[Congressional Record Volume 170, Number 40 (Wednesday, March 6, 2024)]
[House]
[Pages H972-H988]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                EXPANDING ACCESS TO CAPITAL ACT OF 2023


                             General Leave

  Mr. McHENRY. 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 the bill, H.R. 2799.
  The SPEAKER pro tempore (Mr. Duarte). Is there objection to the 
request of the gentleman from North Carolina?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to House Resolution 1052 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. 2799.
  The Chair appoints the gentleman from Ohio (Mr. Wenstrup) to preside 
over the Committee of the Whole.

                              {time}  1631


                     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. 2799) to make reforms to the capital markets of the United 
States, and for other purposes, with Mr. Wenstrup 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.
  General debate shall be confined to the bill and shall not exceed 1 
hour equally divided and controlled by the

[[Page H973]]

chair and ranking minority member of the Committee on Financial 
Services, or their respective designees.
  The gentleman from North Carolina (Mr. McHenry) and the gentlewoman 
from California (Ms. Waters) each will control 30 minutes.
  The Chair recognizes the gentleman from North Carolina.
  Mr. McHENRY. Mr. Chair, I yield myself such time as I may consume.
  Mr. Chair, 40 years ago, my father started a small business in our 
backyard. Growing up in Gastonia, North Carolina, being the youngest of 
five kids, my father started a small business with his friend, who also 
had five kids. It didn't change the world and it was just a lawn mowing 
business. We mowed other people's grass, and that is what put two 
families through school, provided for two families, and eventually 
provided for many others as they scaled up and grew the business.
  While my dad's small business didn't change the world, it certainly 
changed my world and our family's world.
  Like other entrepreneurs, though, my dad needed access to affordable 
capital to scale his business. When other sources of opportunities for 
lending of capital dried up, he relied on a charge card, which we now 
call a credit card, to grow his business and to start employing other 
folks.
  This story isn't unique to my family. We see this playing out across 
the country today. Entrepreneurs with new ideas or who are seeking to 
grow their businesses are struggling to access affordable credit and 
affordable capital. That means that they are not given the same 
opportunity to change their lives, their family's lives, or their 
community.
  This is a loss for all of us. It is a loss for American innovation. 
That is where investment capital and this bill come in to help more 
entrepreneurs realize their version of the American Dream.
  Currently, the venture capital that funds startups are concentrated 
in traditional financial hubs, like Silicon Valley, Boston, and New 
York City. Those three cities of the country account for almost three-
quarters of all venture funding.
  Now, that is not for every business, but it is a very specific group 
of startups. This Congress and our committee heard compelling testimony 
from folks across the ideological spectrum who urged us to make it 
easier for them to raise money from nontraditional sources.
  This would allow them not only to build their funds and deploy more 
capital, but also share their financial success within their community.
  This bill, the Expanding Access to Capital Act, does just that and 
more by alleviating the unique fundraising challenges faced by 
entrepreneurs and their investors who don't live in Silicon Valley.
  This bill will also make improvements to our public markets and 
create new opportunities for everyday investors to save and build 
wealth and enjoy their version of the American Dream.
  This form of capital formation is a critical ingredient for creating 
long-term economic growth that has proven enduring here in the United 
States. Not to mention, it has traditionally been an area where a 
divided Washington can find consensus.
  A little more than a decade ago, Congress came together to pass the 
JOBS Act, which President Obama then signed into law. It was a 
Republican House, a Democrat Senate, and a Democrat in the White House 
who put that historic piece of legislation through the process and into 
law.
  It addressed several hurdles entering our capital markets by 
rightsizing onerous regulatory barriers and providing entrepreneurs 
access to new levels and streams of funding.
  Recognizing the need to build on the success of the JOBS Act, the 
House Financial Services Committee embarked on a yearslong mission to 
better understand the remaining headwinds hindering capital formation 
and legislate real and impactful solutions.
  Many of those solutions are found in this legislation we are 
considering today, which consist of commonsense, innovative ideas to 
accomplish three goals: First, the bill strengthens our public markets 
and aims to incentivize companies to go public, undoing the troubling 
decline of initial public offerings here in the United States, or IPOs. 
IPOs are businesses that average everyday investors can own a piece of.
  Why is it important that we attract more companies to the public 
markets in the United States?
  One, everyday American investors, also known as retail investors, are 
limited to investing in publicly traded companies. Most public 
companies here in the United States that are of large size and scale 
should be available in the public markets. More public companies here 
in the United States means more opportunities for the American retail 
investor to grow their savings.

  Number two, job growth. A 2021 study found that biotech startups 
expand their workforce by an average of 150 percent in the first 3 
years after undertaking an initial public offering using the JOBS Act 
provisions.
  To make our public markets more attractive, H.R. 2799, this bill, 
includes provisions that rightsize regulatory burdens on public 
companies, streamline the process of going public, and allow more 
companies to qualify as an emerging growth company.
  This is an extension of more key provisions within the bipartisan 
JOBS Act that have a proven record of success.
  Second, as I said earlier, this legislation supports small businesses 
and entrepreneurs who are the true engine of our economy and account 
for 99.9 percent of all U.S. businesses.
  Among other policies, this bill allows small businesses to raise more 
money through offerings. It also addresses limitations on small, 
emerging venture fund managers attempting to raise and deploy capital 
to startups and entrepreneurs in their communities.
  Third, this bill increases access to private markets and allows more 
Americans to participate in high-growth investment opportunities that 
have been traditionally reserved for the wealthy elite.
  Currently, these investment opportunities are reserved for those 
qualifying as ``accredited investors,'' which dictates what a person 
can invest in based off their wealth or income.
  We should all agree that wealth and income should not be a proxy for 
sophistication, especially if investors have expertise or experience 
that prepares them to invest in private offerings.
  This bill includes provisions to expand the accredited investor 
definition, allowing everyday Americans to invest where they see 
opportunities and where they have expertise. That means new wealth-
building opportunities for American investors who have been arbitrarily 
sidelined for too long.
  Now, these private markets, that is where we have had the fastest 
growing businesses. The greatest wealth creation is ownership in these 
private markets. We want to link that up for all Americans to have that 
opportunity to invest in those markets where they have expertise.
  Let me close with this: Capital formation should not be a partisan 
issue.
  This legislation builds on the success of the bipartisan JOBS Act and 
will benefit Americans in every single one of our districts, either by 
growing their retirement savings or through job creation and economic 
growth in their community.
  This bill is a compilation of several standalone bills introduced by 
numerous members of the Financial Services Committee, under the great 
leadership of our subcommittee chair on Capital Markets, Ann Wagner of 
Missouri.
  There are many Members that I wish to recognize, but it would take 
too long at this time to go through all of their great work; however, 
it is embodied in this bill before us today.
  I am grateful for the opportunity to be here on the House floor, and 
I am grateful to the House Republican leadership that have prioritized 
this help for small businesses and our legislative work in the 
Financial Services Committee. I think we can see that we all want to be 
unified in helping the American people achieve their dreams in the way 
they see fit. For small business folks that want to start a small 
business, we need to make things easier for them, not harder. This bill 
makes it better for them and easier for them.
  Mr. Chair, I yield to the gentlewoman from Missouri (Mrs. Wagner) to 
control the balance of my time.
  The CHAIR. The gentlewoman from Missouri (Mrs. Wagner) will control 
the time.
  Ms. WATERS. Mr. Chair, I yield myself such time as I may consume.

[[Page H974]]

  Mr. Chair, I rise today in strong opposition to H.R. 2799, a bill 
that would cause significant long-term harm to both small businesses 
trying to raise money and mom-and-pop investors trying to save for 
their retirements.
  A primary reason our capital markets are the envy of the world is 
because investors have confidence in the financial products that they 
are investing in. That confidence is hard won to be sure. It is the 
result of a robust disclosure regime that has been in place for decades 
and requires public companies to transparently and accurately tell 
investors about the inner workings of their businesses, their 
financials, and the risk involved with purchasing their shares.
  Investor confidence is also rooted in strong legal protections for 
investors and their right to have a say in the company's direction 
through the proxy process.

  And importantly, investor confidence is based on having a strong 
enforcer, the Securities and Exchange Commission, or SEC, that sets 
clear rules of the road, and keeps fraudsters out of the system.
  While our capital markets are far from perfect, trillions of dollars 
are invested every year because investors are confident that they won't 
be ripped off.
  Unfortunately, the bill before us today threatens to undermine that 
investor confidence.
  First, H.R. 2799 would expand the number of companies that are able 
to offer securities without needing to register with the SEC or provide 
critical disclosures to ordinary investors.
  This expansion will only benefit moderate to large companies rather 
than the small businesses this act purports to help. By exempting more 
companies from public SEC registration requirements, this bill expands 
the size of the private securities markets, which are growing rapidly 
and already outnumber the public securities markets 2-1.
  Second, this bill makes it easier for financial middlemen to peddle 
opaque, illiquid, and high-risk private securities to retail investors 
who won't receive the information they need to make informed investment 
decisions.
  This isn't democratizing finance or creating investment 
opportunities; this is Wall Street creating another target to dump its 
bottom-of-the-barrel investment products onto retail investors.
  Private securities, compared to public securities, are significantly 
more risky and more volatile, less transparent, harder to cash out, and 
have fewer legal protections.
  The bottom-of-the-barrel private securities that will be sold to 
retail investors as a result of this bill are especially dangerous 
because they will only be offered to retail investors after private 
equity and venture capital funds have already passed on them. It is 
important to notice that 90 percent of startups fail and private equity 
would love to dump these stocks on your constituents.

                              {time}  1645

  Third, H.R. 2799 undermines the ability of State securities 
regulators to help small businesses raise capital and stop fraudsters. 
State securities regulators are on the front line of our capital 
markets, investigating complaints of investor fraud, enforcing State 
securities laws, educating investors about their rights, and helping 
small businesses raise money to fund their goals and comply with the 
law. We should not preempt States by blocking these important overseers 
from doing their jobs.
  To summarize, H.R. 2799 is a Wall Street wish list that collectively 
exempts big corporations and investment funds from transparency and 
accountability while gutting critical legal safeguards for Main Street 
investors. By weakening investor protections in numerous ways, this 
bill would allow fraud to proliferate and retirees and other mom-and-
pop investors to be ripped off by bad actors.
  This bill would ultimately harm confidence in our capital markets 
while doing nothing to assist the very small businesses the bill 
purports to help. In fact, as investors lose confidence in our markets, 
small businesses will see their capital costs rise, not fall.
  I want to thoroughly debunk the notion that this bill somehow helps 
small businesses because the truth is that it would do just the 
opposite. I am very supportive of small businesses.
  In fact, I have worked extensively this Congress with Chair McHenry 
on bipartisan ways that we can help small businesses raise capital. We 
have worked together to strengthen crowdfunding and to change the rules 
on accredited investors. There are several policy solutions that we 
have agreed on that represent targeted ways to increase capital 
formation without harming investor protection.
  In fact, we worked together to pass 13 bills last year that represent 
bipartisan, commonsense reforms that support small businesses, enabling 
those who are knowledgeable about the risks of private securities to 
make informed investments, while ensuring robust investor protections.
  Most of these bills also passed under suspension on the House floor, 
so there is a bipartisan way forward on this issue, but instead of 
working with Democrats to get these bipartisan bills to the President's 
desk, Republicans have packaged together this toxic combination of 
partisan bills and are focusing their time and energy here.
  Mr. Chair, Democrats on the Financial Services Committee voted 
unanimously to oppose this bill at a markup last April. I urge all of 
my colleagues to unanimously reject it on the floor today.
  Mr. Chair, I reserve the balance of my time.
  Mrs. WAGNER. Mr. Chair, I yield myself such time as I may consume. 
Mr. Chair, I rise in support of H.R. 2799, the Expanding Access to 
Capital Act.
  As chair of the Capital Markets Subcommittee, I am so proud of the 
hard work of our members in crafting this landmark piece of legislation 
that supports America's Main Street businesses and retail investors. I 
am also grateful to leadership for affirming that this bill is a 
crucial priority and taking action to pass this legislation in the 
House today.
  This legislation is the culmination of four hearings that the Capital 
Markets Subcommittee has held this Congress, where we heard powerful 
testimony from 19 witnesses, including founders of both private and 
public companies, investors of all sizes, former SEC Commissioners, 
securities law practitioners, and even one of the authors of the IPO-
related provisions of the JOBS Act.
  As the witnesses at each of these hearings made clear, all the bills 
included in H.R. 2799 play a vital role in strengthening our public 
markets, improving access to capital for small businesses and 
entrepreneurs, and expanding investment opportunities for all 
Americans.
  For example, Representative Steil's Helping Startups Continue to Grow 
Act strengthens our public markets, making them more attractive by 
allowing more companies to benefit from emerging growth company status. 
Representative Steil's bill also extends the maximum amount of time an 
issuer can remain an emerging growth company, helping to rightsize the 
regulatory burdens on newly public companies that are working to 
achieve their potential. This commonsense provision builds on one of 
the most successful and impactful reforms from the JOBS Act of 2012.
  Representative Houchin's Regulation A+ Improvement Act improves 
access to capital for small businesses by increasing the amount that 
small companies can raise under Regulation A from $50 million to $150 
million without being subject to burdensome IPO compliance 
requirements. In making this adjustment, Regulation A will become a 
more attractive pathway for small businesses to raise capital.
  Our committee's legislation also expands investment opportunities for 
all Americans by revising the accredited investor definition to include 
individuals receiving investment advice on a private offering from a 
qualified accredited investor.
  Amendments to H.R. 2799 include Representative Huizenga's Improving 
Disclosure for Investors Act, Representative Lawler's Helping Angels 
Lead Our Startups Act, Representative Lucas' Retirement Fairness for 
Charities and Educational Institutions Act, and my Increasing Investor 
Opportunities Act, which gives investors greater choice and access to 
an asset class typically reserved for the wealthy. They are all welcome 
and thoughtful additions.

[[Page H975]]

  Together, these policies ensure that our markets are working 
efficiently and effectively to provide companies access to the capital 
that they need to innovate, grow, and create jobs, not just on the 
coasts but in America's heartland as well.
  H.R. 2799 offers targeted, commonsense solutions that level the 
playing field for Main Street investors looking to save for a new home, 
their child's future, or retirement.
  Moreover, America's IPO market has been on the decline for years due 
to increased regulatory and compliance costs. This package builds on 
the success of the JOBS Act and reins in those onerous barriers that 
are keeping America's innovators from seeking to enter and stay in our 
public markets.
  The thoughtfully crafted bills in H.R. 2799 would address a multitude 
of inefficiencies within our public and private markets and deliver 
sustainable and enduring growth to our economy.
  I thank Chairman McHenry for his leadership and tireless efforts in 
getting these bills to the floor, and I also thank the Members who have 
bills in H.R. 2799 for their incredible work.
  Mr. Chair, I urge my colleagues to support this legislation, and I 
reserve the balance of my time.
  Ms. WATERS. Mr. Chair, I yield such time as she may consume to the 
gentlewoman from New York (Ms. Velazquez), the ranking member of the 
Small Business Committee.
  Ms. VELAZQUEZ. Mr. Chairman, I rise in opposition to H.R. 2799.
  As ranking member of the House Small Business Committee, I know that 
small businesses are the driving force of the American economy. Access 
to capital is the lifeblood of our Nation's small firms. It is what 
allows them to expand and hire more workers.
  A key method for small businesses to raise capital is seeking 
investors through our Nation's capital markets. It is a method I 
support. However, raising funds through capital markets cannot come at 
the expense of retail investors, employees, and independent 
contractors. This bill fails to strike an appropriate balance and 
significantly weakens investor protections while dramatically expanding 
the number of exempt offerings.
  When we created new exemptions in the JOBS Act, they were designed 
for smaller firms. Today, large private companies and private equity 
funds have misused these exemptions to create an opaque lending market 
that is now bigger than our public markets. The lack of transparency 
associated with these funds isn't beneficial for small businesses 
seeking financing from these funds or retail investors investing in 
them.
  Private securities offerings are generally deemed as riskier than 
public offerings. The lack of disclosures and transparency in this bill 
allows retail investors to participate in these offerings without 
adequately understanding the dangers, creating the potential for 
significant financial loss for working-class investors and retirees.
  President Biden has already signaled his opposition to this bill. If 
the majority were serious about helping small businesses raise capital 
through our private markets, they would pull this bill and work with us 
to craft a bipartisan solution that helps small businesses and protects 
investors.
  Mr. Chair, I encourage my colleagues to vote ``no.''
  Mrs. WAGNER. Mr. Chair, I yield 1 minute to the gentleman from Texas 
(Mr. Williams), my classmate and good friend and colleague.
  Mr. WILLIAMS of Texas. Mr. Chair, I rise today in support of H.R. 
2799, the Expanding Access to Capital Act.
  This commonsense legislation is critical for long-term, sustainable 
economic growth by strengthening our public markets, helping small 
businesses and entrepreneurs, and increasing opportunity for all 
investors.
  The Biden administration has continuously increased obligations and 
regulations, which in turn have increased compliance costs for public 
companies and businesses. H.R. 2799 would reduce compliance burdens and 
allow for companies and markets to thrive.
  This important legislation would also benefit small businesses by 
reducing regulatory barriers to ensure small business and entrepreneurs 
have access to the capital they need to support their operations and 
communities.
  I thank Chairman McHenry for including language from my legislation 
that expands benefits currently reserved for emerging growth companies 
to other public companies. The EGC on-ramp has been a key tool in 
funding growth and will make public markets more attractive to help 
small issuers and level the playing field.
  Mr. Chair, I urge my colleagues to support this legislation, the 
Expanding Access to Capital Act, to help strengthen public markets. In 
God we trust.
  Ms. WATERS. Mr. Chair, I yield 4 minutes to the gentleman from 
California (Mr. Sherman), who is also the ranking member of the 
Subcommittee on Capital Markets.
  Mr. SHERMAN. Mr. Chair, I rise in opposition to the bill. It is not a 
good bill. We have some amendments that will make it slightly better, 
but it still won't be a good bill. All the Democrats on the Financial 
Services Committee voted against this bill in committee.
  Let's give a little background here. The gold standard is a public 
offering of securities. They then become registered securities. They 
can trade on an exchange. They provide disclosures to investors and 
audited financial statements.
  We do have exceptions to this rule--exceptions for small offerings 
and exceptions where you are going to have accredited investors who 
have the capacity to absorb an enormous amount of risk and the capacity 
to evaluate the investments.
  The definition of an accredited investor was criticized by the chair 
of the full committee when he was here, and I agree that definition 
should change. Right now, it is focused too much just on wealth and 
income. We need, instead, to also allow people to be accredited 
investors if they have the expertise to evaluate the investment and are 
not putting too much of their own resources into one illiquid 
investment. We also need to take a look at the expertise that an 
investor may not have himself or herself but can acquire through truly 
independent advisers.
  The fact is that the definition of accredited investor should be 
improved, and that is why this House passed and sent to the Senate 
bills that would improve it, and I hope the Senate will finally take 
action on those bipartisan pieces of legislation.
  This bill doesn't really improve the definition of accredited 
investor. It says that you are an accredited investor if you sign a 
piece of paper saying you want to be an accredited investor, self-
certification. That shreds investor protection.

                              {time}  1700

  This bill not only guts investor protection when it comes to the 
definition of accredited investor, but it also locks in a system in 
which a company can say they are a private company even though they 
have thousands of owners--thousands. You can have 2,000 or more owners 
because you may have an investment vehicle that has hundreds of 
investors of its own, and it counts as only one investor toward that 
2,000.
  That means that a lot of companies will never go public. That means 
that those investors who want investor protection and want the 
liquidity of being able to sell their shares on an exchange will never 
be able to invest. It means that these companies will not provide the 
audited financial statements and the other disclosures that are 
required of public companies.
  It guts the concept of being a public company. Why is that so 
important? Because today, the SEC published climate disclosures 
required of public companies, and today, we are considering a bill that 
is designed to truncate the number of public companies that we have.
  If you care about the economy, vote ``no.'' If you want to protect 
investors, vote ``no.'' If you want to protect our climate, vote 
``no.''
  This bill would open the door to investors placing their entire nest 
eggs in private securities with insufficient transparency, no audited 
financial statements, and no liquidity. Vote ``no.''
  Mrs. WAGNER. Mr. Chair, I yield 1\1/2\ minutes to the gentleman from 
South Carolina (Mr. Timmons), my friend and colleague.
  Mr. TIMMONS. Mr. Chair, I rise today in support of H.R. 2799, the 
Expanding Access to Capital Act. This legislation would provide greater 
access to funding by strengthening public

[[Page H976]]

markets, expanding fundraising opportunities for entrepreneurs, and 
increasing investment opportunities for everyday Americans.
  This package represents a much-needed stimulant to capital formation 
and would empower small businesses throughout the country.
  One particular provision contained in this package is my bill, the 
Improving Capital Allocation for Newcomers Act, also known as the ICAN 
Act, which seeks to generate more regional venture capital 
participation outside of Silicon Valley by raising the cap on 
qualifying venture capital funds from $10 million to $150 million and 
raising the number of permitted investors from 250 to 600.
  This would allow venture funds to raise more money from more 
individuals, enabling funds to build an investor base outside of 
traditional financial centers.
  According to the SEC's Advocate for Small Business Capital Formation 
report, 78 percent of small business owners are concerned about their 
ability to access capital. My bill would alleviate some of this concern 
by making it easier for venture capital to expand into new regions and 
communities.
  Simply put, new venture funds mean new opportunities for small 
businesses and innovators to gain the funding they need to develop 
their ideas, promote good-paying jobs, and grow their companies.
  Mr. Chair, an entrepreneur in Spartanburg, South Carolina, should be 
afforded the same opportunities to grow their businesses as an 
entrepreneur in Silicon Valley.
  I am proud to say this legislation democratizes finances and allows 
for more South Carolinians to support local economic ventures, 
providing capital outside of traditional venture capital hubs and 
bringing these funds from Silicon Valley to the Fourth District of 
South Carolina.
  Ms. WATERS. Mr. Chair, I yield myself such time as I may consume.
  Let's be clear. This Wall Street wish list bill is going nowhere in 
the Senate, but we have several bipartisan bills that support small 
businesses and retail investors that actually have a chance of getting 
into law.
  Chair McHenry and I have worked together for several years on 
legislation to strengthen our capital markets, going back to the JOBS 
Act and our efforts on crowdfunding and legislation to support angel 
investors.
  In fact, this Congress, we worked extensively together on 13 
bipartisan bills, including my bill, H.R. 2796, the Promoting 
Opportunities for Non-Traditional Capital Formation Act, which requires 
the SEC's Office of the Advocate for Small Business Capital Formation 
to provide educational resources and host events to promote capital-
raising options for underrepresented small businesses and businesses in 
rural areas and to meet annually with representatives of State 
securities commissions; Mr. Meeks' bill, H.R. 2795, the Enhancing 
Multi-Class Share Disclosures Act, which requires an issuer with the 
multi-class share structure to disclose certain information regarding 
the voting power of specified persons; Mr. Himes' bill, H.R. 2812, the 
Middle Market IPO Underwriting Cost Act, which requires the SEC to 
study the costs encountered by small- and medium-sized companies when 
undertaking initial public offerings and certain offerings exempt from 
securities registration requirements; and Mr. Gottheimer's bill, H.R. 
2593, the Senior Security Act, which establishes a senior investor task 
force within the SEC. The task force must report on topics relating to 
investors over the age of 65 and make recommendations for actions to 
address problems encountered by senior investors.
  Committee Democrats also supported several more Republican bills that 
help promote capital formation. We could have worked together to get 
these all included in the NDAA, but Chair McHenry knows why that didn't 
happen--Republicans blocked all of these bills from being added.
  Today, Republicans are pivoting to a completely partisan approach to 
the issue with this bill. This is par for the course with extreme MAGA 
Republicans who prefer to pander to their base instead of actually 
getting things done.
  When Republicans are done wasting their time on this extreme MAGA 
bill, Democrats will be ready to get to work on solutions that actually 
have a chance of making a difference for small businesses and retail 
investors.

  Mr. Chair, I reserve the balance of my time.
  Mrs. WAGNER. Mr. Chair, I yield 1 minute to the gentleman from 
Wisconsin (Mr. Fitzgerald), my friend and colleague.
  Mr. FITZGERALD. Mr. Chair, I rise today in strong support of H.R. 
2799. American public markets remain the go-to place for innovative 
companies to grow and build capital. However, the regulatory 
environment has steadily become more burdensome and costly, creating a 
real divide between market regulation now and market regulation years 
ago.
  At a time when the markets and regulatory environment were more 
conducive to small- and mid-cap stocks, groundbreaking Wisconsin 
companies like Harley-Davidson, Johnson Controls, and Kohler raised 
capital by going public. Through the IPOs, these upstart enterprises 
raised the funding necessary to expand their workforce and operations. 
At the same time, families benefited from the opportunity to invest in 
these companies to build savings and wealth.
  While Americans have started new businesses at record rates since the 
pandemic, many still struggle to meet their own capital needs. The 
number of U.S. IPOs has continued to decline since the early 2000s as 
the cost and regulatory burdens of going and staying public remain 
high.
  The Acting CHAIR (Mr. Smucker). The time of the gentleman has 
expired.
  Mrs. WAGNER. Mr. Chair, I yield an additional 30 seconds to the 
gentleman from Wisconsin.
  Mr. FITZGERALD. Under President Biden, SEC Chairman Gary Gensler 
proposed over 50 rules. This must be reversed, and I urge my colleagues 
to vote ``yes'' for this commonsense legislation.
  Ms. WATERS. Mr. Chair, the following organizations oppose this bill: 
the North American Securities Administrators Association, Consumer 
Federation of America, AFL-CIO, AFSCME, Communications Workers of 
America, SEIU, Steelworkers, Transport Workers Union of America, 
Americans for Financial Reform, Public Citizen, Center for American 
Progress, and Main Street Alliance.
  Mr. Chair, I reserve the balance of my time.
  Mrs. WAGNER. Mr. Chair, I yield 2 minutes to the gentleman from 
Wisconsin (Mr. Steil), my friend and colleague.
  Mr. STEIL. Mr. Chair, I rise in support of the Expanding Access to 
Capital Act. This package would help improve our capital markets to 
foster innovation, growth, and job creation here in the United States.
  It is a win for workers, investors, and entrepreneurs. It includes 
two bills I introduced that would help smaller public companies raise 
money.
  The first, the Helping Startups Continue to Grow Act, would expand 
the IPO on-ramp first established in the bipartisan JOBS Act. It allows 
more early-stage companies to keep their emerging growth company status 
for longer, and it would update the low caps currently in place. The 
provisions ensure more companies can benefit from the rightsized 
disclosures and reduce compliance costs that come with EGC status.
  Thanks to EGC status, these companies can focus on innovation and job 
creation rather than complying with a regulatory regime designed for 
larger and more mature firms. This is especially helpful for R&D-
intensive startups that often work for years to develop lifesaving 
cures or transformative technologies.
  This package also includes my bill to expand the availability of 
well-known seasoned issuer status to more small public companies. This 
designation allows qualified companies to use the shelf registration 
process, saving them time and money when they go to the public markets 
to raise capital.
  In the two decades since the WKSI construct was created, it has been 
shown to be safe and effective. My targeted reform would reduce the 
cost of capital for small market companies, spurring more job creation 
and growth.
  Many of these ideas are in Chairman McHenry's package, and they have 
long had bipartisan support and a long bipartisan track record.

[[Page H977]]

  My colleagues on both sides of the aisle should vote to modernize our 
capital markets. It is good for workers, investors, and entrepreneurs 
seeking to invest in American innovation and build a better future.
  Mr. Chair, I urge my colleagues to support this bill.
  Ms. WATERS. Mr. Chair, I have no further speakers, and I yield myself 
the balance of my time.
  Mr. Chair, in all my years in Congress, this is one of the worst 
examples I have ever seen of a Wall Street wish list masquerading as a 
lifeline for small businesses and ordinary investors.
  Let me be clear. This bill does nothing to help small businesses. It 
only helps big business avoid transparency and accountability, and that 
is why the Biden administration opposes this bill.
  This bill does nothing to help ordinary investors. It only helps make 
it easier for investors to be duped by conflicted middlemen into 
purchasing some of the riskiest securities out there.
  Under this bill, these middlemen will have free rein to mask critical 
details about investment risk and target elderly people and others with 
what they claim is a great investment opportunity that will help them 
build wealth but, in reality, is a fraud.
  For example, these middlemen will be able to take the failing 
businesses off private equity balance sheets and offload them onto Main 
Street investors.
  This bill also hinders small businesses' ability to raise money by 
preempting State law and preventing State securities regulators from 
doing their job.
  Mr. Chair, we see this bill for what it is: a Wall Street wish list 
that throws Main Street investors under the bus.
  Mr. Chair, I urge my colleagues to vote for Main Street, not Wall 
Street, by voting ``no'' on this bill. I yield back the balance of my 
time.
  Mrs. WAGNER. Mr. Chair, I yield myself the balance of my time.
  I want to quickly and swiftly say that H.R. 2799 has been a wonderful 
collaborative effort. There are many bipartisan pieces of legislation 
in this bill and amendments that also received bipartisan support out 
of the committee.
  Mr. Chair, I urge all of my colleagues to join Republicans in 
supporting savers, entrepreneurs, and job creators and to give them the 
chance to achieve their American Dream by voting ``yes'' on H.R. 2799, 
and I yield back the balance of my time.
  The Acting 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 amendment in the nature of a substitute recommended by the 
Committee on Financial Services, printed in the bill, modified by the 
amendment printed in part A of House Report 118-407, shall be 
considered as adopted. The bill, as amended, shall be considered as the 
original bill for the purpose of further amendment and shall be 
considered as read.
  The text of the bill is as follows:

                               H.R. 2799

       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 ``Expanding 
     Access to Capital Act of 2023''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:
Sec. 1. Short title; table of contents.

                DIVISION A--STRENGTHENING PUBLIC MARKETS

 TITLE I--REMOVE ABERRATIONS IN THE MARKET CAP TEST FOR TARGET COMPANY 
                          FINANCIAL STATEMENTS

Sec. 1101. Avoiding aberrational results in requirements for 
              acquisition and disposition financial statements.

              TITLE II--HELPING STARTUPS CONTINUE TO GROW

Sec. 1201. Short title.
Sec. 1202. Emerging growth company criteria.

    TITLE III--SEC AND PCAOB AUDITOR REQUIREMENTS FOR NEWLY PUBLIC 
                               COMPANIES

Sec. 1301. Auditor independence for certain past audits occurring 
              before an issuer is a public company.

   TITLE IV--EXPAND THE PROTECTION FOR RESEARCH REPORTS TO COVER ALL 
                       SECURITIES OF ALL ISSUERS

Sec. 1401. Provision of research.

    TITLE V--EXCLUDE QIBS AND IAAS FROM THE RECORD HOLDER COUNT FOR 
                         MANDATORY REGISTRATION

Sec. 1501. Exclusions from mandatory registration threshold.

                   TITLE VI--EXPAND WKSI ELIGIBILITY

Sec. 1601. Definition of well-known seasoned issuer.

         DIVISION B--HELPING SMALL BUSINESSES AND ENTREPRENEURS

            TITLE I--UNLOCKING CAPITAL FOR SMALL BUSINESSES

Sec. 2101. Short title.
Sec. 2102. Safe harbors for private placement brokers and finders.
Sec. 2103. Limitations on State law.

            TITLE II--SMALL BUSINESS INVESTOR CAPITAL ACCESS

Sec. 2201. Short title.
Sec. 2202. Inflation adjustment for the exemption threshold for certain 
              investment advisers of private funds.

         TITLE III--IMPROVING CAPITAL ALLOCATION FOR NEWCOMERS

Sec. 2301. Short title.
Sec. 2302. Qualifying venture capital funds.

       TITLE IV--SMALL ENTREPRENEURS' EMPOWERMENT AND DEVELOPMENT

Sec. 2401. Short title.
Sec. 2402. Micro-offering exemption.

                   TITLE V--REGULATION A+ IMPROVEMENT

Sec. 2501. Short title.
Sec. 2502. JOBS Act-related exemption.

        TITLE VI--DEVELOPING AND EMPOWERING OUR ASPIRING LEADERS

Sec. 2601. Short title.
Sec. 2602. Definitions.
Sec. 2603. Reports.

            TITLE VII--IMPROVING CROWDFUNDING OPPORTUNITIES

Sec. 2701. Short title.
Sec. 2702. Crowdfunding revisions.

           TITLE VIII--RESTORING THE SECONDARY TRADING MARKET

Sec. 2801. Short title.
Sec. 2802. Exemption from State regulation.

            DIVISION C--INCREASING ACCESS TO PRIVATE MARKETS

                TITLE I--GIG WORKER EQUITY COMPENSATION

Sec. 3101. Short title.
Sec. 3102. Extension of Rule 701.
Sec. 3104. GAO study.

               TITLE II--INVESTMENT OPPORTUNITY EXPANSION

Sec. 3201. Short title.
Sec. 3202. Investment thresholds to qualify as an accredited investor.

          TITLE III--RISK DISCLOSURE AND INVESTOR ATTESTATION

Sec. 3301. Short title.
Sec. 3302. Investor attestation.

  TITLE IV--ACCREDITED INVESTORS INCLUDE INDIVIDUALS RECEIVING ADVICE 
                       FROM CERTAIN PROFESSIONALS

Sec. 3401. Accredited investors include individuals receiving advice 
              from certain professionals.

                DIVISION A--STRENGTHENING PUBLIC MARKETS

 TITLE I--REMOVE ABERRATIONS IN THE MARKET CAP TEST FOR TARGET COMPANY 
                          FINANCIAL STATEMENTS

     SEC. 1101. AVOIDING ABERRATIONAL RESULTS IN REQUIREMENTS FOR 
                   ACQUISITION AND DISPOSITION FINANCIAL 
                   STATEMENTS.

       The Securities and Exchange Commission shall revise section 
     210.1-02(w)(1)(i)(A) of title 17, Code of Federal 
     Regulations, to permit a registrant, in determining the 
     significance of an acquisition or disposition described in 
     such section 210.1-02(w)(1)(i)(A), to calculate the 
     registrant's aggregate worldwide market value based on the 
     applicable trading value, conversion value, or exchange value 
     of all of the registrant's outstanding classes of stock 
     (including preferred stock and non-traded common shares that 
     are convertible into or exchangeable for traded common 
     shares) and not just the voting and non-voting common equity 
     of the registrant.

              TITLE II--HELPING STARTUPS CONTINUE TO GROW

     SEC. 1201. SHORT TITLE.

       This title may be cited as the ``Helping Startups Continue 
     To Grow Act''.

     SEC. 1202. EMERGING GROWTH COMPANY CRITERIA.

       (a) Securities Act of 1933.--Section 2(a)(19) of the 
     Securities Act of 1933 (15 U.S.C. 77b(a)(19)) is amended--
       (1) by striking ``$1,000,000,000'' each place such term 
     appears and inserting ``$1,500,000,000'';
       (2) in subparagraph (B)--
       (A) by striking ``fifth'' and inserting ``7-year''; and
       (B) by adding ``or'' at the end;
       (3) in subparagraph (C), by striking ``; or'' and inserting 
     a period; and
       (4) by striking subparagraph (D).
       (b) Securities Exchange Act of 1934.--Section 3(a) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is 
     amended, in the first paragraph (80) (related to emerging 
     growth companies)--
       (1) by striking ``$1,000,000,000'' each place such term 
     appears and inserting ``$1,500,000,000'';
       (2) in subparagraph (B)--

[[Page H978]]

       (A) by striking ``fifth'' and inserting ``7-year''; and
       (B) by adding ``or'' at the end;
       (3) in subparagraph (C), by striking ``; or'' and inserting 
     a period; and
       (4) by striking subparagraph (D).

    TITLE III--SEC AND PCAOB AUDITOR REQUIREMENTS FOR NEWLY PUBLIC 
                               COMPANIES

     SEC. 1301. AUDITOR INDEPENDENCE FOR CERTAIN PAST AUDITS 
                   OCCURRING BEFORE AN ISSUER IS A PUBLIC COMPANY.

       (a) Auditor Independence Standards of the Public Company 
     Accounting Oversight Board.--Section 103 of the Sarbanes-
     Oxley Act of 2002 (15 U.S.C. 7213) is amended by adding at 
     the end the following:
       ``(e) Auditor Independence for Certain Past Audits 
     Occurring Before an Issuer Is a Public Company.--With respect 
     to an issuer that is a public company or an issuer that has 
     filed a registration statement to become a public company, 
     the auditor independence rules established by the Board with 
     respect to audits occurring before the last fiscal year of 
     the issuer completed before the issuer filed a registration 
     statement to become a public company shall treat an auditor 
     as independent if--
       ``(1) the auditor is independent under standards 
     established by the American Institute of Certified Public 
     Accountants applicable to certified public accountants in 
     United States; or
       ``(2) with respect to a foreign issuer, the auditor is 
     independent under comparable standards applicable to 
     certified public accountants in the issuer's home country.''.
       (b) Auditor Independence Standards of the Securities and 
     Exchange Commission.--Section 10A of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78j-1) is amended by adding at the end 
     the following:
       ``(n) Auditor Independence for Certain Past Audits 
     Occurring Before an Issuer Is a Public Company.--With respect 
     to an issuer that is a public company or an issuer that has 
     filed a registration statement to become a public company, 
     the auditor independence rules established by the Commission 
     under the securities laws with respect to audits occurring 
     before the last fiscal year of the issuer completed before 
     the issuer filed a registration statement to become a public 
     company shall treat an auditor as independent if--
       ``(1) the auditor is independent under standards 
     established by the American Institute of Certified Public 
     Accountants applicable to certified public accountants in 
     United States; or
       ``(2) with respect to a foreign issuer, the auditor is 
     independent under comparable standards applicable to 
     certified public accountants in the issuer's home country.''.

   TITLE IV--EXPAND THE PROTECTION FOR RESEARCH REPORTS TO COVER ALL 
                       SECURITIES OF ALL ISSUERS

     SEC. 1401. PROVISION OF RESEARCH.

       Section 2(a)(3) of the Securities Act of 1933 (15 U.S.C. 
     77b(a)(3)) is amended--
        (a) by striking ``an emerging growth company'' and 
     inserting ``an issuer'';
       (b) by striking ``the common equity'' and inserting 
     ``any''; and
       (c) by striking ``such emerging growth company'' and 
     inserting ``such issuer''.

    TITLE V--EXCLUDE QIBS AND IAAS FROM THE RECORD HOLDER COUNT FOR 
                         MANDATORY REGISTRATION

     SEC. 1501. EXCLUSIONS FROM MANDATORY REGISTRATION THRESHOLD.

       (a) In General.--Section 12(g)(1) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78l(g)(1)) is amended--
       (1) in subparagraph (A)(i), by inserting after ``persons'' 
     the following: ``(that are not a qualified institutional 
     buyer or an institutional accredited investor)''; and
       (2) in subparagraph (B), by inserting after ``persons'' the 
     following: ``(that are not a qualified institutional buyer or 
     an institutional accredited investor)''.
       (b) Nonapplicability of General Exemptive Authority.--
     Section 36 of the Securities Exchange Act of 1934 (15 U.S.C. 
     78mm) shall not apply to the matter inserted by the 
     amendments made by subsection (a).

                   TITLE VI--EXPAND WKSI ELIGIBILITY

     SEC. 1601. DEFINITION OF WELL-KNOWN SEASONED ISSUER.

       For purposes of the Federal securities laws, and 
     regulations issued thereunder, an issuer shall be a ``well-
     known seasoned issuer'' if--
       (1) the aggregate market value of the voting and non-voting 
     common equity held by non-affiliates of the issuer is 
     $250,000,000 or more (as determined under Form S-3 general 
     instruction I.B.1. as in effect on the date of enactment of 
     this Act); and
       (2) the issuer otherwise satisfies the requirements of the 
     definition of ``well-known seasoned issuer'' contained in 
     section 230.405 of title 17, Code of Federal Regulations 
     without reference to any requirement in such definition 
     relating to minimum worldwide market value of outstanding 
     voting and non-voting common equity held by non-affiliates.

         DIVISION B--HELPING SMALL BUSINESSES AND ENTREPRENEURS

            TITLE I--UNLOCKING CAPITAL FOR SMALL BUSINESSES

     SEC. 2101. SHORT TITLE.

       This title may be cited as the ``Unlocking Capital for 
     Small Businesses Act of 2023''.

     SEC. 2102. SAFE HARBORS FOR PRIVATE PLACEMENT BROKERS AND 
                   FINDERS.

       (a) In General.--Section 15 of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78o) is amended by adding at the end the 
     following:
       ``(p) Private Placement Broker Safe Harbor.--
       ``(1) Registration requirements.--Not later than 180 days 
     after the date of the enactment of this subsection the 
     Commission shall promulgate regulations with respect to 
     private placement brokers that are no more stringent than 
     those imposed on funding portals.
       ``(2) National securities associations.--Not later than 180 
     days after the date of the enactment of this subsection the 
     Commission shall promulgate regulations that require the 
     rules of any national securities association to allow a 
     private placement broker to become a member of such national 
     securities association subject to reduced membership 
     requirements consistent with this subsection.
       ``(3) Disclosures required.--Before effecting a 
     transaction, a private placement broker shall disclose 
     clearly and conspicuously, in writing, to all parties to the 
     transaction as a result of the broker's activities--
       ``(A) that the broker is acting as a private placement 
     broker;
       ``(B) the amount of any payment or anticipated payment for 
     services rendered as a private placement broker in connection 
     with such transaction;
       ``(C) the person to whom any such payment is made; and
       ``(D) any beneficial interest in the issuer, direct or 
     indirect, of the private placement broker, of a member of the 
     immediate family of the private placement broker, of an 
     associated person of the private placement broker, or of a 
     member of the immediate family of such associated person.
       ``(4) Private placement broker defined.--In this 
     subsection, the term `private placement broker' means a 
     person that--
       ``(A) receives transaction-based compensation--
       ``(i) for effecting a transaction by--

       ``(I) introducing an issuer of securities and a buyer of 
     such securities in connection with the sale of a business 
     effected as the sale of securities; or
       ``(II) introducing an issuer of securities and a buyer of 
     such securities in connection with the placement of 
     securities in transactions that are exempt from registration 
     requirements under the Securities Act of 1933; and

       ``(ii) that is not with respect to--

       ``(I) a class of publicly traded securities;
       ``(II) the securities of an investment company (as defined 
     in section 3 of the Investment Company Act of 1940); or
       ``(III) a variable or equity-indexed annuity or other 
     variable or equity-indexed life insurance product;

       ``(B) with respect to a transaction for which such 
     transaction-based compensation is received--
       ``(i) does not handle or take possession of the funds or 
     securities; and
       ``(ii) does not engage in an activity that requires 
     registration as an investment adviser under State or Federal 
     law; and
       ``(C) is not a finder as defined under subsection (q).
       ``(q) Finder Safe Harbor.--
       ``(1) Nonregistration.--A finder is exempt from the 
     registration requirements of this Act.
       ``(2) National securities associations.--A finder shall not 
     be required to become a member of any national securities 
     association.
       ``(3) Finder defined.--In this subsection, the term 
     `finder' means a person described in paragraphs (A) and (B) 
     of subsection (p)(4) that--
       ``(A) receives transaction-based compensation of equal to 
     or less than $500,000 in any calendar year;
       ``(B) receives transaction-based compensation in connection 
     with transactions that result in a single issuer selling 
     securities valued at equal to or less than $15,000,000 in any 
     calendar year;
       ``(C) receives transaction-based compensation in connection 
     with transactions that result in any combination of issuers 
     selling securities valued at equal to or less than 
     $30,000,000 in any calendar year; or
       ``(D) receives transaction-based compensation in connection 
     with fewer than 16 transactions that are not part of the same 
     offering or are otherwise unrelated in any calendar year.''.
       (b) Validity of Contracts With Registered Private Placement 
     Brokers and Finders.--Section 29 of the Securities Exchange 
     Act of 1934 (15 U.S.C. 78cc) is amended by adding at the end 
     the following:
       ``(d) Subsection (b) shall not apply to a contract made for 
     a transaction if--
       ``(1) the transaction is one in which the issuer engaged 
     the services of a broker or dealer that is not registered 
     under this Act with respect to such transaction;
       ``(2) such issuer received a self-certification from such 
     broker or dealer certifying that such broker or dealer is a 
     registered private placement broker under section 15(p) or a 
     finder under section 15(q); and
       ``(3) the issuer either did not know that such self-
     certification was false or did not have a reasonable basis to 
     believe that such self-certification was false.''.
       (c) Removal of Private Placement Brokers From Definitions 
     of Broker.--
       (1) Records and reports on monetary instruments 
     transactions.--Section 5312 of title 31, United States Code, 
     is amended in

[[Page H979]]

     subsection (a)(2)(G) by inserting ``with the exception of a 
     private placement broker as defined in section 15(p)(4) of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78o(p)(4))'' 
     before the semicolon at the end.
       (2) Securities exchange act of 1934.--Section 3(a)(4) of 
     the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)) is 
     amended by adding at the end the following:
       ``(G) Private placement brokers.--A private placement 
     broker as defined in section 15(p)(4) is not a broker for the 
     purposes of this Act.''.

     SEC. 2103. LIMITATIONS ON STATE LAW.

       Section 15(i) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78o(i)) is amended--
       (1) by redesignating paragraphs (3) and (4) as paragraphs 
     (4) and (5), respectively;
       (2) by inserting after paragraph (2) the following:
       ``(3) Private placement brokers and finders.--
       ``(A) In general.--No State or political subdivision 
     thereof may enforce any law, rule, regulation, or other 
     administrative action that imposes greater registration, 
     audit, financial recordkeeping, or reporting requirements on 
     a private placement broker or finder than those that are 
     required under subsections (p) and (q), respectively.
       ``(B) Definition of state.--For purposes of this paragraph, 
     the term `State' includes the District of Columbia and each 
     territory of the United States.''; and
       (3) in paragraph (4), as so redesignated, by striking 
     ``paragraph (3)'' and inserting ``paragraph (5)''.

            TITLE II--SMALL BUSINESS INVESTOR CAPITAL ACCESS

     SEC. 2201. SHORT TITLE.

       This title may be cited as the ``Small Business Investor 
     Capital Access Act''.

     SEC. 2202. INFLATION ADJUSTMENT FOR THE EXEMPTION THRESHOLD 
                   FOR CERTAIN INVESTMENT ADVISERS OF PRIVATE 
                   FUNDS.

       Section 203(m) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-3(m)) is amended by adding at the end the 
     following:
       ``(5) Inflation adjustment.--The Commission shall adjust 
     the dollar amount described under paragraph (1)--
       ``(A) upon enactment of this paragraph, 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 between the date of enactment of the Private Fund 
     Investment Advisers Registration Act of 2010 and the date of 
     enactment of this paragraph; and
       ``(B) annually thereafter, 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 III--IMPROVING CAPITAL ALLOCATION FOR NEWCOMERS

     SEC. 2301. SHORT TITLE.

       This title may be cited as the ``Improving Capital 
     Allocation for Newcomers Act of 2023''.

     SEC. 2302. 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) in the matter preceding subparagraph (A), by striking 
     ``250 persons'' and inserting ``600 persons''; and
       (2) in subparagraph (C)(i), by striking ``$10,000,000'' and 
     inserting ``$150,000,000''.

       TITLE IV--SMALL ENTREPRENEURS' EMPOWERMENT AND DEVELOPMENT

     SEC. 2401. SHORT TITLE.

       This title may be cited as the ``Small Entrepreneurs' 
     Empowerment and Development Act of 2023'' or the ``SEED Act 
     of 2023''.

     SEC. 2402. MICRO-OFFERING EXEMPTION.

       (a) In General.--Section 4 of the Securities Act of 1933 
     (15 U.S.C. 77d) is amended--
       (1) in subsection (a), by adding at the end the following:
       ``(8) transactions meeting the requirements of subsection 
     (f).''; and
       (2) by adding at the end the following:
       ``(f) Micro-Offerings.--The transactions referred to in 
     subsection (a)(8) are transactions involving the sale of 
     securities by an issuer (including all entities controlled by 
     or under common control with the issuer) where the aggregate 
     amount of all securities sold by the issuer, including any 
     amount sold in reliance on the exemption provided under 
     subsection (a)(8), during the 12-month period preceding such 
     transaction, does not exceed $250,000.''.
       (b) Disqualification.--
       (1) In general.--Not later than 270 days after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall, by rule, establish disqualification provisions under 
     which an issuer shall not be eligible to offer securities 
     pursuant to section 4(a)(8) of the Securities Act of 1933, as 
     added by this section.
       (2) Inclusions.--Disqualification provisions required by 
     this subsection shall--
       (A) be substantially similar to the provisions of section 
     230.506(d) of title 17, Code of Federal Regulations (or any 
     successor thereto); and
       (B) disqualify any offering or sale of securities by a 
     person that--
       (i) is subject to a final order of a covered regulator 
     that--

       (I) bars the person from--

       (aa) association with an entity regulated by the covered 
     regulator;
       (bb) engaging in the business of securities, insurance, or 
     banking; or
       (cc) engaging in savings association or credit union 
     activities; or

       (II) constitutes a final order based on a violation of any 
     law or regulation that prohibits fraudulent, manipulative, or 
     deceptive conduct, if such final order was issued within the 
     previous 10-year period; or

       (ii) has been convicted of any felony or misdemeanor in 
     connection with the purchase or sale of any security or 
     involving the making of any false filing with the Commission.
       (3) Covered regulator defined.--In this subsection, the 
     term ``covered regulator'' means--
       (A) a State securities commission (or an agency or officer 
     of a State performing like functions);
       (B) a State authority that supervises or examines banks, 
     savings associations, or credit unions;
       (C) a State insurance commission (or an agency or officer 
     of a State performing like functions);
       (D) a Federal banking agency (as defined under section 3 of 
     the Federal Deposit Insurance Act); and
       (E) the National Credit Union Administration.
       (c) Exemption Under State Regulations.--Section 18(b)(4) of 
     the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is amended--
       (1) in subparagraph (F), by striking ``or'' at the end;
       (2) in subparagraph (G), by striking the period and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(H) section 4(a)(8).''.

                   TITLE V--REGULATION A+ IMPROVEMENT

     SEC. 2501. SHORT TITLE.

       This title may be cited as the ``Regulation A+ Improvement 
     Act of 2023''.

     SEC. 2502. JOBS ACT-RELATED EXEMPTION.

       Section 3(b) of the Securities Act of 1933 (15 U.S.C. 
     77c(b)) is amended--
       (1) in paragraph (2)(A), by striking ``$50,000,000'' and 
     inserting ``$150,000,000, adjusted for inflation by the 
     Commission every 2 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''; and
       (2) in paragraph (5)--
       (A) by striking ``such amount as'' and inserting: ``such 
     amount, in addition to the adjustment for inflation provided 
     for under such paragraph (2)(A), as''; and
       (B) by striking ``such amount, it'' and inserting ``such 
     amount, in addition to the adjustment for inflation provided 
     for under such paragraph (2)(A), it''.

        TITLE VI--DEVELOPING AND EMPOWERING OUR ASPIRING LEADERS

     SEC. 2601. SHORT TITLE.

       This title may be cited as the ``Developing and Empowering 
     our Aspiring Leaders Act of 2023'' or the ``DEAL Act of 
     2023''.

     SEC. 2602. DEFINITIONS.

       Not later than the end of the 180-day period beginning on 
     the date of the enactment of this Act, the Securities and 
     Exchange Commission shall, in a manner that facilitates 
     capital formation without compromising investor protection--
       (1) revise the definition of a qualifying investment under 
     paragraph (c) of section 275.203(l)-1 of title 17, Code of 
     Federal Regulations--
       (A) to include an equity security issued by a qualifying 
     portfolio company, whether acquired directly from the company 
     or in a secondary acquisition; and
       (B) to specify that an investment in another venture 
     capital fund is a qualifying investment under such 
     definition; and
       (2) revise paragraph (a) of such section to require, as a 
     condition of a private fund qualifying as a venture capital 
     fund under such paragraph, that the qualifying investments of 
     the private fund are either--
       (A) predominantly qualifying investments that were acquired 
     directly from a qualifying portfolio company; or
       (B) predominantly qualifying investments in another venture 
     capital fund or other venture capital funds.

     SEC. 2603. REPORTS.

       (a) GAO Report.--The Comptroller General of the United 
     States shall issue a report to Congress on the risks and 
     impacts of concentrated sectoral counterparty risk in the 
     banking sector, in light of the failure of Silicon Valley 
     Bank.
       (b) Advocate for Small Business Capital Formation Report.--
     The Advocate for Small Business Capital Formation shall issue 
     a report to Congress and the Securities and Exchange 
     Commission--
       (1) examining the access to banking services for venture 
     funds and companies funded by venture capital, in light of 
     the failure of Silicon Valley Bank, especially those funds 
     and companies located outside of the established technology 
     and venture capital hubs of California, Massachusetts, and 
     New York; and
       (2) containing any policy recommendations of the Advocate.

            TITLE VII--IMPROVING CROWDFUNDING OPPORTUNITIES

     SEC. 2701. SHORT TITLE.

       This title may be cited as the ``Improving Crowdfunding 
     Opportunities Act''.

     SEC. 2702. CROWDFUNDING REVISIONS.

       (a) Exemption From State Regulation.--Section 18(b)(4)(A) 
     of the Securities Act of 1933 (15 U.S.C. 77r(b)(4)(A)) is 
     amended by striking ``pursuant to section'' and all that 
     follows through the semicolon at the end and inserting the 
     following: ``pursuant to--
       ``(i) section 13 or 15(d) of the Securities Exchange Act of 
     1934 (15 U.S.C. 78m, 78o(d)); or

[[Page H980]]

       ``(ii) section 4A(b) or any regulation issued under that 
     section;''.
       (b) Liability for Material Misstatements and Omissions.--
     Section 4A(c) of the Securities Act of 1933 (15 U.S.C. 77d-
     1(c)) is amended--
       (1) by redesignating paragraph (3) as paragraph (4); and
       (2) by inserting after paragraph (2) the following:
       ``(3) Liability of funding portals.--For the purposes of 
     this subsection, a funding portal, as that term is defined in 
     section 3(a) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78c(a)), shall not be considered to be an issuer 
     unless, in connection with the offer or sale of a security, 
     the funding portal knowingly--
       ``(A) makes any untrue statement of a material fact or 
     omits to state a material fact in order to make the 
     statements made, in light of the circumstances under which 
     they are made, not misleading; or
       ``(B) engages in any act, practice, or course of business 
     which operates or would operate as a fraud or deceit upon any 
     person.''.
       (c) Applicability of Bank Secrecy Act Requirements.--
       (1) Securities act of 1933.--Section 4A(a) of the 
     Securities Act of 1933 (15 U.S.C. 77d-1(a)) is amended--
       (A) in paragraph (11), by striking ``and'' at the end;
       (B) in paragraph (12), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following:
       ``(13) not be subject to the recordkeeping and reporting 
     requirements relating to monetary instruments under 
     subchapter II of chapter 53 of title 31, United States 
     Code.''.
       (2) Title 31, united states code.--Section 5312 of title 
     31, United States Code, is amended by striking subsection (c) 
     and inserting the following:
       ``(c) Additional Clarification.--The term `financial 
     institution' (as defined in subsection (a))--
       ``(1) includes any futures commission merchant, commodity 
     trading advisor, or commodity pool operator registered, or 
     required to register, under the Commodity Exchange Act (7 
     U.S.C. 1 et seq.); and
       ``(2) does not include a funding portal, as that term is 
     defined in section 3(a) of the Securities Exchange Act of 
     1934 (15 U.S.C. 78c(a)).''.
       (d) Provision of Impersonal Investment Advice and 
     Recommendations.--Section 3(a) of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78c(a)) is amended--
       (1) by redesignating the second paragraph (80) (relating to 
     funding portals) as paragraph (81); and
       (2) in paragraph (81)(A), as so redesignated, by inserting 
     after ``recommendations'' the following: ``(other than by 
     providing impersonal investment advice by means of written 
     material, or an oral statement, that does not purport to meet 
     the objectives or needs of a specific individual or 
     account)''.
       (e) Target Amounts of Certain Exempted Offerings.--The 
     Securities and Exchange Commission shall amend paragraph 
     (t)(1) of section 227.201 of title 17, Code of Federal 
     Regulations so that such paragraph applies with respect to an 
     issuer offering or selling securities in reliance on section 
     4(a)(6) of the Securities Act of 1933 (15 U.S.C. 77d(a)(6)) 
     if--
       (1) the offerings of such issuer, together with all other 
     amounts sold under such section 4(a)(6) within the preceding 
     12-month period, have, in the aggregate, a target amount of 
     more than $124,000 but not more than $250,000;
       (2) the financial statements of such issuer that have 
     either been reviewed or audited by a public accountant that 
     is independent of the issuer are unavailable at the time of 
     filing; and
       (3) such issuer provides a statement that financial 
     information certified by the principal executive officer of 
     the issuer has been provided instead of financial statements 
     reviewed by a public accountant that is independent of the 
     issuer.
       (f) Exemption Available to Investment Companies.--Section 
     4A(f) of the Securities Act of 1933 (15 U.S.C. 77d-1(f)) is 
     amended--
       (1) in paragraph (2), by inserting ``or'' after the 
     semicolon;
       (2) by striking paragraph (3); and
       (3) by redesignating paragraph (4) as paragraph (3).
       (g) Non-accredited Investor Requirements.--Section 4(a)(6) 
     of the Securities Act of 1933 (15 U.S.C. 77d(a)(6))) is 
     amended--
       (1) in subparagraph (A), by striking ``$1,000,000'' and 
     inserting ``$10,000,000''; and
       (2) in subparagraph (B), by striking ``does not exceed'' 
     and all that follows through ``more than $100,000'' and 
     inserting ``does not exceed 10 percent of the annual income 
     or net worth of such investor''.
       (h) Technical Correction.--The Securities Act of 1933 (15 
     U.S.C. 77a et seq.) is amended--
       (1) by striking the term ``section 4(6)'' each place such 
     term appears and inserting ``section 4(a)(6)'';
       (2) by striking the term ``section 4(6)(B)'' each place 
     such term appears and inserting ``section 4(a)(6)(B)'';
       (3) in section 4A(f), by striking ``Section 4(6)'' and 
     inserting ``Section 4(a)(6)''; and
       (4) in section 18(b)(4)(A), by striking ``section 4'' and 
     inserting ``section 4(a)''.

           TITLE VIII--RESTORING THE SECONDARY TRADING MARKET

     SEC. 2801. SHORT TITLE.

       This title may be cited as the ``Restoring the Secondary 
     Trading Market Act''.

     SEC. 2802. EXEMPTION FROM STATE REGULATION.

       Section 18(a) of the Securities Act of 1933 (15 U.S.C. 
     77r(a)) is amended--
       (1) in paragraph (2), by striking ``or'' at the end;
       (2) in paragraph (3), by striking the period at the end and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(4) shall directly or indirectly prohibit, limit, or 
     impose any conditions upon the off-exchange secondary trading 
     (as such term is defined by the Commission) in securities of 
     an issuer that makes current information publicly available, 
     including--
       ``(A) the information required in the periodic and current 
     reports described under paragraph (b) of section 230.257 of 
     title 17, Code of Federal Regulations; or
       ``(B) the documents and information required with respect 
     to Tier 2 offerings, as defined in section 230.251(a) of 
     title 17, Code of Federal Regulations.''.

            DIVISION C--INCREASING ACCESS TO PRIVATE MARKETS

                TITLE I--GIG WORKER EQUITY COMPENSATION

     SEC. 3101. SHORT TITLE.

       This title may be cited as the ``Gig Worker Equity 
     Compensation Act''.

     SEC. 3102. EXTENSION OF RULE 701.

       (a) In General.--The exemption provided under section 
     230.701 of title 17, Code of Federal Regulations, shall apply 
     to individuals (other than employees) providing goods for 
     sale, labor, or services for remuneration to either an issuer 
     or to customers of an issuer to the same extent as such 
     exemptions apply to employees of the issuer. For purposes of 
     the previous sentence, the term ``customers'' may, at the 
     election of an issuer, include users of the issuer's 
     platform.
       (b) Adjustment for Inflation.--The Securities and Exchange 
     Commission shall annually adjust the dollar figure under 
     section 230.701(e) of title 17, Code of Federal Regulations, 
     to reflect the percentage change in the Consumer Price Index 
     for All Urban Consumers published by the Bureau of Labor 
     Statistics of the Department of Labor.
       (c) Rulemaking.--The Securities and Exchange Commission--
       (1) shall revise section 230.701 of title 17, Code of 
     Federal Regulations, to reflect the requirements of this 
     section; and
       (2) may not revise such section 230.701 in any manner that 
     would have the effect of restricting access to equity 
     compensation for employees or individuals described under 
     subsection (a).

     SEC. 3104. GAO STUDY.

       Not later than the end of the 3-year period beginning on 
     the date of enactment of this Act, the Comptroller General of 
     the United States shall carry out a study on the effects of 
     this title and submit a report on such study to the Congress.

               TITLE II--INVESTMENT OPPORTUNITY EXPANSION

     SEC. 3201. SHORT TITLE.

       This title may be cited as the ``Investment Opportunity 
     Expansion Act''.

     SEC. 3202. INVESTMENT THRESHOLDS TO QUALIFY AS AN ACCREDITED 
                   INVESTOR.

       Section 2(a)(15) of the Securities Act of 1933 (15 U.S.C. 
     77b(a)(15)) is amended--
       (1) by striking ``(15) The term `accredited investor' shall 
     mean--'' and inserting the following:
       ``(15) Accredited investor.--
       ``(A) In general.--The term `accredited investor' means--
     '';
       (2) in clause (i), by striking ``or'' at the end;
       (3) in clause (ii), by striking the period at the end and 
     inserting a semicolon; and
       (4) by adding at the end the following:
       ``(iii) with respect to a proposed transaction, any 
     individual whose aggregate investment, at the completion of 
     such transaction, in securities with respect to which there 
     has not been a public offering is not more than 10 percent of 
     the greater of--

       ``(I) the net assets of the individual; or
       ``(II) the annual income of the individual;''.

          TITLE III--RISK DISCLOSURE AND INVESTOR ATTESTATION

     SEC. 3301. SHORT TITLE.

       This title may be cited as the ``Risk Disclosure and 
     Investor Attestation Act''.

     SEC. 3302. INVESTOR ATTESTATION.

       (a) In General.--Section 2(a)(15) of the Securities Act of 
     1933 (15 U.S.C. 77b(a)(15)), as amended by section 3202, is 
     further amended by adding at the end the following:
       ``(iv) with respect to an issuer, any individual that has 
     attested to the issuer that the individual understands the 
     risks of investment in private issuers, using such form as 
     the Commission shall establish, by rule, but which form may 
     not be longer than 2 pages in length; or''.
       (b) Rulemaking.--Not later than the end of the 1-year 
     period beginning on the date of enactment of this Act, the 
     Securities and Exchange Commission shall issue rules to carry 
     out the amendments made by subsection (a), including 
     establishing the form required under such amendments.

  TITLE IV--ACCREDITED INVESTORS INCLUDE INDIVIDUALS RECEIVING ADVICE 
                       FROM CERTAIN PROFESSIONALS

     SEC. 3401. ACCREDITED INVESTORS INCLUDE INDIVIDUALS RECEIVING 
                   ADVICE FROM CERTAIN PROFESSIONALS.

       (a) Securities Act of 1933.--Section 2(a)(15) of the 
     Securities Act of 1933 (15

[[Page H981]]

     U.S.C. 77b(a)(15)), as amended by sections 3202 and 3302, is 
     further amended by adding at the end the following:
       ``(v) any individual receiving individualized investment 
     advice or individualized investment recommendations with 
     respect to the applicable transaction from an individual 
     described under section 203.501(a)(10) of title 17, Code of 
     Federal Regulations.
       ``(B) Definitions.--In subparagraph (A)(v):
       ``(i) Investment advice.--The term `investment advice' 
     shall be interpreted consistently with the interpretation of 
     the phrase `engages in the business of advising others, 
     either directly or through publications or writings, as to 
     the value of securities or as to the advisability of 
     investing in, purchasing, or selling securities' under 
     section 202(a)(11) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)(11)).
       ``(ii) Investment recommendation.--The term `investment 
     recommendation' shall be interpreted consistently with the 
     interpretation of the term `recommendation' under section 
     240.15l-1 of title 17, Code of Federal Regulations.''.
       (b) Conforming Changes to Regulations.--The Securities and 
     Exchange Commission shall revise section 203.501(a) of title 
     17, Code of Federal Regulations, and any other definition of 
     ``accredited investor'' in a rule of the Commission in the 
     same manner as such definition is revised under subsection 
     (a).

  The Acting CHAIR. No further amendment to the bill, as amended, shall 
be in order except those printed in part B of House Report 118-407. 
Each such further amendment may be offered only in the order printed in 
the report, may be offered only 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.

                              {time}  1715


                 Amendment No. 1 Offered by Mr. Lawler

  The Acting CHAIR. It is now in order to consider amendment No. 1 
printed in part B of House Report 118-407.
  Mr. LAWLER. Mr. Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Add at the end the following:

              DIVISION D--HELPING ANGELS LEAD OUR STARTUPS

     SEC. 4001. CLARIFICATION OF GENERAL SOLICITATION.

       (a) Definitions.--For purposes of this section and the 
     revision of rules required under this section:
       (1) Angel investor group.--The term ``angel investor 
     group'' means any group that--
       (A) is composed of accredited investors interested in 
     investing personal capital in early-stage companies;
       (B) 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
       (C) is neither associated nor affiliated with brokers, 
     dealers, or investment advisers.
       (2) Issuer.--The term ``issuer'' means an issuer that is a 
     business, is not in bankruptcy or receivership, is not an 
     investment company, and is not a blank check, blind pool, or 
     shell company.
       (b) In General.--Not later than 6 months after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall revise Regulation D (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, the 
     District of Columbia, any State, a political subdivision of 
     any State or territory, or 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 
     reasonable administrative fees;
       (D) does not receive any compensation for making 
     introductions between investors attending the event and 
     issuers, or for investment negotiations between such parties;
       (E) makes readily available to attendees a disclosure not 
     longer than one page in length, as prescribed by the 
     Securities and Exchange Commission, describing the nature of 
     the event and the risks of investing in the issuers 
     presenting at the event; and
       (F) 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.
       (c) Rule of Construction.--Subsection (b) 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.
       (d) No Pre-existing Substantive Relationship by Reason of 
     Event.--Attendance at an event described under subsection (b) 
     shall not qualify, by itself, as establishing a pre-existing 
     substantive relationship between an issuer and a purchaser, 
     for purposes of Rule 506(b).

  The Acting CHAIR. Pursuant to House Resolution 1052, the gentleman 
from New York (Mr. Lawler) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from New York.
  Mr. LAWLER. Mr. Chair, today I rise to urge the House to adopt my 
amendment, which would include the Helping Angels Lead Our Startups 
Act, otherwise known as the HALOS Act, into the underlying bill.
  The HALOS Act will promote access to investment capital for small 
companies and ensure that startups can continue to generate interest 
and connect with investors.
  It will do this by ensuring that demo days, pitch competitions, and 
community economic development events where there is no specific 
investment offering are not considered general solicitation under Reg 
D.
  In doing so, companies will be able to engage with a wider audience 
of investors and spread word of the products and services that they can 
offer to help develop a thriving and diverse economy.
  Small businesses are facing turbulent economic times. After surviving 
COVID, they are still dealing with the impacts of inflation, low 
confidence in the economy, and having to contend with many regulations 
which can stifle economic growth, prevent entrepreneurs from achieving 
their full potential, and frankly, prevent folks from living out their 
American Dream.
  Entrepreneurs and small businesses drive the American economy. In 
2019, the SBA calculated that close to 44 percent of our GDP was the 
result of small businesses.
  Barriers like the general compliance requirements on general 
solicitations can reduce opportunities for small businesses, 
entrepreneurs, and everyday investors as they both soak up the amount 
of time and resources needed but also deter small businesses who are 
afraid of unintentionally violating these laws.
  We have seen many successes from and since the passing of the 
bipartisan JOBS Act over a decade ago that helped reduce barriers to 
investment.
  The HALOS Act is a logical next step on the road of clarifying and 
modernizing rules that will enable startups to find the resources they 
need to grow and thrive.
  Angel investors who are defined by this bill not only play a major 
role in financing individual efforts to pursue their dream and start a 
business, but also often provide a wealth of advice and support for 
tens of thousands of startups.
  Long-term impact can be seen as companies such as Amazon, Costco, 
Facebook, Google, and Starbucks all initially were funded by angel 
investors.
  By alleviating burdens on businesses, cutting red tape, and making 
capital in our public markets easier and less costly for emerging 
companies, we will be helping to build a more diverse and inclusive 
universe of entrepreneurs and

[[Page H982]]

founders by expanding opportunities to underrepresented entrepreneurs 
and communities facing capital formation challenges.
  The HALOS Act will simply allow folks to get eyes on their businesses 
and potentially find the vital investor they need to succeed.
  Once again, I urge all of my colleagues to support this commonsense 
and bipartisan amendment to help our small businesses and startups.
  Mr. Chair, I reserve the balance of my time.
  Ms. WATERS. Mr. Chair, I claim the time in opposition.
  The Acting CHAIR. The gentlewoman from California is recognized for 5 
minutes.
  Ms. WATERS. Mr. Chair, I yield myself such time as I may consume.
  This amendment sponsored by Mr. Lawler codifies a controversial 
Trump-era SEC rule that is opposed by many investor advocates.
  The amendment allows high-risk startups to tout their businesses in 
front of retail investors. This is currently prohibited in part because 
roughly 75 percent of VC-backed startups fail.
  The amendment would specifically allow angel investors and issuers to 
market their startup ventures to prospective investors at colleges and 
nonprofits, including churches.
  Broadly marketing your securities to the public in this fashion--
known as a general solicitation--is usually prohibited for private 
offerings like these because the public nature of the market 
effectively makes the offering itself public, and therefore, requires 
registration with the SEC.
  At universities and churches, students and congregants gather to 
learn, and they generally trust the information they receive. I don't 
believe these are spaces where it is appropriate to market highly risky 
investment opportunities.
  In my own district, a church was the victim of an investment scheme 
in which an issuer conned the church out of nearly $6 million. I 
previously offered an amendment during our committee's markup last year 
that would prevent future frauds like this from happening again--frauds 
that would be further enabled by this amendment.
  As such, I urge my colleagues to oppose Mr. Lawler's amendment, and I 
reserve the balance of my time.
  Mr. LAWLER. Mr. Chair, I would just remind the ranking member that 
you need to be an accredited investor to invest. Many of the examples 
that the gentlewoman highlights are frankly null and void.
  Mr. Chair, may I inquire how much time I have remaining?
  The Acting CHAIR. The gentleman has 2 minutes remaining.
  Mr. LAWLER. Mr. Chair, I yield 2 minutes to the gentlewoman from 
Missouri (Mrs. Wagner), the chair of the Capital Markets Subcommittee.
  Mrs. WAGNER. Mr. Chair, I rise in support of my friend and colleague 
from New York's amendment, which would add his Helping Angels Lead Our 
Startups, or HALOS, Act to H.R. 2799.
  Mr. Lawler's legislation is a commonsense step to promote capital 
formation by permanently reducing certain burdens on U.S. small 
businesses and entrepreneurs.
  Unfortunately, when implementing the JOBS Act of 2012, the SEC 
complicated these events for many startups by classifying demo day 
discussions as general solicitations, blocking companies from being 
able to use common fundraising practices.
  In 2021, then-SEC Chairman Clayton reformed these rules to provide 
relief for entrepreneurs throughout our country, and my colleague's 
amendment builds on this progress by adding much-needed certainty that 
will ensure startups can continue to access demo days without 
sacrificing their ability to raise capital through popular and 
practical regulatory pathways.
  Members of Congress from both sides of the aisle have recognized the 
need for this amendment with the current language receiving strong 
bipartisan support, once again, from the committee.
  Therefore, I urge my colleagues to adopt this commonsense amendment 
and help U.S. startups grow their ideas into thriving and successful 
businesses.
  Ms. WATERS. Mr. Chair, what Mr. Lawler doesn't recognize is that the 
underlying bill makes the accredited investor definition meaningless. 
All you have to do is check a box, and poof, able to invest.
  Mr. Chair, I reserve the balance of my time.
  Mr. LAWLER. Mr. Chair, I rise again to urge the House to adopt my 
amendment, the Helping Angels Lead Our Startups Act, otherwise known as 
the HALOS Act, into the underlying bill.
  Ensuring that folks have access to capital is critical, and this 
amendment will help ensure that our small businesses, which are the 
lifeblood of our economy, have greater access to capital and that 
accredited investors will be able to invest in these small startup 
businesses.
  Mr. Chair, I urge all of my colleagues to support my amendment, and I 
yield back the balance of my time.
  Ms. WATERS. Mr. Chair, I yield myself the balance of my time to 
close.
  Simply put, this amendment allows failure-prone startups to market 
their private offerings to unaccredited investors who do not fully 
understand the risks involved.
  Colleges and churches are not the place startups should be raising 
money, and in general, we should not make it easier for them to push 
their risky private securities on unsuspecting retail investors, as 
this provision does.
  Mr. Chair, I urge my colleagues to vote ``no,'' and I yield back the 
balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from New York (Mr. Lawler).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Ms. WATERS. Mr. Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from New York 
will be postponed.


                Amendment No. 2 Offered by Mr. Huizenga

  The Acting CHAIR. It is now in order to consider amendment No. 2 
printed in part B of House Report 118-407.
  Mr. HUIZENGA. Mr. Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Add at the end the following:

             DIVISION D--IMPROVING DISCLOSURE FOR INVESTORS

     SEC. 4001. SHORT TITLE.

       This division may be cited as the ``Improving Disclosure 
     for Investors Act of 2024''.

     SEC. 4002. ELECTRONIC DELIVERY.

       (a) Promulgation of Rules.--Not later than 180 days after 
     the date of the enactment of this section, the Securities and 
     Exchange Commission shall propose and, not later than 1 year 
     after the date of the enactment of this section, the 
     Commission shall finalize, rules, regulations, amendments, or 
     interpretations, as appropriate, to allow a covered entity to 
     satisfy the entity's obligation to deliver regulatory 
     documents required under the securities laws to investors 
     using electronic delivery.
       (b) Required Provisions.--Rules, regulations, amendments, 
     or interpretations the Commission promulgates pursuant to 
     subsection (a) shall:
       (1) With respect to investors that do not receive all 
     regulatory documents by electronic delivery, provide for--
       (A) delivery of an initial communication in paper form 
     regarding electronic delivery;
       (B) a transition period not to exceed 180 days until such 
     regulatory documents are delivered to such investors by 
     electronic delivery; and
       (C) during a period not to exceed 2 years following the 
     transition period set forth in subparagraph (B), delivery of 
     an annual notice in paper form solely reminding such 
     investors of the ability to opt out of electronic delivery at 
     any time and receive paper versions of regulatory documents.
       (2) Set forth requirements for the content of the initial 
     communication described in paragraph (1)(A).
       (3) Set forth requirements for the timing of delivery of a 
     notice of website availability of regulatory documents and 
     the content of the appropriate notice described in subsection 
     (h)(3)(B).
       (4) Provide a mechanism for investors to opt out of 
     electronic delivery at any time and receive paper versions of 
     regulatory documents.
       (5) Require measures reasonably designed to identify and 
     remediate failed electronic deliveries of regulatory 
     documents.
       (6) Set forth minimum requirements regarding readability 
     and retainability for regulatory documents that are delivered 
     electronically.
       (7) For covered entities other than brokers, dealers, 
     investment advisers registered with the Commission, and 
     investment companies, require measures reasonably designed to 
     ensure the confidentiality of personal information in 
     regulatory documents that are delivered to investors 
     electronically.

[[Page H983]]

       (c) Rule of Construction.--Nothing in this section shall be 
     construed as altering the substance or timing of any 
     regulatory document obligation under the securities laws or 
     regulations of a self-regulatory organization.
       (d) Treatment of Revisions Not Completed in a Timely 
     Manner.--If the Commission fails to finalize the rules, 
     regulations, amendments, or interpretations required under 
     subsection (a) before the date specified in such subsection--
       (1) a covered entity may deliver regulatory documents using 
     electronic delivery in accordance with subsections (b) and 
     (c); and
       (2) such electronic delivery shall be deemed to satisfy the 
     obligation of the covered entity to deliver regulatory 
     documents required under the securities laws.
       (e) Other Required Actions.--
       (1) Review of rules.--The Commission shall--
       (A) within 180 days of the date of enactment of this Act, 
     conduct a review of the rules and regulations of the 
     Commission to determine whether any such rules or regulations 
     require delivery of written documents to investors; and
       (B) within 1 year of the date of enactment of this Act, 
     promulgate amendments to such rules or regulations to provide 
     that any requirement to deliver a regulatory document ``in 
     writing'' may be satisfied by electronic delivery.
       (2) Actions by self-regulatory organizations.--Each self-
     regulatory organization shall adopt rules and regulations, or 
     amend the rules and regulations of the self-regulatory 
     organization, consistent with this Act and consistent with 
     rules, regulations, amendments, or interpretations finalized 
     by the Commission pursuant to subsection (a).
       (3) Rule of application.--This subsection shall not apply 
     to a rule or regulation issued pursuant to a Federal statute 
     if that Federal statute specifically requires delivery of 
     written documents to investors.
       (f) Definitions.--In this section:
       (1) Commission.--The term ``Commission'' means the 
     Securities and Exchange Commission.
       (2) Covered entity.--The term ``covered entity'' means--
       (A) an investment company (as defined in section 3(a)(1) of 
     the Investment Company Act of 1940 (15 U.S.C. 80a-3(a)(1))) 
     that is registered under such Act;
       (B) a business development company (as defined in section 
     2(a) the Investment Company Act of 1940 (15 U.S.C. 80a-2(a))) 
     that has elected to be regulated as such under such Act;
       (C) a registered broker or dealer (as defined in section 
     3(a)(4) and section 3(a)(5) of the Securities Exchange Act of 
     1934) (15 U.S.C. 78c(a)(4) & 78c(a)(5));
       (D) a registered municipal securities dealer (as defined in 
     section 3(a)(30) of the Securities Exchange Act of 1934) (15 
     U.S.C. 78c(a)(30));
       (E) a registered government securities broker or government 
     securities dealer (as defined in section 3(a)(43) and section 
     3(a)(44) of the Securities Exchange Act of 1934) (15 U.S.C. 
     78c(a)(43) & 78c(a)(44));
       (F) a registered investment adviser (as defined in section 
     202(a)(11) of the Investment Advisers Act of 1940) (15 U.S.C. 
     80b-1(a)(11));
       (G) a registered transfer agent (as defined in section 
     3(a)(25) of the Securities Exchange Act of 1934) (15 U.S.C. 
     78c(a)(25)); or
       (H) a registered funding portal (as defined in the second 
     paragraph (80) of section 3(a) of the Securities Exchange Act 
     of 1934) (15 U.S.C. 78c(a)(80)).
       (3) Electronic delivery.--The term ``electronic delivery'', 
     with respect to regulatory documents, includes--
       (A) the direct delivery of such regulatory document to an 
     electronic address of an investor;
       (B) the posting of such regulatory document to a website 
     and direct electronic delivery of an appropriate notice of 
     the availability of the regulatory document to the investor; 
     and
       (C) an electronic method reasonably designed to ensure 
     receipt of such regulatory document by the investor.
       (4) Regulatory documents.--The term ``regulatory 
     documents'' includes--
       (A) prospectuses meeting the requirements of section 10(a) 
     of the Securities Act of 1933 (15 U.S.C. 77j(a));
       (B) summary prospectuses meeting the requirements of--
       (i) section 230.498 of title 17, Code of Federal 
     Regulations; or
       (ii) section 230.498A of title 17, Code of Federal 
     Regulations;
       (C) statements of additional information, as described 
     under section 270.30e-3(h)(3) of title 17, Code of Federal 
     Regulations;
       (D) annual and semi-annual reports to investors meeting the 
     requirements of section 30(e) of the Investment Company Act 
     of 1940 (15 U.S.C. 80a-29(e));
       (E) notices meeting the requirements under section 270.19a-
     1 of title 17, Code of Federal Regulations;
       (F) confirmations and account statements meeting the 
     requirements under section 240.10b-10 of title 17, Code of 
     Federal Regulations;
       (G) proxy statements meeting the requirements under section 
     240.14a-3 of title 17, Code of Federal Regulations;
       (H) privacy notices meeting the requirements of Regulation 
     S-P under subpart A of part 248 of title 17, Code of Federal 
     Regulations;
       (I) affiliate marketing notices meeting the requirements of 
     Regulation S-AM under subpart B of part 248 of title 17, Code 
     of Federal Regulations; and
       (J) all other regulatory documents required to be delivered 
     by covered entities to investors under the securities laws 
     and the rules and regulations of the Commission and the self-
     regulatory organizations.
       (5) Securities laws.--The term ``securities laws'' has the 
     meaning given the term in section 3(a) of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78c(a)).
       (6) Self-regulatory organization.--The term ``self-
     regulatory organization'' means--
       (A) a self-regulatory organization, as defined in section 
     2(a)(26) of the Securities Exchange Act of 1934 (15 U.S.C. 
     78c(a)(26)); and
       (B) the Municipal Securities Rulemaking Board.
       (7) Website.--The term ``website'' means an internet 
     website or other digital, internet, or electronic-based 
     information repository, such as a mobile application, to 
     which an investor of a covered entity has been provided 
     reasonable access.

  The Acting CHAIR. Pursuant to House Resolution 1052, the gentleman 
from Michigan (Mr. Huizenga) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Michigan.
  Mr. HUIZENGA. Mr. Chair, I yield myself 2\1/2\ minutes.
  Mr. Chair, for 90 years, the Securities and Exchange Commission has 
been tasked with three things: protect investors; maintain fair, 
orderly, and efficient markets; and finally, facilitate capital 
formation.
  The amendment before us today does all three.
  First, it directs the Securities and Exchange Commission to 
promulgate rules with respect to electronic delivery of some required 
disclosures to retail investors.
  Second, it provides a transition period, allowing an initial paper 
communication about the electronic delivery to be sent to existing 
investors.
  Third, during a period not to exceed 2 years, the amendment requires 
delivery of the annual notice in paper solely to remind investors of 
the ability to opt out of that and into electronic delivery at any 
time.
  Lastly--and I can't emphasize this enough--this amendment provides a 
mechanism for investors at any time to opt out of e-delivery, and once 
again, you will receive paper versions of the documents.
  You want paper, Mr. Chair, you get it.
  You want e-delivery, you can get that, too.
  E-delivery is not a new and radical concept, but frankly, it is long 
overdue, and the data supports the facts.
  In 2018, the Social Security Administration eliminated paper as its 
primary method of delivering benefit statements to individuals. Now, 
nearly 45 million Americans who receive benefits from Social Security 
have created online accounts to access their information--information 
that is more timely and more secure.
  Likewise, the Federal Thrift Savings Plan, TSP, which Members and 
staff in this Chamber use, began offering statements digitally in 2003, 
with 5.5 million or 85 percent of participants currently taking 
advantage of this option.
  Finally, in 2020, the Department of Labor moved to e-delivery as a 
default for all of its workplace plan participants.
  I would close by addressing consumer protection. This amendment 
appropriately preserves the ability for investors who prefer to receive 
paper notices and disclosures to do just that.
  Like many of my colleagues, I, too, represent a district that 
encompasses rural communities. That is why it was important for today's 
amendment to ensure that paper will always be an option if internet 
access is an issue.
  American financial markets are some of the most sophisticated in the 
world with innovation happening at every turn. Yet, for retail 
investors, we have decided that defaulting to an outdated mode of 
information sharing is in their best interest.
  Today's amendment was guided by a commitment to honor consumer choice 
while ensuring Americans receive important information.
  Madam Chair, I reserve the balance of my time.

                              {time}  1730

  Ms. WATERS. Madam Chair, I claim the time in opposition to the 
amendment.
  The Acting CHAIR (Mrs. Miller-Meeks). The gentlewoman from California 
is recognized for 5 minutes.

[[Page H984]]

  

  Ms. WATERS. Madam Chair, I yield myself such time as I may consume.
  This amendment ignores the reality that many investors, particularly 
seniors, do not have access to or the ability to review electronic 
documents or simply do not prefer electronic delivery of financial 
documents. It would require investors to opt in to receive paper 
documents, which would effectively prevent individuals who do not have 
easy access to the internet from viewing important financial documents 
about the securities they invest in.
  Several major investor advocate groups strongly oppose this bill, 
including the AARP, the North American Securities Administrators 
Association, the Consumer Federation of America, Americans for 
Financial Reform, and Public Citizen, to name a few.
  I strongly urge my colleagues to vote ``no'' on this terrible 
amendment.
  Madam Chair, I reserve the balance of my time.
  Mr. HUIZENGA. Madam Speaker, I yield 2 minutes to the gentleman from 
North Carolina (Mr. Nickel).
  Mr. NICKEL. Madam Speaker, I rise in support of this bipartisan 
amendment with Mr. Huizenga. I also thank my colleagues, Congressman 
Steil and Congressman Auchincloss, for cosponsoring this amendment.
  This commonsense, probusiness amendment cuts unnecessary red tape and 
directs the SEC to make electronic delivery, or eDelivery, the default 
communication method for investment companies with their investors. The 
amendment aims to modernize the policy, with investors opting in to 
paper disclosures instead of opting out while ensuring that paper will 
always be an option.
  Consumer protection is a cornerstone of this amendment, which is why 
it includes a 2-year transition period. Well before any switch to 
eDelivery begins, consumers would be given advance notice in the form 
of clear and readable paper disclosures about the move to digital 
disclosures. On top of that, consumers will be mailed reminders for 2 
years that they can opt in to paper disclosures. Paper disclosures will 
always be an option for those who want them.
  This a long overdue reform, especially when you consider that the 
Social Security Administration, the Federal Thrift Savings Plan, the 
Department of Labor, and the IRS have already advanced digital-first 
policies that have succeeded in providing Americans with more timely, 
secure, and engaging communications.
  This is a pro-environment amendment. Congress can save millions of 
trees with this legislation. With each forest we cut down to deliver a 
disclosure to clog up both mailboxes and trash cans, we cause 
devastating impacts to our air, water, and the healthy planet future 
generations deserve to grow up on.
  American financial markets are the most sophisticated in the world. 
While some are finding innovative ways to harness the speed and 
reliability of today's technology for everyday investors, the SEC's 
regulatory construct still uses an outdated mode of sharing 
information: paper.
  Despite the convenience and security of the internet, we are not 
removing paper as an option. That choice remains. I believe it is 
incumbent upon Congress to modernize regulations in our capital 
markets.
  Madam Chair, I urge my colleagues to vote ``yes'' on this amendment, 
to do the right thing for consumers, the planet, and the market.
  Mr. HUIZENGA. Madam Chair, may I inquire of the time remaining?
  The Acting CHAIR. The gentleman from Michigan has 30 seconds 
remaining.
  Mr. HUIZENGA. Madam Chair, virtually every Federal agency, including 
the IRS and the Social Security Administration, have moved to 
electronic delivery. Why? Because older Americans have rapidly adopted 
internet technology in recent years, including 96 percent of those 
between the ages of 50 and 65, of which I am, and over three-quarters 
of those over the age of 65.
  In fact, in a recent AARP study about retirement plan account 
holders' views on electronic versus paper accounts, 91 percent of the 
people were comfortable using the internet to log in and view financial 
accounts and 94 percent used the internet daily.
  I understand the AARP has some concerns with this legislation. We 
have attempted to address those through the ranking member. 
Unfortunately, their solution so radically changes the scope of the 
bill that it undercuts the entire intent of this.
  As I have said before, if you want paper, you will receive paper. If 
you want an electronic copy, you will receive an electronic copy. It is 
disingenuous to say anything else. If you don't have internet access, 
or if you choose to receive paper, you will get it.
  Madam Chair, I yield back the balance of my time.
  Ms. WATERS. Madam Speaker, I yield myself the balance of my time.
  The name of this amendment, Improving Disclosure for Investors, is an 
oxymoron. It does absolutely nothing to improve disclosure for 
investors. Rather, by forcing them to opt in to paper filings, it would 
make it more difficult, if not impossible, for many investors to see 
what fees they pay for their funds, brokerage accounts, and retirement 
savings. Instead of having easy, instant access via paper copies, they 
would need to go online to search for that information.
  This amendment is more appropriately called the improving Wall Street 
profits at the expense of retail investors act.
  I strongly urge my colleagues to protect elderly investors and to 
vote ``no'' on this amendment.
  Madam Chair, I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Michigan (Mr. Huizenga).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Mr. HUIZENGA. Madam Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Michigan 
will be postponed.


                  Amendment No. 3 Offered by Mr. Lucas

  The Acting CHAIR. It is now in order to consider amendment No. 3 
printed in part B of House Report 118-407.
  Mr. LUCAS. Madam Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

         Add at the end the following:
                DIVISION D--ENHANCEMENT OF 403(b) PLANS

     SEC. 4101. SHORT TITLE.

         This division may be cited as the ``Retirement Fairness 
     for Charities and Educational Institutions Act of 2024''.

     SEC. 4102. ENHANCEMENT OF 403(B) PLANS.

         (a) Amendments to the Investment Company Act of 1940.--
     Section 3(c)(11) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-3(c)(11)) is amended to read as follows:
         ``(11) Any--
         ``(A) employee's stock bonus, pension, or profit-sharing 
     trust which meets the requirements for qualification under 
     section 401 of the Internal Revenue Code of 1986;
         ``(B) custodial account meeting the requirements of 
     section 403(b)(7) of such Code;
         ``(C) governmental plan described in section 3(a)(2)(C) 
     of the Securities Act of 1933;
         ``(D) collective trust fund maintained by a bank 
     consisting solely of assets of one or more--
         ``(i) trusts described in subparagraph (A);
         ``(ii) government plans described in subparagraph (C);
         ``(iii) church plans, companies, or accounts that are 
     excluded from the definition of an investment company under 
     paragraph (14) of this subsection; or
         ``(iv) plans which meet the requirements of section 
     403(b) of the Internal Revenue Code of 1986--

         ``(I) if--

         ``(aa) such plan is subject to title I of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1001 et 
     seq.);
         ``(bb) any employer making such plan available agrees to 
     serve as a fiduciary for the plan with respect to the 
     selection of the plan's investments among which participants 
     can choose; or
         ``(cc) such plan is a governmental plan (as defined in 
     section 414(d) of such Code); and

         ``(II) if the employer, a fiduciary of the plan, or 
     another person acting on behalf of the employer reviews and 
     approves each investment alternative offered under such plan 
     described under subclause (I)(cc) prior to the investment 
     being offered to participants in the plan; or

         ``(E) separate account the assets of which are derived 
     solely from--
         ``(i) contributions under pension or profit-sharing plans 
     which meet the requirements of section 401 of the Internal 
     Revenue Code of 1986 or the requirements for deduction of the 
     employer's contribution under section 404(a)(2) of such Code;

[[Page H985]]

         ``(ii) contributions under governmental plans in 
     connection with which interests, participations, or 
     securities are exempted from the registration provisions of 
     section 5 of the Securities Act of 1933 by section 3(a)(2)(C) 
     of such Act;
         ``(iii) advances made by an insurance company in 
     connection with the operation of such separate account; and
         ``(iv) contributions to a plan described in clause (iii) 
     or (iv) of subparagraph (D).''.
         (b) Amendments to the Securities Act of 1933.--Section 
     3(a)(2) of the Securities Act of 1933 (15 U.S.C. 77c(a)(2)) 
     is amended--
         (1) by striking ``beneficiaries, or (D)'' and inserting 
     ``beneficiaries, (D) a plan which meets the requirements of 
     section 403(b) of such Code (i) if (I) such plan is subject 
     to title I of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1001 et seq.), (II) any employer making such 
     plan available agrees to serve as a fiduciary for the plan 
     with respect to the selection of the plan's investments among 
     which participants can choose, or (III) such plan is a 
     governmental plan (as defined in section 414(d) of such 
     Code), and (ii) if the employer, a fiduciary of the plan, or 
     another person acting on behalf of the employer reviews and 
     approves each investment alternative offered under any plan 
     described under clause (i)(III) prior to the investment being 
     offered to participants in the plan, or (E)'';
         (2) by striking ``(C), or (D)'' and inserting ``(C), (D), 
     or (E)''; and
         (3) by striking ``(iii) which is a plan funded'' and all 
     that follows through ``retirement income account).'' and 
     inserting ``(iii) in the case of a plan not described in 
     subparagraph (D) or (E), which is a plan funded by an annuity 
     contract described in section 403(b) of such Code''.
         (c) Amendments to the Securities Exchange Act of 1934.--
     Section 3(a)(12)(C) of the Securities Exchange Act of 1934 
     (15 U.S.C. 78c(a)(12)(C)) is amended--
         (1) by striking ``or (iv)'' and inserting ``(iv) a plan 
     which meets the requirements of section 403(b) of such Code 
     (I) if (aa) such plan is subject to title I of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1001 et 
     seq.), (bb) any employer making such plan available agrees to 
     serve as a fiduciary for the plan with respect to the 
     selection of the plan's investments among which participants 
     can choose, or (cc) such plan is a governmental plan (as 
     defined in section 414(d) of such Code), and (II) if the 
     employer, a fiduciary of the plan, or another person acting 
     on behalf of the employer reviews and approves each 
     investment alternative offered under any plan described under 
     subclause (I)(cc) prior to the investment being offered to 
     participants in the plan, or (v)'';
         (2) by striking ``(ii), or (iii)'' and inserting ``(ii), 
     (iii), or (iv)''; and
         (3) by striking ``(II) is a plan funded'' and inserting 
     ``(II) in the case of a plan not described in clause (iv), is 
     a plan funded''.
         (d) Conforming Amendment to the Securities Exchange Act 
     of 1934.--Section 12(g)(2)(H) of the Securities Exchange Act 
     of 1934 (15 U.S.C. 78l(g)(2)(H)) is amended by striking ``or 
     (iii)'' and inserting ``(iii) a plan described in section 
     3(a)(12)(C)(iv) of this Act, or (iv)''.

  The Acting CHAIR. Pursuant to House Resolution 1052, the gentleman 
from Oklahoma (Mr. Lucas) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Oklahoma.
  Mr. LUCAS. Madam Chair, I yield myself such time as I may consume.
  One of the most difficult decisions a worker will ever undertake is 
determining how to save for retirement. This requires an individual to 
forecast decades into the future, ensuring one has the ability to 
navigate through life, family, and economic events.
  For many teachers and nonprofit employees, their retirement savings 
are through 403(b) plans. However, these public servants in 403(b) 
plans are unable to benefit from the same cost-effective investment 
products that are available in all other plans, including 401(k) plans, 
government 457(b) plans, and the Federal Thrift Savings Plan.
  Since the creation of 403(b) retirement plans back in 1958, there 
have been many changes to how we save for retirement, both in the law 
and the overall economy.
  This amendment will allow 403(b) plans the ability to invest in 
collective investment trusts, or CITs, and insurance company separate 
accounts.
  CITs and insurance company separate accounts are both pooled 
investment vehicles sponsored and maintained by a bank or trust 
company, or an insurance company, respectively.
  This measure originated in SECURE 2.0 last Congress, which passed the 
House Ways and Means Committee unanimously. The SECURE 2.0 Act that 
ultimately became law included the required changes to the tax code but 
did not include the necessary changes to securities law.
  The data speaks for itself. During the past 10 years, 401(k) plan 
assets increased by 88 percent, government 457(b) plans increased by 82 
percent, but total assets in 403(b) plans only increased by 46 percent.
  We have for too long limited the investment options made available to 
public servants, and this bill will allow for much-needed consistency 
across retirement plans.
  This measure received broad bipartisan support in the Financial 
Services Committee, and I thank Congressman Gottheimer of New Jersey 
and Congressman Foster of Illinois for joining me on this amendment.
  Madam Chair, I urge my colleagues to support the amendment, and I 
reserve the balance of my time.
  Ms. WATERS. Madam Chair, I claim the time in opposition to the 
amendment.
  The Acting CHAIR. The gentlewoman from California is recognized for 5 
minutes.
  Ms. WATERS. Madam Chair, I yield myself such time as I may consume.
  This amendment, sponsored by Mr. Lucas, would be better titled the 
retirement hazard for charities and educational institutions amendment 
because it puts the retirement savings of public interest professionals 
at risk.
  403(b) retirement plans cater to teachers, school administrators, 
professors, nonprofit employees, and healthcare workers. These 
individuals dedicate their lives to the public interest. They invest in 
the future of our children. They ensure we get the healthcare we need, 
even during a global pandemic, and too often, they aren't paid nearly 
enough to do the work that they do.
  There are current restrictions on how 403(b) plans can invest their 
assets, and this is to ensure that these retirement accounts are 
generally safe investments. However, this amendment would allow 403(b) 
plans to invest in two types of risky, unregistered securities: 
collective investment trusts, or CITs, which is a type of pooled 
investment vehicle, and insurance products called variable annuities, 
both of which are considered fairly risky products for unsophisticated 
investors.
  Madam Chair, under this amendment, neither of these products would be 
subject to regulation or oversight by the SEC.
  More than half of all 403(b) plans are not covered by ERISA 
protections, meaning that this newly allowed risky investment activity 
would also escape the oversight of the Department of Labor.
  While Republicans claim they are creating parity with 401(k) plans, 
this is simply untrue because all 401(k) plans are, in fact, covered by 
ERISA. To create true parity, we would need to restrict the sale of 
CITs and variable annuities to only 403(b) plans covered by ERISA.
  All in all, this amendment would carve out over $1.4 trillion of 
retirement funds from Federal oversight. This would constitute the 
single largest deregulation of our capital markets in years.
  Ultimately, this amendment would put the hard-earned retirement 
savings of public interest professionals at risk. That is why I 
strongly oppose it.
  Madam Chair, I reserve the balance of my time.
  Mr. LUCAS. Madam Chair, I yield such time as she may consume to the 
gentleman from Missouri (Mrs. Wagner).

                              {time}  1745

  Mrs. WAGNER. Madam Chair, I rise in support of the gentleman from 
Oklahoma's amendment.
  Under current law, Americans participating in 401(k) plans through 
their employer may invest their retirement accounts in collective 
investment trusts, CITs, and insurance company separate accounts that 
are exempt from the SEC's registration requirements. This exemption 
from SEC registration allows these products to be offered at lower 
costs.
  However, teachers, nurses, janitors, and charity workers who 
participate in 403(b) plans are currently denied access to the cost-
effective investments available to private workers in 401(k) plans. 
Importantly, investment options in a 403(b) plan are always selected by 
the private or public employer. As such, this amendment does not allow 
direct retail sales to individuals.
  Moreover, unregistered does not mean unregulated. It simply means

[[Page H986]]

that investment products available to 403(b) plans will not have to 
register with the SEC and, thus, will not have to provide a lengthy 
prospectus document to accompany the filing, thus keeping costs 
appropriately low.
  The amendment preserves important protections for investors in 403(b) 
plans.
  Mr. Lucas' amendment is a thoughtful and balanced bill to allow 
employees of nonprofit charities and public educational institutions in 
403(b) plans to have access to the same low-cost investments available 
to employees of for-profit companies and other employees in 401(k) 
plans.
  This amendment is co-led in a bipartisan fashion with support from my 
colleagues across the aisle, Mr. Gottheimer and Mr. Foster. On top of 
that, the bill this amendment is based on, the Retirement Fairness for 
Charities and Educational Institutions Act, passed out of the Financial 
Services Committee last year with very strong bipartisan support.
  Madam Chair, I urge my colleagues to support this amendment.
  Ms. WATERS. Madam Chair, I continue to reserve the balance of my 
time.
  Mr. LUCAS. Madam Chair, I have no further speakers, and I yield 
myself the balance of my time.
  Madam Chair, I simply wish to say that I have the greatest respect 
for the ranking member of the Financial Services Committee, but I would 
note we simply disagree on this amendment.
  I believe it is a very effective way to provide equity amongst the 
various retirement accounts, and it is important that teachers and 
public service people have the same opportunity to grow their savings 
so that they, too, can enjoy the best possible golden years.
  Madam Chair, I yield back the balance of my time.
  Ms. WATERS. Madam Chair, I yield myself the balance of my time.
  Madam Chair, by allowing unregistered financial professionals to sell 
unregistered products to 403(b) plans, this amendment would leave 
America's teachers, healthcare workers, and other public interest 
professionals vulnerable to losing their retirement funds.
  Neither of the two unregistered products contemplated nor the sales 
of these products would be subject to regulation or oversight by the 
SEC, which allows them to skirt investor protections and exposes plan 
participants to greater risk of loss. Congress must do everything in 
its power to ensure our teachers and dedicated public servants have a 
comfortable retirement, but this amendment would do anything but that.
  Madam Chair, I strongly urge my colleagues to vote ``no,'' and I 
yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Oklahoma (Mr. Lucas).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Ms. WATERS. Madam Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Oklahoma 
will be postponed.


                 Amendment No. 4 Offered by Mrs. Wagner

  The Acting CHAIR. It is now in order to consider amendment No. 4 
printed in part B of House Report Number 118-407.
  Mrs. WAGNER. Madam Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Add at the end the following:

             DIVISION D--INCREASING INVESTOR OPPORTUNITIES

     SEC. 4001. CLOSED-END COMPANY AUTHORITY TO INVEST IN PRIVATE 
                   FUNDS.

       (a) In General.--Section 5 of the Investment Company Act of 
     1940 (15 U.S.C. 80a-5) is amended by adding at the end the 
     following:
       ``(d) Closed-End Company Authority to Invest in Private 
     Funds.--
       ``(1) In general.--Except as otherwise prohibited or 
     restricted by this Act (or any rule issued under this Act), 
     the Commission may not prohibit or otherwise limit a closed-
     end company from investing any or all of the assets of the 
     closed-end company in securities issued by private funds.
       ``(2) Other restrictions on commission authority.--
       ``(A) In general.--Except as otherwise prohibited or 
     restricted by this Act (or any rule issued under this Act) or 
     to the extent permitted by subparagraph (B), the Commission 
     may not impose any condition on, restrict, or otherwise 
     limit--
       ``(i) the offer to sell, or the sale of, securities issued 
     by a closed-end company that invests, or proposes to invest, 
     in securities issued by private funds; or
       ``(ii) the listing of the securities of a closed-end 
     company described in clause (i) on a national securities 
     exchange.
       ``(B) Unrelated restrictions.--The Commission may impose a 
     condition on, restrict, or otherwise limit an activity 
     described in clause (i) or (ii) of subparagraph (A) if that 
     condition, restriction or limitation is unrelated to the 
     underlying characteristics of a private fund or the status of 
     a private fund as a private fund.
       ``(3) Application.--Notwithstanding section 6(f), this 
     subsection shall also apply to a closed-end company that 
     elects to be treated as a business development company 
     pursuant to section 54.''.
       (b) Definition of Private Fund.--Section 2(a) of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-2(a)) is 
     amended by adding at the end the following:
       ``(55) The term `private fund' has the meaning given in 
     section 202(a) of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-2(a)).''.
       (c) Treatment by National Securities Exchanges.--Section 6 
     of the Securities Exchange Act of 1934 (15 U.S.C. 78f) is 
     amended by adding at the end the following:
       ``(m)(1) Except as otherwise prohibited or restricted by 
     rules of the exchange that are consistent with section 5(d) 
     of the Investment Company Act of 1940 (15 U.S.C. 80a-5(d)), 
     an exchange may not prohibit, condition, restrict, or impose 
     any other limitation on the listing or trading of the 
     securities of a closed-end company when the closed-end 
     company invests, or may invest, some or all of the assets of 
     the closed-end company in securities issued by private funds.
       ``(2) In this subsection--
       ``(A) the term `closed-end company'--
       ``(i) has the meaning given the term in section 5(a) of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-5(a)); and
       ``(ii) includes a closed-end company that elects to be 
     treated as a business development company pursuant to section 
     54 of the Investment Company Act of 1940 (15 U.S.C. 80a-53); 
     and
       ``(B) the term `private fund' has the meaning given the 
     term in section 2(a) of the Investment Company Act of 1940 
     (15 U.S.C. 80a-2(a))).''.
       (d) Investment Limitation.--Section 3(c) of the Investment 
     Company Act of 1940 (15 U.S.C. 80a-3(c)) is amended--
       (1) in paragraph (1), in the matter preceding subparagraph 
     (A), in the second sentence, by striking ``subparagraphs 
     (A)(i) and (B)(i)'' and inserting ``subparagraphs (A)(i), 
     (B)(i), and (C)''; and
       (2) in paragraph (7)(D), by striking ``subparagraphs (A)(i) 
     and (B)(i)'' and inserting ``subparagraphs (A)(i), (B)(i), 
     and (C)''.
       (e) Rules of Construction.--
       (1) Nothing in this section or the amendments made by this 
     section may be construed to limit or amend any fiduciary duty 
     owed to a closed-end company (as defined in section 5(a)(2) 
     of the Investment Company Act of 1940 (15 U.S.C. 80a-
     5(a)(2))) or by an investment adviser (as defined under 
     section 2(a) of the Investment Company Act of 1940 (15 U.S.C. 
     80a-2(a))) to a closed-end company.
       (2) Nothing in this section or the amendments made by this 
     section may be construed to limit or amend the valuation, 
     liquidity, or redemption requirements or obligations of a 
     closed-end company (as defined in section 5(a)(2) of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-5(a)(2))) as 
     required by the Investment Company Act of 1940.

  The Acting CHAIR. Pursuant to House Resolution 1052, the gentlewoman 
from Missouri (Mrs. Wagner) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentlewoman from Missouri.
  Mrs. WAGNER. Madam Chair, I yield myself such time as I may consume.
  Madam Chair, closed-end funds are a popular tool for everyday 
investors who gain exposure to private markets in a safe, appropriately 
regulated way. Approximately 3 million Americans rely on these products 
to build wealth and save for retirement.
  Like other investment options available to Americans looking to save 
for retirement, send their kids to college, or plan for the future, 
closed-end funds must comply with the requirements of the Securities 
Act of 1933, the Securities Exchange Act of 1934, and the Investment 
Company Act of 1940.
  To satisfy their regulatory obligations, closed-end funds must, among 
other things, register with the SEC, file annual and semiannual 
reports, and comply with stringent valuation and disclosure 
requirements. They are also subject to the broad antifraud provisions 
of the Federal securities laws, which provide additional protections to 
investors.
  Unfortunately, an SEC staff position prevents registered closed-end 
funds from investing more than 15 percent of their total assets in 
private funds. This arbitrary restriction is especially harmful to low-
income and middle-

[[Page H987]]

class Americans who rely on appropriately regulated products like 
closed-end funds to access high-growth investment opportunities.
  In substituting their own judgments for those of financial 
professionals, SEC bureaucrats have taken another step toward reserving 
safe access to investment opportunities for wealthy, accredited 
investors.
  My amendment, which mirrors my bipartisan Increasing Investor 
Opportunities Act, would remove this arbitrary SEC staff position and 
allow investment professionals to determine which investments a closed-
end fund should make. This would increase investment opportunities for 
millions of Americans and eliminate unnecessary barriers restricting 
investor access.
  Madam Chair, I thank my Democratic friends across the aisle, 
including Mr. Meeks, Mr. Scott, and Mr. Nickel, for their bipartisan 
support of my bill on which this amendment is based.
  Last year, the Financial Services Committee passed the same text that 
is in this amendment with strong bipartisan support. I am proud of this 
legislation and our committee's unwavering commitment to expanding 
investment opportunities for all Americans.
  Madam Chair, I encourage my colleagues to support this amendment, and 
I reserve the balance of my time.
  Ms. WATERS. Madam Chair, I claim the time in opposition.
  The Acting CHAIR. The gentlewoman from California is recognized for 5 
minutes.
  Ms. WATERS. Madam Chair, I yield myself such time as I may consume.
  Madam Chair, this amendment would be better titled increasing 
investor risks.
  Currently, closed-end funds, which are a type of mutual fund, are 
only allowed to invest up to 15 percent of their assets into private 
funds. This current limit of 15 percent gives closed-end funds some 
flexibility to invest in private funds but establishes a reasonable 
restriction, considering private funds are subject to less regulation 
and disclosure. This restriction also accounts for the fact that 
private funds invest in fledgling startups and distressed companies, 
which are significantly more risky than public securities, and most of 
their investments fail.
  Mrs. Wagner's amendment would eliminate the restriction on closed-end 
fund investments into private funds, allowing them to invest up to 100 
percent of their assets into private funds. Moreover, the amendment 
provides zero safeguards to mitigate the new risks created by this 
blunt deregulation.
  Like all the rest of the capital markets-related amendments before us 
today, this one is opposed by investor groups, consumer and investor 
advocates, and State regulators.
  For these reasons, Madam Chair, I oppose this amendment. I urge my 
colleagues to do the same, and I reserve the balance of my time.
  Mrs. WAGNER. Madam Chair, I yield 1 minute to the gentleman from New 
York (Mr. Meeks).
  Mr. MEEKS. Madam Chair, at this time, I am pleased to offer this 
bipartisan amendment with my friend from Missouri (Mrs. Wagner) along 
with the support of my colleagues Mr. Scott and Mr. Nickel.
  This amendment would provide opportunities for enhanced exposure to 
private funds through closed-end funds, investment vehicles with 
comprehensive protections under the 1940 Investment Company Act. These 
rules include the mandatory requirement that the fund be managed by an 
investment adviser who is required to conduct due diligence on a fund's 
investments, answer to independent directors, and adhere to extensive 
disclosure and reporting requirements.

  This amendment also makes clear that investors should be given access 
to the growth opportunities provided in the private markets so long as 
they have proper disclosures and risk mitigation.
  I am happy to sponsor this bipartisan amendment primarily because it 
also broadens opportunities and increases access for people who have 
been left out in the past while ensuring that robust rules of the road 
are followed.
  Ms. WATERS. Madam Chair, I reserve the balance of my time.
  Mrs. WAGNER. Madam Chair, the closed-end funds are a very popular 
tool for everyday investors who gain exposure to private markets in a 
safe, appropriately regulated way.
  As I said, approximately 3 million Americans rely on these products 
to build wealth and save for retirement.
  Madam Chair, I urge all of my colleagues to support this amendment, 
and I yield back the balance of my time.
  Ms. WATERS. Madam Chair, I yield myself the balance of my time.
  Madam Chair, as I stated, the assets that private funds purchase are 
significantly more risky than public securities. In fact, 9 out of 
every 10 of their investments fail.
  Allowing closed-end funds to invest all of their assets into private 
funds can be risky for America's retirement savers, who should be able 
to trust that these funds are safe investments for them to save for 
retirement.
  As such, Madam Chair, I strongly urge my colleagues to vote ``no,'' 
and I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentlewoman from Missouri (Mrs. Wagner).
  The question was taken; and the Acting Chair announced that the ayes 
appeared to have it.
  Ms. WATERS. Madam Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentlewoman from Missouri 
will be postponed.


                 Amendment No. 5 Offered by Mr. Sherman

  The Acting CHAIR. It is now in order to consider amendment No. 5 
printed in part B of House Report 118-407.
  Mr. SHERMAN. Madam Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 38, strike line 21 and all that follows through page 
     39, line 6 and insert the following:

       ``(iii) with respect to a proposed transaction involving a 
     private offering, any individual if--

       ``(I) the amount of such transaction is not more than 5 
     percent of the net worth of the individual (excluding the 
     primary residence of the individual); and
       ``(II) the aggregate investment of the individual at the 
     completion of such transaction, in securities with respect to 
     which there has not been a public offering, is not more than 
     25 percent of the net worth of the individual (excluding the 
     primary residence of the individual);''.

  The Acting CHAIR. Pursuant to House Resolution 1052, the gentleman 
from California (Mr. Sherman) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from California.
  Mr. SHERMAN. Madam Chair, in the debate on the bill in chief, the 
chair of the full committee correctly criticized the definition of 
accredited investor as it occurs under current law.
  Accredited investor is an important concept in securities law 
because, Madam Chair, when you have a private offering, one that hasn't 
gone through the SEC process, the amount that can be raised and the 
number of investors you can have are related to, in large part, how 
many of your investors are accredited.
  The current definition makes you an accredited investor if you earn 
over $200,000 a year or have a net worth of more than $1 million. 
Frankly, the fact that you have that level of income or that level of 
wealth does not show that you have particular expertise or that your 
adviser team has particular expertise. While it certainly shows that 
you are in a position to absorb a loss, no one can afford to absorb a 
loss of 100 percent of their net worth.
  We need a different definition of accredited investor, one that does 
not limit that status just to those who happen to be wealthy or have a 
high income.
  The bill before us here does provide that different definition by 
saying you are an accredited investor, first, if you acknowledge the 
risks that you are taking and, second, if you are investing less than 
10 percent of your net worth in the securities offering so that you can 
afford a loss on what, after all, is a higher risk--as many people have 
pointed out--offering about which you get less information.
  The problem with the bill in chief using that 10 percent standard is 
twofold. First, it includes in your net

[[Page H988]]

worth your primary residence. If you happen to have a $1 million home, 
you could take out a $100,000 mortgage on it and invest all $100,000 in 
one relatively risky investment.

                              {time}  1800

  Mr. SHERMAN. You have literally bet your house on an investment that 
is of a type that is risky and where you get less information and where 
the investment is illiquid. That is not good investor protection.
  What this amendment does is it says, yes, we are going to look at 
what portion of your net worth you are investing, but we are going to 
take a look first at your net worth excluding your primary residence 
because very few people feel they can afford to lose their house; 
second, that you cannot invest more than 10 percent of your net worth 
in any single offering or more than 25 percent of your net worth in all 
these private offerings.
  Therefore, we look at wealth, excluding your home so you don't risk 
losing your home, and we look at not only how much you are investing in 
the particular investment, but how much you are investing overall.
  I want to correct one thing. This amendment limits it to, excluding 
your primary residence, 5 percent of your net worth on any one private 
offering, and no more than 25 percent of your net worth, excluding your 
primary residence, on all such private offerings.
  Madam Chair, I urge adoption of this amendment. I think it gives us a 
better definition of those who can afford the risks and the risk of 
liquidity that comes with these private investments.
  The risk of liquidity is there. You may think, well, I made an 
investment and it is going to pan out, but if you need the money and 
you can't liquidate the investment on a fair basis, it is almost as if 
the investment failed.
  Therefore, we are talking higher risk, less liquidity. We limit it 
under this amendment to 5 percent of your net worth on any one deal, 25 
percent of your net worth on all such deals. Also, when we look at your 
net worth, we exclude your personal residence. These are not situations 
where you should be betting your home.
  Mr. Chairman, I reserve the balance of my time.
  Mrs. WAGNER. Madam Chair, I rise in opposition to the amendment.
  The Acting CHAIR. The gentlewoman from Missouri is recognized for 5 
minutes.
  Mrs. WAGNER. Madam Chair, a key tenet of H.R. 2799 is to increase 
access to investment opportunities for everyday investors.
  Under the guise of investor protection, this amendment would 
arbitrarily limit the amount nonaccredited investors can invest in a 
private offering to 5 percent of an individual's net worth.
  In the Expanding Access to Capital Act, the investment cap for a 
single private offering is set at 10 percent of the investor's net 
assets or annual income, whichever is greater. Instead of using a 
number just pulled out of thin air, the 10 percent cap in the bill is 
rooted in precedent.
  There is a 10 percent cap for nonaccredited investors through 
offerings such as Regulation Crowdfunding and Reg A+. Why would we not 
go with the percentage cap that is already proven effective?
  Additionally, this amendment would arbitrarily cap aggregate 
investments across private offerings for nonaccredited investors to no 
more than 25 percent of their net worth. This essentially says to 
everyday investors that the government knows better than you how to 
invest your hard-earned dollars.
  As I previously said, and we heard from several witnesses at 
committee, wealth and income should not be a proxy for sophistication. 
Similarly, if we want to provide more Americans the opportunity to 
build wealth, we cannot keep them on the sidelines.
  Private offerings are often the most high-growth investment 
opportunities, yet they are largely reserved for high-net-worth 
investors. This enshrines inequity and blatantly picks winners and 
losers.
  If my colleagues on the other side of the aisle are serious about 
equity and ownership in the American economy, they will join 
Republicans in providing more opportunities to everyday investors, not 
less.
  Madam Chair, I urge my colleagues to oppose this amendment, and I 
reserve the balance of my time.
  Mr. SHERMAN. Madam Chair, let me respond to those comments.
  The underlying bill acknowledges the fact that the government puts 
some restrictions on how much of your net worth you can put into one of 
these unregulated, risky, low-information, illiquid investments. 
Therefore, to say that we have clashed with some great principle of 
personal freedom in my amendment because it says 5 percent, but that it 
is consistent with the same great overriding principle of personal 
autonomy when you back a bill that says 10 percent, defies logic.
  The Acting CHAIR (Mr. LaLota). The time of the gentleman has expired.
  Mrs. WAGNER. Mr. Chair, I yield myself the balance of my time.
  If my colleagues on the other side of the aisle are serious about 
equity and ownership in the American economy, they will join 
Republicans in providing more opportunities to everyday investors, not 
less.
  Mr. Chair, I urge my colleagues to oppose this amendment, and I yield 
back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from California (Mr. Sherman).
  The question was taken; and the Acting CHAIR announced that the noes 
appeared to have it.
  Mrs. WAGNER. Mr. Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from California 
will be postponed.
  Mrs. WAGNER. Mr. Chair, I move that the Committee do now rise.
  The motion was agreed to.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Moore of Utah) having assumed the chair, Mr. LaLota, Acting 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. 
2799) to make reforms to the capital markets of the United States, and 
for other purposes, had come to no resolution thereon.

                          ____________________