[Congressional Record Volume 169, Number 92 (Tuesday, May 30, 2023)]
[House]
[Pages H2656-H2658]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            EQUAL OPPORTUNITY FOR ALL INVESTORS ACT OF 2023

  Mrs. WAGNER. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 2797) to amend the Securities Act of 1933 to require 
certification examinations for accredited investors, and for other 
purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 2797

       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 ``Equal Opportunity for All 
     Investors Act of 2023''.

     SEC. 2. CERTIFICATION EXAMINATIONS FOR ACCREDITED INVESTORS.

       (a) In General.--The Securities and Exchange Commission 
     shall revise the definition of ``accredited investor'' under 
     Regulation D (section 230.501 of title 15, Code of Federal 
     Regulations) to include any natural person who is certified 
     through the examination required under subsection (b).
       (b) Establishment of Examination.--Not later than 1 year 
     after the date of the enactment of this Act, the Securities 
     and Exchange Commission shall establish an examination 
     (including a test, certification, or examination program)--
       (1) to certify an individual as an accredited investor; and
       (2) that--
       (A) is designed with an appropriate level of difficulty 
     such that an individual with financial sophistication would 
     be unlikely to fail; and
       (B) includes methods to determine whether an individual 
     seeking to be certified as an accredited investor 
     demonstrates competency with respect to--
       (i) the different types of securities;
       (ii) the disclosure requirements under the securities laws 
     applicable to issuers and private companies as compared to 
     public companies;
       (iii) corporate governance;
       (iv) financial statements and the components of such 
     statements;
       (v) aspects of unregistered securities, securities issued 
     by private companies, and investments into private funds, 
     including risks associated with--

       (I) limited liquidity;
       (II) limited disclosures;
       (III) variance in valuation methods;
       (IV) information asymmetry;
       (V) leverage risks;
       (VI) concentration risk; and
       (VII) longer investment horizons;

       (vi) potential conflicts of interest, when the interests of 
     the financial professionals and their clients are misaligned 
     or when their professional responsibilities are compromised 
     by financial motivations; and
       (vii) other criteria the Commission determines necessary or 
     appropriate in the public interest or for the protection of 
     investors.
       (c) Administration.--Beginning not later than 180 days 
     after the date the examination is established under 
     subsection (b), such examination shall be administered and 
     offered free of charge to the public by a registered national 
     securities association under section 15A of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78o-3).

  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
Missouri (Mrs. Wagner) and the gentlewoman from California (Ms. Waters) 
each will control 20 minutes.
  The Chair recognizes the gentlewoman from Missouri.


                             General Leave

  Mrs. WAGNER. 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 material on this bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from Missouri?
  There was no objection.
  Mrs. WAGNER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of H.R. 2797, the Equal Opportunity 
for All Investors Act. I thank my colleagues, Congressman Flood and 
Congressman Nickel, for their work on this important piece of 
bipartisan legislation that will safely increase investment 
opportunities for everyday investors.
  The ``accredited investor'' definition is intended to limit private 
market investments to only those investors who are considered 
``sophisticated.''

                              {time}  1700

  To qualify as an accredited investor, an individual must have an 
annual income of at least $200,000 or $300,000 together with a spouse 
for each of the previous 2 years or a net worth of over $1 million.
  However, using wealth as a proxy for determining sophistication 
excludes a large pool of investors who may have other types of 
expertise or experience.
  According to estimates from the Securities and Exchange Commission, 
the SEC, in 2016, about 13 percent of U.S. households qualified as 
accredited investors.
  Additionally, only about 1.3 percent and 2.8 percent of accredited 
investors are Black and Latino, respectively. H.R. 2797 represents a 
thoughtful approach to expanding the accredited investor definition to 
include individuals who are certified through an examination 
established by the SEC and administered by FINRA.
  Under this bill, if you can demonstrate competency with these types 
of investments through an exam, then you qualify as an accredited 
investor.
  Mr. Speaker, by expanding the pathways to qualify as an accredited 
investor beyond wealth tests, this bill modernizes the outdated 
definition that has inappropriately sidelined sophisticated-but-not-
wealthy individuals from high-growth asset classes historically 
reserved for the wealthiest individuals. By doing so, this legislation 
will help more American families realize the American Dream by building 
wealth through our capital markets.
  For these reasons, I urge my colleagues to support H.R. 2797, and I 
reserve the balance of my time.
  Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of H.R. 2797, the Equal Opportunity 
for All Investors Act, sponsored by the gentleman from Nebraska. The 
accredited investor framework serves to protect the general public from 
investing in high-risk, illiquid, private securities because they lack 
the safeguards that are a feature of public securities.
  Unlike our public capital markets, companies do not provide anywhere 
near the same financial and other disclosures to investors for private 
offerings. Private securities also do not offer the same legal 
protections for investors.
  The SEC and State securities regulators do not have the same ability 
to police the private markets as they can the public markets. The 
general rationale behind the comparative lack of regulations governing 
private securities is that institutional investors like private equity 
funds, hedge funds, banks, and others can demand the disclosures from 
the company in exchange for their investment and have significant legal 
resources to hold the company accountable.
  These Wall Street players and other big-money investors don't 
necessarily need the same level of protections when investing as 
compared to retail investors like working families do. The accredited 
investor definition ensures that those who are eligible to invest in 
private securities do, in fact, have the knowledge to know these 
heightened risks.
  Initially, the SEC defined accredited investors to be those who 
possess an intimate understanding of the risk and had the knowledge 
base to decide whether to invest in these particular types of 
securities.
  However, the companies needing to raise capital privately and the 
underwriters and intermediaries facilitating these capital-raising 
activities argued for a simpler approach, so the SEC adopted the 
current definition which is based on financial resources.
  Today, an accredited investor must meet three criteria: They must 
have a net worth either individually or with a spouse exceeding $1 
million, excluding the value of their home; make more than $200,000 a 
year or $300,000 with a spouse; or since 2020, hold certain 
professional certifications or designations, such as being an 
investment adviser or broker.
  This bill being considered under suspension today aims to return to 
the original concept of accredited investor, which is that investors in 
these high-risk investment offerings should be fully aware and 
knowledgeable of the risks involved.
  We all know that just because you have a million dollars, it doesn't 
mean that you understand the complexities of investing. This is why it 
is important for the SEC to also update the current thresholds so that 
Wall Street intermediaries are not able to sell unregulated securities 
to individuals who have become accredited solely based on

[[Page H2657]]

the inflated value of their retirement assets.
  For example, unfortunately, there are millions of accredited 
investors who are now being solicited to invest in products they have 
little knowledge about and the SEC should act to amend the definition 
of the accredited investors to protect those investors.
  On the other hand, we have heard from some investors who really want 
to try their luck with some of these risky and illiquid investments, 
but they do not qualify as an accredited investor because they don't 
meet the wealth or the income test.
  The Equal Opportunity for All Investors Act would solve the latter 
part of this problem by allowing an individual to qualify as an 
accredited investor if they pass an exam that ensures they are 
sufficiently versed in the risk of investing in the private markets.
  Generally, private markets are understood to have a higher potential 
for total loss and can be significantly illiquid than the public 
markets, so having a deep understanding of these risks is necessary to 
navigate the space. In addition, there are fewer protections for 
investors when things go wrong with an investment.
  With this change, any investor who wants to invest in private 
securities can now do so if they can pass this test, which would 
establish they are keenly aware of the particular risks related to 
high-risk and illiquid securities, as well as the conflicts of 
interests presented when financial professionals sell these products to 
investors.
  Mr. Speaker, I thank Mr. Flood and Chair McHenry for working with me 
to ensure that the test in this bill is established by the SEC and that 
it contains specific, robust elements that witnesses at previous 
committee hearings talked about when discussing how they teach and 
mentor their budding investors. I am also pleased that the tests in 
this bill would be available free of charge.

  I think that this bill will solve the problem of people who are ready 
to invest, who are not millionaires, they are not billionaires, but 
they are smart and they know how to determine what the risks are. If 
they are prepared to take them, then let them do so.
  Mr. Speaker, I urge my colleagues to vote ``yes'' on this bill, and I 
reserve the balance of my time.
  Mrs. WAGNER. Mr. Speaker, I yield to the gentleman from Nebraska (Mr. 
Flood), the author of this piece of legislation.
  Mr. FLOOD. Mr. Speaker, I thank the gentlewoman from Missouri for 
yielding.
  Mr. Speaker, the Equal Opportunity for All Investors Act of 2023 will 
give Americans new opportunities to grow their wealth and savings. I 
also thank Chairman McHenry, Chairwoman Wagner, Ranking Member Waters, 
and my Democratic co-lead Wiley Nickel for their support of my bill.
  This legislation expands the accredited investor definition to 
include individuals that are certified, as you have heard today, 
through an exam written by the SEC and administered by FINRA. It is my 
firm belief that the accredited investor definition should not be tied 
exclusively to wealth. Instead, we should unlock opportunities for 
knowledgeable investors that may not come from means. This bill strikes 
an effective balance. It brings more investors into the accredited 
investor pool but also contains guardrails that would filter out 
individuals that do not fully understand private offerings and the 
investment risks associated with them.
  We have legislation today that would make for a thorough but fair 
examination for investors that want to become accredited investors.
  Mr. Speaker, I urge my colleagues to support my bill.
  Ms. WATERS. Mr. Speaker, I yield 3 minutes to the gentleman from 
North Carolina (Mr. Nickel), the lead cosponsor of this bill.
  Mr. NICKEL. Mr. Speaker, I am proud to rise as the co-lead of the 
Equal Opportunity for All Investors Act with my Republican colleague,  
Mike Flood, from the great State of Nebraska.
  Our bipartisan bill cuts through government red tape to improve 
choices for investors regardless of their net worth. This will result 
in greater access to capital for minorities, veterans, and women, and 
will also spur economic growth in places like North Carolina's Research 
Triangle Park.
  Under the current system, only millionaires can be accredited 
investors. We want to open up lucrative private securities investments 
to individuals who have the financial knowledge to understand the risks 
they are taking on but aren't necessarily millionaires. Our bill does 
just that by expanding the accredited investor definition which is what 
allows people to invest in private securities to include individuals 
that are certified through a robust exam established by the SEC and 
administered by FINRA.
  If you are able to pass a test demonstrating you are financially 
sophisticated enough to take on the risk of investing in private 
securities, you should be considered an accredited investor without 
having to be a millionaire. North Carolina's Research Triangle Park is 
an essential economic driver from my district. It is home to many small 
biotech companies working on critical life-changing technologies. Many 
of these companies rely on accredited investors for capital, so our 
larger pool of investors will improve their access to funding, spurring 
growth, and bringing good jobs to working families in North Carolina's 
13th Congressional District and around the country.
  Additionally, according to Brookings, the average net worth of a 
typical White family is nearly ten times greater than that of a Black 
family. By allowing individuals to become accredited investors, 
regardless of their net worth, this bill will enable more diverse 
investors to participate in that asset class. Underrepresented 
entrepreneurs often struggle to access capital, and they greatly 
benefit from a larger pool of more diverse investors that look like 
them.
  Mr. Speaker, I thank my colleague and co-lead Mike Flood and our 
Financial Services Committee Ranking Member Maxine Waters for her 
support and her leadership of this bill, along with Chair Patrick 
McHenry.
  Mr. Speaker, the only real solutions in this Congress are going to be 
bipartisan solutions. This legislation is the result of Democrats and 
Republicans working together to improve the lives of the people we 
represent. I urge my colleagues to join me in supporting the Equal 
Opportunity for All Investors Act.
  Mrs. WAGNER. Mr. Speaker, I reserve the balance of my time.
  Ms. WATERS. Mr. Speaker, I yield myself the balance of my time for 
closing.
  Mr. Speaker, it is important to appropriately tailor the accredited 
investor definition to protect those who do not have the requisite 
knowledge to make certain investments while creating a pathway for 
those who have demonstrable knowledge about the risk associated with 
investing in private securities.
  I believe this bill would ensure that those who possess the knowledge 
and risk appetite for privately-issued securities are able to invest in 
those.
  Mr. Speaker, I, again, urge my colleagues to support this bill that 
is offered by Mr. Flood and Mr. Nickel, and I yield back the balance of 
my time.
  Mrs. WAGNER. Mr. Speaker, I strongly urge my colleagues to support 
H.R. 2797, and I yield back the balance of my time.
  Ms. JACKSON LEE. Mr. Speaker, I rise in support of H.R. 2797 the 
Equal Opportunity for All Investors Act of 2023, which expands who 
would be considered an accredited investor for the purposes of 
participating in private offerings of securities.
  Additionally, certain unregistered securities may only be offered to 
accredited investors.
  Furthermore, this bill allows an individual to qualify through an 
examination established by the Securities and Exchange Commission.
  The examination must be designed with an appropriate level of 
difficulty such that an individual with financial sophistication or 
training would be unlikely to fail.
  It also may include methods to determine competency in certain areas 
and must be administered by a registered national securities 
association and offered free of charge to the public.
  Currently, accredited investors must satisfy certain requirements 
indicating their reduced exposure to financial risk, including those 
related to income, net worth, or knowledge and experience.
  I urge all my colleagues to support this legislation.
  The SPEAKER pro tempore. The question is on the motion offered by

[[Page H2658]]

the gentlewoman from Missouri (Mrs. Wagner) that the House suspend the 
rules and pass the bill, H.R. 2797, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mrs. WAGNER. 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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