large, established 
companies.
  We need to keep our promise to the American people. We need to focus 
on creating good-paying jobs. And I believe that this bipartisan 
legislation is a step in the right direction.
  I urge my colleagues to vote ``yes'' on this important legislation.
  Mr. CLAY. Mr. Chair, I continue to reserve the balance of my time.
  Mr. HUIZENGA. Mr. Chair, I yield 2 minutes to the gentleman from 
Illinois (Mr. Schneider) for 2 minutes.
  Mr. SCHNEIDER. Mr. Speaker, I rise in support of H.R. 79, the Helping 
Angels Lead Our Startups or the HALOS Act.
  I was proud to have introduced this bill with Representative Chabot 
during the 113th Congress and have been pleased to see this commonsense 
legislation continue to gain bipartisan support. I want to thank 
Representatives Chabot and Sinema for continuing to advocate for this 
important legislation.
  Small businesses and startup companies are tremendous assets and 
sources of economic growth for our country. Economists have shown that 
when the economy is healthy, startups and young, fast-growing firms are 
the fundamental drivers of job creation. But to succeed, innovative 
entrepreneurs with ideas need access to capital. These investments give 
new companies the resources to take their idea from concept to startup 
to success.
  Congress should support this process and pass legislation that makes 
it easier for accredited investors to find creative, aspiring 
entrepreneurs. Unfortunately, certain legislation has had the 
unintended consequence of often making it more difficult for 
entrepreneurs and inventors to meet investors and access critical 
investment capital.
  The JOBS Act of 2012 has placed additional restrictions on 
individuals who want to invest in startups. This has adversely affected 
programs where young companies demonstrate their products and meet 
potential investors and mentors, and the legislation has curtailed 
startups' access to individual or angel investors and angel groups.
  During my more than two decades of business experience, I saw 
firsthand how angel investors often provide more than just funding for 
young companies. They offer wisdom, advice, and guidance as small 
businesses seek to grow. The HALOS Act would reopen the path for 
innovative individuals and young companies to more easily connect with 
angel investors, while still maintaining important investor 
protections.
  This bill will help small businesses better access the resources they 
need to thrive and ultimately create jobs, ensuring the United States 
remains the best place in the world to start and grow a new business.
  I urge my colleagues to join me in supporting this important 
legislation.
  Mr. CLAY. Mr. Chair, I continue to reserve the balance of my time.

  Mr. HUIZENGA. Mr. Chairman, may I inquire as to the balance of time 
remaining on both sides.
  The CHAIR. The gentleman from Michigan has 8 minutes remaining, and 
the gentleman from Missouri has 22 minutes remaining.
  Mr. HUIZENGA. Mr. Chair, I yield 2 minutes to the gentlewoman from 
Arizona (Ms. Sinema), the coauthor of this bill.
  Ms. SINEMA. Mr. Chair, I thank my colleagues on the other side of the 
aisle for working with me, yet again, on this bipartisan bill to help 
entrepreneurs and startup companies create jobs and grow our economy.
  American startup businesses are growing both in number and diversity. 
Entrepreneurs are finding new and better ways to bring together talent, 
innovation, and investment capital in an increasingly competitive small 
business environment.
  The HALOS Act clarifies SEC regulations to ensure small businesses 
may participate in educational demo days without the burden of having 
to verify that attendees are accredited investors. Demo days provide 
invaluable opportunities for entrepreneurs to meet and exchange ideas 
with students, professors, business professionals, and potential future 
investors.
  The HALOS Act creates a clear path for startups to participate in 
demo days sponsored by a government entity, nonprofit, angel investor 
group, venture association, or other entity permitted by the SEC. 
Specifically, the act clarifies the definition of general solicitation 
to exempt communications and presentations at these events where 
advertising for the event does not make specific investment offerings 
and where no specific securities offering information is communicated 
at the event.
  This permits startups to connect with business experts, potential 
future investors, and other entrepreneurs, all while maintaining 
existing accredited investor verification requirements and exemptions 
under Regulation D for the actual purchase or sale of securities. It 
does not, in any way, permit the sale of securities to unaccredited 
investors at demo days.
  Companies such as Amazon, Costco, Facebook, Google, and Starbucks 
were all initially funded by angel investors. As we work to make 
America more

[[Page H263]]

competitive in the new global economy, we need to encourage the growth 
of innovative startups and job-creating small businesses.
  Again, I thank Representative Chabot for working with me on this 
commonsense, bipartisan bill. I am committed to working with my 
colleagues on both sides of the aisle to ensure that Arizona startups 
have the support they need to grow their businesses and create jobs.

                              {time}  1445

  Mr. CLAY. Mr. Chairman, I have no further speakers, and I reserve the 
balance of my time.
  Mr. HUIZENGA. Mr. Chairman, I yield 2 minutes to the gentlewoman from 
Florida (Mrs. Murphy) and welcome her as a new Member.
  Mrs. MURPHY of Florida. Mr. Chairman, I rise in support of the 
bipartisan HALOS Act because it will help startup companies with angel 
investors without compromising important investor protections.
  When working in the private sector, I participated in numerous so-
called demo days where early-stage entrepreneurs make presentations. I 
have counseled multiple startups and small firms through this process, 
particularly women and minority-owned businesses. I have seen firsthand 
as they struggled to overcome regulatory hurdles and to obtain access 
to much-needed capital when traditional financing sources, such as 
banks, may not be feasible.
  It is important for the government at all levels--Federal, State, and 
local--to promote economic growth and encourage innovation by 
connecting people with good ideas to people with the capital and 
courage to bankroll those ideas. Robust entrepreneurial ecosystems is 
how great products come to market and how well-paying jobs are created. 
This is particularly important for my district in central Florida, 
which has a growing innovative and entrepreneurial startup community.
  Based on personal experiences and on the experiences conveyed to me 
by Floridians with expertise in this area, the current Federal 
regulations governing demo days can be made more clear and less 
burdensome so that they better promote the flow of capital through our 
economy while continuing to protect nonaccredited investors.
  Because I believe the HALOS Act achieves these dual objectives, I 
urge my colleagues to join me in voting ``yes'' on H.R. 79.
  Mr. CLAY. Mr. Chairman, I yield myself the balance of my time.
  Mr. Chairman, both Democrats and Republicans want to help facilitate 
capital formation, particularly for groups such as angel investors, who 
have substantial experience in the private securities market, and for 
small companies like startups who are seeking funding to innovate and 
grow. But as Members of Congress, we also have the responsibility to 
protect investors and ensure that the rules of the road are reasonable 
and appropriate. This is especially important for retail investors, 
those of us who are looking to save for retirement or to buy a house or 
to support our children's education.
  That is what concerns me about the bill we have before us today. We 
cannot create loopholes in the securities laws that could have a 
serious negative impact on Americans' nest eggs, so we must strike the 
right balance between capital formation in our securities markets and 
investor protection.
  It is with these goals in mind that Democrats supported the current 
rules in place. Companies can raise money to grow and support their 
businesses in our securities markets under the purview of the SEC and 
State regulators. The regulatory framework we have set up allows for 
different activities and oversight depending on the nature of the 
security offering.
  For example, public offerings provide robust information to investors 
about the risks and rewards of a particular securities purchase. They 
require the SEC or State securities regulator to preapprove and review 
an offering, and they provide legal recourse to investors that may be 
deceived. This is a strong regulatory framework that ensures our 
markets are safe and sound. In exchange for complying with these rules, 
companies can advertise and sell their stock to anyone in the general 
public.
  On the other hand, private offerings do not come with the same 
regulatory requirements and protections, which can make it easier and 
less costly for firms to raise money. This means less information for 
investors, less legal recourse, and little to no scrutiny by 
regulators. So we put in place procedures to ensure these private 
offerings, which are inherently riskier, are only sold to accredited 
investors.
  Private offerings now play a significant role in the market. 
Unregistered securities have surpassed registered securities in terms 
of capital formation. They have accounted for more than $2 trillion in 
new capital. Moreover, $71 billion has been raised since 2012 through 
the general solicitation and advertising exemption that we put in place 
in the JOBS Act. This is clearly an important and growing segment of 
our market, and, as such, I believe we need to be even more cautious 
about who is participating in it.
  In fact, the SEC's Investor Advisory Committee said we should do 
more, not less, to protect investors in the general solicitation and 
advertising market for private offerings. They think we don't have 
enough guardrails in place. And yet this bill would do the opposite, by 
expanding the exemptions on general solicitation without similarly 
protecting the investor.
  The bill also undercuts an important amendment Ranking Member Waters 
offered to the JOBS Act, which was approved unanimously. It required 
companies to verify that the purchaser is an accredited investor and is 
financially sophisticated enough to bear the risks involved in private 
offerings. By effectively allowing purchasers to ``self-certify'' at or 
after demo days sponsored by certain groups, the bill could open the 
door to financial ruin for a retail investor who may not have 
understood the consequences of his or her investment. So I oppose this 
bill.
  I yield back the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, I yield myself the balance of my time.
  I have actually had the pleasure and the honor of sitting through a 
number of these demo days and seeing these pitches being made. People 
are coming in, and they are literally laying out their dreams, their 
hopes, and, frankly, their hard work because they wouldn't be there 
that day if it wasn't for their hard work. They are looking for a 
couple of things. As small businesses and entrepreneurs, they are 
looking for capital and credit. We use the word ``capital'' a lot 
around here, but think of it as cash and credit. They really are 
looking for someone who will buy into their dream, who will look at 
their hard work, and who will understand that their dreams can become a 
reality with hope. This bill is trying to do that.

  Members are hearing a lot of doom and gloom on the other side. In 
fact, I think the phrase was just thrown out, financial doom for the 
retail investor. Let's talk about these retail investors.
  For you to become an accredited investor, someone who would qualify 
to be able to invest in these startup companies, according to SEC rule 
501, you need to be married, jointly; $300,000 in income; and $1 
million of net worth, excluding your home. So you cannot include a 
million-dollar home. You have to have $1 million net worth outside of 
your home and have an income of $300,000. Earlier, college students 
were brought up. Not a whole lot of college students that I am aware of 
have $300,000 annual income or $1 million net worth.
  These are people who are sophisticated, typically. They are high net 
worth, by definition. Interestingly enough, as Members of Congress, if 
we allowed some of these amendments to go through and these 
restrictions to go through, as Members of Congress, we would be 
excluded from the room. We would be excluded. We couldn't even go in 
there to educate ourselves about how this process works. That, 
ultimately, is what this is about.
  Those pitch days are not just for those people who are going to 
invest. Those pitch days are not just for the people who are going to 
do the investing. Those pitch days are for others to learn, to have an 
understanding.
  If you are a college student sitting in the back row, to understand 
what it looks like to become an entrepreneur, to really become a part 
of that engine of the American economy, you should be in the room. If 
you are someone who might be making a pitch later on and want to see 
how this happens and

[[Page H264]]

works, you ought to be in the room. Let's not exclude those people.
  Why would we have a government closed off, closed room, a government-
sanctioned closed room that would keep people from understanding and 
achieving their hopes and dreams and success?
  I am pleased to be up here and to talk about this issue because we 
know that for our standing in the world, we need to have a dynamic 
economy. Our dynamic economy starts with our entrepreneurs and the 
risk-takers who are willing to invest in those ideas.
  I just want to commend the gentlewoman from Arizona (Ms. Sinema) and 
the gentleman from Ohio (Mr. Chabot) for working in a bipartisan 
manner. I expect we are going to see a massively bipartisan vote for 
this bill, and I eagerly await that. I ask my colleagues to support 
H.R. 79.
  Mr. Chairman, I yield back the balance of my time.
  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. The bill shall be considered as read.
  The text of the bill is as follows:

                                H.R. 79

       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 ``Helping Angels Lead Our 
     Startups Act'' or the ``HALOS Act''.

     SEC. 2. DEFINITION OF ANGEL INVESTOR GROUP.

       As used in this Act, the term ``angel investor group'' 
     means any group that--
       (1) is composed of accredited investors interested in 
     investing personal capital in early-stage companies;
       (2) holds regular meetings and has defined processes and 
     procedures for making investment decisions, either 
     individually or among the membership of the group as a whole; 
     and
       (3) is neither associated nor affiliated with brokers, 
     dealers, or investment advisers.

     SEC. 3. CLARIFICATION OF GENERAL SOLICITATION.

       (a) In General.--Not later than 6 months after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall revise Regulation D of its rules (17 CFR 230.500 et 
     seq.) to require that in carrying out the prohibition against 
     general solicitation or general advertising contained in 
     section 230.502(c) of title 17, Code of Federal Regulations, 
     the prohibition shall not apply to a presentation or other 
     communication made by or on behalf of an issuer which is made 
     at an event--
       (1) sponsored by--
       (A) the United States or any territory thereof, by the 
     District of Columbia, by any State, by a political 
     subdivision of any State or territory, or by any agency or 
     public instrumentality of any of the foregoing;
       (B) a college, university, or other institution of higher 
     education;
       (C) a nonprofit organization;
       (D) an angel investor group;
       (E) a venture forum, venture capital association, or trade 
     association; or
       (F) any other group, person or entity as the Securities and 
     Exchange Commission may determine by rule;
       (2) where any advertising for the event does not reference 
     any specific offering of securities by the issuer;
       (3) the sponsor of which--
       (A) does not make investment recommendations or provide 
     investment advice to event attendees;
       (B) does not engage in an active role in any investment 
     negotiations between the issuer and investors attending the 
     event;
       (C) does not charge event attendees any fees other than 
     administrative fees; and
       (D) does not receive any compensation with respect to such 
     event that would require registration of the sponsor as a 
     broker or a dealer under the Securities Exchange Act of 1934, 
     or as an investment advisor under the Investment Advisers Act 
     of 1940; and
       (4) where no specific information regarding an offering of 
     securities by the issuer is communicated or distributed by or 
     on behalf of the issuer, other than--
       (A) that the issuer is in the process of offering 
     securities or planning to offer securities;
       (B) the type and amount of securities being offered;
       (C) the amount of securities being offered that have 
     already been subscribed for; and
       (D) the intended use of proceeds of the offering.
       (b) Rule of Construction.--Subsection (a) may only be 
     construed as requiring the Securities and Exchange Commission 
     to amend the requirements of Regulation D with respect to 
     presentations and communications, and not with respect to 
     purchases or sales.

  The CHAIR. No amendment to the bill shall be in order except those 
printed in part B of House Report 115-2. 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.


                Amendment No. 1 Offered by Ms. Velazquez

  The CHAIR. It is now in order to consider amendment No. 1 printed in 
part B of House Report 115-2.
  Ms. VELAZQUEZ. Mr. Chairman, I have an amendment at the desk.
  The CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 3, line 18, strike ``and''.
       Page 3, after line 24, insert the following:
       (E) provides attendees with a disclosure, as prescribed by 
     the Securities and Exchange Commission by rule, describing 
     the nature of the event and the risks of investing in the 
     securities being advertised; and
       Add at the end the following:
       (c) No Pre-existing Relationship by Reason of Event.--
     Attendance at an event described under subsection (a) shall 
     not qualify, by itself, as establishing a pre-existing 
     relationship between an issuer and a purchaser, for purposes 
     of Rule 506(b).

  The CHAIR. Pursuant to House Resolution 33, the gentlewoman from New 
York (Ms. Velazquez) and a Member opposed each will control 5 minutes.
  The Chair recognizes the gentlewoman from New York.
  Ms. VELAZQUEZ. Mr. Chairman, I yield myself such time as I may 
consume.
  When we think of a startup business, the early days of Apple or 
Google usually come to mind. Their stories are familiar--hardworking 
entrepreneurs who beat the odds. Like these companies, most successful 
startups have several common ingredients: a new product or service, a 
willingness to take risks, and leadership that can navigate the 
complexities of today's economy. And successful firms also have a way 
of securing capital to both get off the ground and to grow.
  This last ingredient can present serious obstacles as startups face 
unique financing challenges. Many do not have positive cash flow, 
putting traditional bank loans out of reach. While some of these firms 
participate in incubator or accelerator programs that provide a small 
amount of seed capital, they must find new sources of funding when 
their initial capital runs out.
  One avenue for securing additional capital is by participating in 
demo days or pitch days. At these events, entrepreneurs have an 
opportunity to showcase their companies and innovations to potential 
investors.
  Today's bill will alter SEC rules to exempt the use of general 
solicitation for presentations made at demo days. In other words, demo 
day organizers will not have to comply with the usual procedures 
verifying that the investors they are attracting to the event are 
accredited.
  Despite the well-intended goal of expanding the use of demo days to 
better meet startups' capital needs, it is easy to see how unscrupulous 
actors could exploit this exemption to deceive ordinary people that 
were drawn to the event by a public advertisement. My amendment makes 
improvements to ensure attendees at demo days have an opportunity to be 
informed about the nature of these presentations and the risks of 
investing in startups.

                              {time}  1500

  Typically, demo days are limited to select groups of potential 
investors. Let's be clear, these are not science fairs, but they are 
sophisticated business presentations designed to raise capital for the 
entrepreneurs and their startups.
  However, the underlying bill allows colleges and universities and 
nonprofits to host these events and advertise them to the public. It is 
easy to see how some attendees might not know the true nature of the 
presentation.
  My amendment will address this by requiring event sponsors to provide 
an SEC-created disclosure outlining the nature of the event and 
investment risks. By creating a uniform disclosure, the SEC can take 
the burden off the sponsors and issuers on what to disclose.
  This amendment would also clarify that attendance at a demo day alone 
does not constitute a preexisting relationship and does not allow a 
stock issuer to sidestep their obligation to verify that an investor is 
accredited. Without this clarification, it is possible that issuers 
could defraud less-sophisticated retail investors.

[[Page H265]]

  Demo days are a great way for our Nation's entrepreneurs to raise 
capital, but they should be making presentations to the right 
investors, those that understand the risks of investing in risky 
startup businesses, not just anyone who saw an advertisement.
  My amendment would both expand the ability of small businesses to 
raise capital by tapping into demo days while ensuring that the right 
kind of investors, those accredited and fully informed, are 
participating in the small business capital markets.
  Mr. Chairman, I urge my colleagues to support the amendment, and I 
reserve the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, I claim the time in opposition to this 
amendment.
  The CHAIR. The gentleman from Michigan is recognized for 5 minutes.
  Mr. HUIZENGA. Mr. Chairman, so here is the alternate reality you are 
expected to believe in this scenario that has been created. You are 
going to have somebody wander off the street with their checkbook in 
their pocket, listen to a 3- to 5-minute pitch on an idea that is going 
to change the world, and then they are going to sign away their 
financial future and life savings. That is the scenario that is being 
painted for you out there today by the opponents of this commonsense 
legislation.
  Again, to be an investor, you must be an accredited investor, 
according to the SEC rules, Rule 501, that says you have $300,000 of 
income annually and a net worth of $1 million outside of your home. 
Owning your house doesn't count towards that.
  I have been to these pitch days. You know what you are walking into. 
You don't just stumble on it and go: Wow, what's going on here?
  I have never thought about this. Tell you what, I am going to write a 
five- or six- or seven-figure check today and put myself into financial 
ruin. That is not how these things work.
  Mr. Chairman, at the end of the day, I think it is important to just 
review a little bit of the history here.
  First of all, this amendment isn't necessary. It would create yet 
another SEC-required disclosure and further burden the ability for 
startups to present their ideas to demo days.
  I would note that this amendment could have been offered last March, 
either in committee or while we here in the House had consideration 
last April 2016. However, in both cases that didn't occur.
  Let's remember why we are here today, Mr. Chairman. When the SEC 
promulgated the rules to implement Title II of the JOBS Act, the agency 
made something that was legal prior to April 5 of 2012 suddenly 
illegal. The SEC decided that demo days that bring together those 
entrepreneurs and those companies suddenly became a general 
solicitation.
  That isn't the case, and this amendment would require the SEC to 
prescribe a disclosure that ``describes the nature of the event and the 
risks of investing in securities being advertised.''
  There is no sale that day, Mr. Chairman. No sale at all is going to 
happen. There is no exchange that happens at that event.
  This amendment is unnecessary, overly broad, and would delay the 
return to the certainty that the pre-JOBS Act had brought.
  Mr. Chairman, I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Chairman, may I inquire as to how many other 
speakers the gentleman has?
  Mr. HUIZENGA. Mr. Chairman, I have no further speakers on this 
amendment.
  Ms. VELAZQUEZ. Mr. Chairman, I yield myself such time as I may 
consume.
  First of all, I am the author of the amendment, and in the amendment, 
there is no place in which it requires anyone to sign anything. This is 
a reasonable, straightforward, simple amendment that provides 
transparency and protection to the investors.
  The gentleman says that this is not an offering. While some 
presentations may not explicitly be offering securities for sale, these 
demo days are not a simple science fair. They are sophisticated 
business presentations designed to generate hype and investor interest.
  If a sponsor wants to advertise such events to the public, it is 
reasonable that they also provide information regarding the risk of 
investing in startups.
  Mr. Chairman, I yield back the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, you just heard the author of the 
amendment make the case that this is a complicated process in general 
that an unaccredited person is not going to be allowed to invest in. So 
it requires the event sponsor to provide attendees with a written 
disclosure outlining the nature of the event and the risks of investing 
in the securities for sale. It is not an offering that is happening at 
those demo days. I would ask my colleagues to oppose this amendment.
  Mr. Chairman, I yield back the balance of my time.
  The CHAIR. The question is on the amendment offered by the 
gentlewoman from New York (Ms. Velazquez).
  The question was taken; and the Chair announced that the noes 
appeared to have it.
  Ms. VELAZQUEZ. Mr. Chairman, I demand a recorded vote.
  The CHAIR. Pursuant to clause 6 of rule XVIII, further proceedings on 
the amendment offered by the gentlewoman from New York will be 
postponed.


                  Amendment No. 2 Offered by Mr. Clay

  The CHAIR. It is now in order to consider amendment No. 2 printed in 
part B of House Report 115-2.
  Mr. CLAY. Mr. Chairman, I rise as the designee for Ms. Waters' 
amendment to improve H.R. 79.
  The CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 3, line 18, strike ``and''.
       Page 3, after line 18, insert the following:
       (D) does not receive any compensation for making 
     introductions between investors attending the event and 
     issuers, or for investment negotiations between such parties; 
     and
       Page 3, line 19, strike ``(D)'' and insert ``(E)''.
       At the end of the bill, insert the following:
       (c) Definition of Issuer.--For purposes of this section and 
     the revision of rules required under this section, the term 
     ``issuer'' means an issuer that is in day-to-day operations 
     as a business, is not in bankruptcy or receivership, is not 
     an investment company, and is not a blank check, blind pool, 
     or shell company.

  The CHAIR. Pursuant to House Resolution 33, the gentleman from 
Missouri (Mr. Clay) and a Member opposed each will control 5 minutes.
  The Chair recognizes the gentleman from Missouri.
  Mr. CLAY. Mr. Chair, I move for the adoption of the amendment. This 
amendment, combined with Velazquez amendment, if adopted, would ensure 
that the bill strikes the appropriate balance between capital formation 
and investor protection.
  First, the Waters amendment would prohibit event sponsors from 
collecting finders' fees for connecting potential investors to 
companies. This prohibition helps ensure that event sponsors, including 
colleges, nonprofits, and trade associations, don't have perverse 
incentives to drum up sales of stock.
  Second, the Waters amendment would require the company selling 
securities to be a company operating in the real economy, not a hedge 
fund, shell company, or company going through bankruptcy. Not only does 
this provision protect investors from purchasing shares of an opaque or 
speculative firm, but it also ensures that the bill is targeted to 
provide relief to our Nation's startups and small businesses.
  These two provisions are commonsense changes that I hope will receive 
bipartisan support. I move for the adoption of the amendment.
  Mr. Chairman, I reserve the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, I claim the time in opposition to this 
amendment.
  The CHAIR. The gentleman from Michigan is recognized for 5 minutes.
  Mr. HUIZENGA. Mr. Chairman, once again, we are seeing an unnecessary, 
duplicative amendment here. The amendment, as it is laid out, creates a 
new definition of an issuer. The Securities Exchange Act already 
defines an issuer, and Ms. Waters' definition is vague, confusing and, 
frankly, unnecessary.
  Demo days are opportunities for startup companies to present their 
ideas to potential investors that are accredited. Again, accredited. At 
this point, all of America is shouting back at C-SPAN, saying, $300,000 
in income

[[Page H266]]

per year with $1 million net worth, excluding their home. We get this 
out there. This is not a solicitation or offering a security.
  So what I am, quite honestly, concerned about and maybe a little 
confused about is the point of the HALOS Act trying to fix a problem. 
It is trying to fix a problem.
  Remember, we want to expose entrepreneurs and their ideas to the 
broadest pool of potential investors that includes angel investment 
community, again, of accredited investors. This requirement raises 
serious compliance concerns for angel investors. It would require 
entrepreneurs and startups to perform a compliance function that they 
may not have the physical or financial means to do so. Again, it is 
just an additional burden and barrier to entry for entrepreneurs.
  Again, these are--the entrepreneurs typically aren't the ones that 
have $300,000 of annual income or $1 million net worth because, 
frankly, then they wouldn't have to be at the pitch. They could fund it 
themselves.
  The idea is to make sure that those ideas, those people who are 
looking for an opportunity are given the broadest opportunity possible. 
And I think what we are seeing here is a reaction to the notion that, 
you know what? Maybe people can handle this on their own instead of the 
government needing to step in and be so overly prescriptive and control 
every decision that they are making.
  You are seeing a reaction on the other side to that, to that notion 
of freedom, that idea of an entrepreneurial spirit; this idea that we 
all need to be wrapped in bubble wrap as we go out into the world. That 
is not government's role or job.
  Outside of those prescriptions that are already in place, again, we 
are talking about a narrow group of investors with $300,000 of net 
income annually, and $1 million net worth who would even qualify to 
invest in those.
  Why we would wall this off from others seeking to learn and to see an 
opportunity, I just simply don't understand.
  Mr. Chairman, I reserve the balance of my time.
  Mr. CLAY. Mr. Chair, just in closing, let me say that, again, this 
amendment will bring some balance to the legislature and ensure that 
the bill is targeted to provide relief to our Nation's startup and 
small businesses, and I urge its adoption.
  Mr. Chair, I yield back the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, in closing, I cannot support an amendment 
that makes it more difficult for startups to receive the crucial 
funding that they need to grow and create new jobs. Again, these are 
people pursuing their dreams, their hopes. They need capital and 
credit. They need cash and credit to go fulfill those.
  Mr. Chairman, I actually believe in the SEC. I believe that the rules 
that they operate under are sufficient. I believe in the JOBS Act. I 
believe in the HALO Act that will provide the proper protections to 
investors, again, qualified investors with a $300,000 income and a $1 
million net worth.
  There are proper protections in place. This amendment does nothing 
but add additional burden to those seeking the investment and those 
seeking to invest. I request opposition from my colleagues.
  Mr. Chairman, I yield back the balance of my time.
  The CHAIR. The question is on the amendment offered by the gentleman 
from Missouri (Mr. Clay).
  The question was taken; and the Chair announced that the noes 
appeared to have it.
  Mr. CLAY. Mr. Chairman, I demand a recorded vote.
  The CHAIR. Pursuant to clause 6 of rule XVIII, further proceedings on 
the amendment offered by the gentleman from Missouri will be postponed.

                              {time}  1515

  Mr. HUIZENGA. Mr. Chairman, I move that the Committee do now rise.
  The motion was agreed to.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Olson) having assumed the chair, Mr. Bost, 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. 79) to clarify 
the definition of general solicitation under Federal securities law, 
had come to no resolution thereon.

                          ____________________