[Congressional Record Volume 171, Number 107 (Monday, June 23, 2025)]
[House]
[Pages H2869-H2871]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FAIR INVESTMENT OPPORTUNITIES FOR PROFESSIONAL EXPERTS ACT
Mrs. WAGNER. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 3394) to amend the Securities Act of 1933 to codify certain
qualifications of individuals as accredited investors for purposes of
the securities laws, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 3394
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fair Investment
Opportunities for Professional Experts Act''.
SEC. 2. DEFINITION OF ACCREDITED INVESTOR.
(a) In General.--Section 2(a)(15) of the Securities Act of
1933 (15 U.S.C. 77b(a)(15)) is amended--
(1) by redesignating subparagraphs (i) and (ii) as
subparagraphs (A) and (F), respectively; and
(2) in subparagraph (A) (as so redesignated), by striking
``; or'' and inserting a semicolon, and inserting after such
subparagraph the following:
``(B) with respect to a proposed sale of a security, any
natural person whose individual net worth, or joint net worth
with that person's spouse or spousal equivalent, at the time
of such sale, exceeds $1,000,000 (which amount, along with
the amounts set forth in subparagraph (C), shall be adjusted
for inflation by the Commission every 5 years to the nearest
$10,000 to reflect the change in the Consumer Price Index for
All Urban Consumers published by the Bureau of Labor
Statistics) where, for purposes of calculating net worth
under this subparagraph--
``(i) the person's primary residence shall not be included
as an asset;
``(ii) indebtedness that is secured by the person's primary
residence, up to the estimated fair market value of the
primary residence at the time of such sale, shall not be
included as a liability (except that if the amount of such
indebtedness outstanding at the time of such sale
[[Page H2870]]
exceeds the amount outstanding 60 days before such time,
other than as a result of the acquisition of the primary
residence, the amount of such excess shall be included as a
liability); and
``(iii) indebtedness that is secured by the person's
primary residence in excess of the estimated fair market
value of the primary residence at the time of such sale shall
be included as a liability;
``(C) any natural person who had an individual income in
excess of $200,000 in each of the 2 most recent years or
joint income with that person's spouse or spousal equivalent
in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in
the current year;
``(D) any natural person who is--
``(i) currently licensed or registered as a broker or
investment adviser by the Commission, a self-regulatory
organization (as defined in section 3(a) of the Securities
Exchange Act of 1934), or the securities division of a State,
the District of Columbia, or a territory of the United States
or the equivalent division responsible for licensing or
registration of individuals in connection with securities
activities; and
``(ii) in good standing with respect to such licence or
registration;
``(E) any natural person the Commission determines, by
regulation, to have demonstrable education or job experience
to qualify such person as having professional knowledge of a
subject related to a particular investment, and whose
education or job experience is verified by a self-regulatory
organization (as defined in section 3(a) of the Securities
Exchange Act of 1934); or''.
(b) Rulemaking.--Not later than 180 days after the date of
enactment of this Act, the Securities and Exchange Commission
shall revise the definition of accredited investor under
Regulation D (17 CFR 230.500 et seq.) to conform with the
amendments made by subsection (a).
The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from
Missouri (Mrs. Wagner) and the gentleman from California (Mr. Sherman)
each will control 20 minutes.
The Chair recognizes the gentlewoman from Missouri.
General Leave
Mrs. WAGNER. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days to revise and extend their remarks and
include extraneous material on this bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentlewoman from Missouri?
There was no objection.
Mrs. WAGNER. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I rise in strong support of H.R. 3394, the Fair
Investment Opportunities for Professional Experts Act.
I thank our Financial Services Committee chairman, the gentleman from
Arkansas (Mr. Hill), for his leadership on this bipartisan legislation.
For decades, the SEC's accredited investor definition has served as a
gatekeeper to private investment opportunities, relying almost entirely
on income and net worth thresholds.
This approach has excluded millions of Americans who may not meet
those financial metrics but have the education, licenses, or
professional experiences to make informed investment decisions.
H.R. 3394 modernizes that definition. It directs the SEC to expand
eligibility to individuals who hold certain professional
certifications, relevant degrees, or job experience, criteria that
actually reflect financial sophistication.
This change is long overdue. It will unlock capital for small
businesses, broaden investor participation, and better align our rules
with how Americans build expertise and manage risk in today's economy.
The bill maintains investor protections, while removing arbitrary
barriers that have held back individual investors and early-stage
entrepreneurs alike.
Mr. Speaker, I urge my colleagues to support this commonsense reform,
and I reserve the balance of my time.
{time} 1645
Mr. SHERMAN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I want to commend the gentlewoman from Missouri for all
of her work chairing the Subcommittee on Capital Markets, but,
particularly, for the hearings that we have had on this bill. I look
forward to working with her on this subcommittee for many years to
come.
Mr. Speaker, I rise in support of H.R. 3394, the Fair Investment
Opportunities for Professional Experts Act, offered by my friend and
Financial Services Committee chair, French Hill. This bill is the first
step in what I hope will be an effort to reform the definition of
``accredited investor.'' This bill moves us to add to that definition
by noting that certain experience, licenses, and education can, indeed,
make one an accredited investor.
At the same time, I will point out that our definition of
``accredited investor'' was, I think, wrongfully decided that we should
just focus on whoever is rich, then defined people as rich based on
1983 numbers. While $1 million may have made you rich then, Mr.
Speaker, it does not mean that you are rich today.
I rise in support of this bill. The accredited investor framework has
long protected the general public from investing in high-risk, illiquid
private securities. Unlike our public capital markets, in the private
capital markets, companies don't provide anywhere near the same
financial and other disclosures to investors. There are not the same
legal protections for investors either, nor is there the same ability
of the SEC or the State securities regulators to police these markets.
When the accredited investor framework was first being debated,
accredited investors were thought to be those who possess an intimate
understanding and knowledge of the risks inherent in investing in
private securities. These risks include heightened volatility, less
transparency, difficulty obtaining accurate pricing, long lockup
periods, and limited liquidity.
Ultimately, industry argued for a simpler approach, so the SEC
adopted the current definition, which is based around income and
wealth. Today, to be an accredited investor, the investor must have a
net worth, either individually or, with spouse, exceeding $1 million
excluding the value of their home, or they must make more than $200,000
a year or $300,000 with a spouse.
Those were definitions applicable in 1983 that may not have defined
those with the requisite knowledge, but at least defined those who were
high-income, high-net worth individuals. Of course, certain
professional certifications or designations such as being an investment
adviser could also qualify a person under the existing rules.
The wealth and income thresholds, as I have said several times, were
set back in 1983. Back then, roughly 2 percent of all Americans were
considered accredited investors. As of 2023, that number had risen to
20 percent. Clearly either the standard was wrong in 1983 or it is
wrong now, because it is an entirely different level of real wealth and
real income.
Mr. Hill's bill aims to return back to the original concept of
accredited investor, which is that investors in private offerings
should be fully aware and knowledgeable of the risks involved.
As my friend and ranking member of the Financial Services Committee,
Ms. Waters, has said during our markup of this bill:
Just because you have $1 million doesn't mean you
understand the complexities of the private markets. On the
other hand, you shouldn't be prohibited from investing in
products if you have full knowledge of the risks involved but
don't happen to have $1 million.
I would add to that that our definition of ``accredited investors,''
when we are done improving it, and this bill is an important step
toward improving it, should focus on what percentage of net worth a
person is investing in the particular private offering or private
offerings in general.
That is because one may be accredited to invest 5 or 10 percent of
their net worth, but when you start betting the mortgage payments on
one private investment, Mr. Speaker, then that is where our definition
of ``accredited investor'' should protect you from that. So there
should be diversification and limitation on the amount that an
accredited investor can invest in any one or in all private offerings.
Nonetheless, that is for a different bill. This bill simply makes one
important improvement in our definition of ``accredited investor.''
It is critical for the SEC to revise and update the accredited
investor definition to protect those who don't possess the proper
knowledge or information about the risks of private unregistered
securities. Mr. Hill's bill moves us in the right direction by
indicating that certain credentials, such as someone with a master's in
business administration, an MBA, or a FINRA certification, for example,
should be deemed accredited without needing to meet income or wealth
requirements. It also
[[Page H2871]]
reconfirms Congress' mandate to the SEC that it must adjust the wealth
and income thresholds to account for inflation. This is the right
balance.
I look forward to passing this bill, and I look forward to our
subcommittee and the full committee making other changes in the
definition of ``accredited investor.''
Mr. Speaker, I urge my colleagues to support this bill, and I reserve
the balance of my time.
Mrs. WAGNER. Mr. Speaker, I yield such time as he may consume to the
gentleman from Arkansas (Mr. Hill), who is the chairman of the
Financial Services Committee and the author of this bill.
Mr. HILL of Arkansas. Mr. Speaker, I certainly thank our
distinguished chair of the subcommittee, Mrs. Wagner of Missouri, for
her daily leadership of our agenda to make America more competitive by
having the most liquid, competitive capital markets in the world. These
bills certainly take a step in that direction to support that goal. I
thank my friend from California (Mr. Sherman) for his comments in
support of the bill.
The gentleman is right, Mr. Speaker. I think we have all learned in
our lives that intelligence and wealth aren't directly correlated. This
is another example of that, where people are held back from their
ability to use their expertise and their knowledge just because they
don't have a specific net worth. That is what H.R. 3394, the Fair
Investment Opportunities for Professional Experts Act seeks to clarify.
Many individuals, whether through work, education, or other
experience, have the knowledge to make an informed investment decision,
but they are excluded simply because of an income or net worth test.
Before I was in Congress, I helped investors and founders start new
companies and raise funds through regulation D private placements.
I witnessed firsthand on an annual basis routinely how the current
accredited investor definition impaired talented, knowledgeable
innovators from fully participating up front in their business
formation dream.
This bill, with my good friend from California, Representative
Vargas, would expand the definition of an ``accredited investor'' and
allow Americans who can demonstrate education, professional experience,
or other similar credentials the opportunity to invest in a private
offer.
It passed out of our Financial Services Committee 45-1, Mr. Speaker,
demonstrating clear, bipartisan support. I agree with my friend from
California. This bill is a step in the right direction, offering more
Americans a chance to participate in the American Dream, build capital,
help start a business, and use their God-given talent, skills, ability,
and professional expertise to help that company be successful.
Mr. Speaker, I urge a ``yes'' vote from all the Members on both sides
of the aisle.
Mr. SHERMAN. Mr. Speaker, I have no speakers on my side, and I yield
myself the balance of my time.
Mr. Speaker, I rise in support of Chairman Hill's bill, H.R. 3394.
This bill will improve the definition of ``accredited investor.''
Mr. Speaker, I urge a ``yes'' vote, and I yield back the balance of
my time.
Mrs. WAGNER. Mr. Speaker, I yield 3 minutes to the gentleman from
Florida (Mr. Haridopolos).
Mr. HARIDOPOLOS. Mr. Speaker, I will be brief with this explanation.
I will first say that it is so nice to see our economy moving in the
right direction. This bill will give more opportunities to Americans to
invest with not as many regulations in their way. With these
challenging times overseas, it is nice to see that we recognize that
economic security equals national security, and by expanding the
qualified investor rule, which will give exactly that: more opportunity
to others.
This bill, led by our chairman, expands access to private capital
markets with those who have proven expertise. The bill allows investors
to qualify based on licenses, education, and job experience, not just
net worth.
It truly modernizes our investor standards to reflect today's
knowledge-based economy by widening their pool for investors who are
qualified. It fuels private investment and business growth while at the
same time keeping protections in place by the SEC and FINRA.
For these reasons, I support the good bill by our chairman.
Mrs. WAGNER. In closing, Mr. Speaker, the Fair Investment
Opportunities for Professional Experts Act maintains investor
protections while removing arbitrary barriers that have held back
individual investors and early-stage entrepreneurs alike.
Mr. Speaker, I urge my colleagues to support H.R. 3394, and I yield
back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentlewoman from Missouri (Mrs. Wagner) that the House suspend the
rules and pass the bill, H.R. 3394, as amended.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mrs. WAGNER. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.
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