[Congressional Record Volume 171, Number 208 (Wednesday, December 10, 2025)]
[House]
[Pages H5534-H5555]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
INCREASING INVESTOR OPPORTUNITIES ACT
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 the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentlewoman from Missouri?
There was no objection.
The SPEAKER pro tempore. Pursuant to House Resolution 936 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. 3383.
The Chair appoints the gentleman from Guam (Mr. Moylan) to preside
over the Committee of the Whole.
[[Page H5535]]
{time} 1944
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. 3383) to amend the Investment Company Act of 1940 with respect to
the authority of closed-end companies to invest in private funds, with
Mr. Moylan in the chair.
The CHAIR. The House is in the Committee of the Whole House on the
state of the Union for the consideration of H.R. 3383, which the Clerk
will report by title.
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 amendments specified
in section 2 of House Resolution 936 and shall not exceed 1 hour
equally divided and controlled by the chair and ranking minority member
on the Committee on Financial Services or their respective designees.
The gentlewoman from Missouri (Mrs. Wagner) and the gentlewoman from
California (Ms. Waters) each will control 30 minutes.
The Chair recognizes the gentlewoman from Missouri (Mrs. Wagner).
Mrs. WAGNER. Mr. Chair, I yield myself such time as I may consume.
Mr. Chair, I rise in support of H.R. 3383, the Incentivizing New
Ventures and Economic Strength Through Capital Formation Act, the
INVEST Act.
America's economic strength has always come from our builders,
inventors, and risk takers. We are a nation of startups born in
garages, family businesses turned into thriving enterprises, and
Dreamers who take an idea and make it real.
Today, too many of those dreams face serious obstacles. Right now,
three areas--Silicon Valley, Boston, and New York--account for nearly
three quarters of all venture capital funding. Entrepreneurs across the
country are told to move to a coast or move on.
Meanwhile, mountains of red tape are stifling growth. When a founder
spends more time navigating Washington rules than creating jobs,
something is broken. We cannot win the next century with a playbook
written in the last one. The INVEST Act is our course correction, and
it builds on proven success.
More than a decade ago, a divided Congress came together to pass the
JOBS Act. It worked. Companies that went public using JOBS Act
provisions expanded their workforce by an average of 150 percent in
just 3 years.
This legislation that we are talking about right now, the INVEST Act,
takes the next step. Our Capital Markets Subcommittee heard from
entrepreneurs and small businesses that can't access capital in their
own communities, Main Street investors with deep expertise who are
locked out of opportunities just because they aren't wealthy enough,
and emerging fund managers who confirmed that outdated rules are
holding America back.
These aren't abstract problems. They are costing us jobs, innovation,
and economic growth in every district that we represent.
The INVEST Act delivers targeted solutions. It revises the
``accredited investor'' definition to recognize that financial
sophistication comes from what you know, not just from how much you
earn.
It also reduces the regulatory burden that discourages companies from
going public. Small businesses will find it easier to raise capital
locally so that economic success can be shared within communities, not
just concentrated on the coasts.
This is bipartisan, pragmatic policy. I am proud to lead this effort
along with our esteemed chairman, Chairman Hill, and my colleagues
across the aisle, Representatives Meeks and Gottheimer. I would like to
note that the ranking member voted for 19 of the 22 bills included in
this package.
There is a reason this bill has won resounding support. I think we
are at 81 total organizations from every corner of the country. When we
expand access to capital and opportunity, everyone wins. More companies
will choose to grow here, go public here, and create jobs here instead
of overseas. More Americans and everyday retail investors will invest
in innovation, and more communities across the country will participate
in the prosperity that entrepreneurship creates.
I urge my colleagues to support this legislation, H.R. 3383, the
INVEST Act. Mr. Chair, I reserve the balance of my time.
{time} 1950
Ms. WATERS. Mr. Chair, I yield myself such time as I may consume.
Mr. Chair, I rise today in strong opposition to H.R. 3383, the INVEST
Act, which is an end-of-year holiday gift to Wall Street, paid for by
the hard-earned savings of teachers, nurses, seniors, and other
hardworking Americans.
While several of the provisions in the INVEST Act could support
capital formation, the bill contains three poison pill provisions that
make voting for the overall bill untenable. These provisions will raise
costs and increase fees for people all across America.
At a time when the President's disastrous tariff policies are causing
many Americans to struggle just to pay the bills, the INVEST Act would
reduce Federal investor protections, jeopardizing the retirement
savings of millions of regular, hardworking Americans, but it didn't
have to be this way.
I worked closely with the Capital Markets Subcommittee chairwoman,
Mrs. Wagner, and the full committee chairman, Mr. Hill, just to get to
``yes'' on this bill, and 19 of the provisions in this bill would pass
overwhelmingly through this House.
Unfortunately, Republicans could not resist the demands of their Wall
Street, and they threw in three poison pills at the last minute that
would make Wall Street richer and retirement more unaffordable.
Mr. Chair, I will tell you about these poison pill provisions and
what they will do.
The first section, 202, would remove the 403(b) retirement plans
relied on by millions of teachers, nurses, and nonprofit workers from
the protections and oversight of the Federal securities laws. This
massive $1 trillion deregulation of 403(b) plans would allow Wall
Street middlemen and unlicensed, so-called retirement consultants to
free themselves of SEC's rules to always keep the planholders' best
interests in mind.
It is not surprising that, while those Wall Street middlemen are
heavily lobbying this bill, the groups and unions representing the
teachers, nurses, and other workers who would be affected strongly
oppose. The National Education Association, representing over 3 million
educators all across the country; the American Federation of Teachers,
representing over 1.5 million teachers and healthcare professionals;
National Nurses United, representing over 200,000 registered nurses;
and the American Federation of State, County, and Municipal Employees,
representing 1.3 million public service workers, all oppose this bill.
Mr. Chair, that is not all. Let's look at the second poison pill,
section 205.
This provision will make electronic delivery of financial documents
the default for all investors, including seniors, even though the
majority of seniors prefer and rely on paper delivery. The bill would
automatically switch investors from the preferred paper delivery to
electronic delivery, even if the investor has recently declined to
receive statements.
Millions of seniors still don't have access to reliable internet or
an email account. As a result of this provision, they would now be in
the dark about their finances and investments. This means that they
would be less likely to notice junk fees and unnecessary trades
executed by their financial professional.
Not surprisingly, the AARP, representing 110 million Americans,
strongly opposed this provision when it was considered in the committee
during this Congress.
Finally, the third poison pill, section 206, allows Wall Street to
vastly increase the amount of risky, opaque private assets they sell to
Main Street investors. It does so by allowing what is known as closed-
end funds, which is similar to mutual funds and used by many everyday
investors to invest up to 100 percent of their assets in shares of
private equity and venture capital funds and directly into the
unregistered shares of private companies.
Current law limits these kinds of private assets to only 15 percent
of a fund's total assets. This is because private assets are very
different from the
[[Page H5536]]
publicly traded stocks and bonds that most folks are used to investing
in.
Unlike publicly traded stocks, private assets are not registered with
the SEC, meaning Wall Street's cop on the block and all of the ensuing
protections that come from its oversight are not in place. They are
also harder to value, contain far fewer disclosures around risk, and
are very hard for investors to get their money back due to withdrawal
limits and long lockup periods.
For these reasons, our securities laws have guardrails on Wall Street
so that they don't peddle junky assets to investors who can't
understand the financial risks. These various provisions and the bill
as a whole are opposed by the groups who are fighting on behalf of
everyday Americans, including, again, the AFL-CIO; American Federation
of Teachers; Americans for Financial Reform; Public Citizen; the
Service Employees International Union; Communication Workers of
America; American Federation of State, County, and Municipal Employees;
National Education Association; National Nurses United; and the United
Auto Workers.
The State securities regulators also came out against the bill just
this morning. No one cares more about capital formation than our State
governments, but they also care that deregulation does not lead to
harming investors and small businesses.
Mr. Chair, we support capital formation. We tried so hard to get an
agreement, and we thought we had one because of the provisions that we
could be bipartisan on because we, too, support capital formation. What
we don't support is these poison pills that will just do the kind of
deregulation that would put so many hardworking people at risk. As I
mentioned, the teachers and the nurses and all of the other labor
unions, et cetera, are really, really worried that these poison pills
will do so much harm that we had to plea but walk away from what we
thought we could get as a bipartisan operation because of the poison
pills at the last minute.
Mr. Chair, I reserve the balance of my time.
Mrs. WAGNER. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, I would like to just mention to the Chair that those
three so-called poison pills that the ranking member keeps mentioning,
these bills passed overwhelmingly in the Financial Services Committee
with strong bipartisan support.
Mr. Chairman, I include in the Record the 81--let me underscore, 81--
organizations that are supporting this piece of legislation, everything
from the American Retirement Association to the Small Business and
Entrepreneurship Council, the United Way, the U.S. Black Chambers, the
U.S. Chamber of Commerce, even the YMCA.
H.R. 3383--INVEST Act (Wagner) (FSC)
groups supporting
1. Accredited Investor Alliance
2. American Benefits Council
3. American Council of Life Insurers (ACLI)
4. American Heart Association
5. American Retirement Association (ARA)
6. American Securities Association (ASA)
7. Ameriprise Financial
8. Angel Capital Association (ACA)
9. AngelList
10. Arizona Technology Council
11. Association of Women's Business Centers
12. Biotechnology Innovation Organization (BIO)
13. Cancer Fund Impact Investments
14. Capital Integration Systems (CAIS)
15. Carta
16. Center for American Entrepreneurship (CAE)
17. Charles Schwab
18. Chorus America
19. Coalition for Business Development (CBD)
20. Committee of Annuity Insurers (CAI)
21. Council on Foundations
22. Crowdfunding Professional Association (CFPA)
23. Defined Contribution Alternatives Association (DCALTA)
24. Edward Jones
25. Empower
26. Engine
27. Fidelity Investments
28. Financial Services Institute
29. Financial Technology Association (FTA)
30. Franklin Templeton
31. Great Gray Trust Company
32. Habitat for Humanity International
33. Illinois Venture Capital Association
34. Incubate
35. Independent Sector
36. Inland Real Estate Group of Companies
37. Institute for Portfolio Alternatives (IPA)
38. Insured Retirement Institute (IRI)
39. Investment Adviser Association (IAA)
40. Investment Company Institute (ICI)
41. Investor Choice Advocates Network (ICAN)
42. LPL Financial
43. Lutheran Services in America
44. Make Startups
45. Managed Funds Association (MFA)
46. Maryland Technology Council
47. Massachusetts Biotechnology Council (MassBio)
48. Meals on Wheels America
49. Michigan Venture Capital Association
50. MissionSquare
51. Nareit
52. Nasdaq
53. National Association of Insurance and Financial
Advisors (NAIFA)
54. National Association of Manufacturers (NAM)
55. National Small Business Association
56. National Council of Nonprofits
57. National Bankers Association
58. National Venture Capital Association (NVCA)
59. Nationwide
60. New England Venture Capital Association
61. New York Stock Exchange
62. Prudential
63. Rocky Mountain Venture Capital Association
64. Securities Industry and Financial Markets Association
(SIFMA)
65. Small Business & Entrepreneurship Council
66. Small Business Investor Alliance (SBIA)
67. Small Business Multi-Cloud Coalition
68. SPARK Institute
69. Stable Value Investment Association (SVIA)
70. State Street Investment Management
71. Technology Association of Georgia (TAG)
72. Technology Councils of North America (TECNA)
73. Texas Venture Alliance
74. TIAA
75. United Way Worldwide
76. U.S. Black Chambers, Inc.
77. U.S. Chamber of Commerce
78. Coalition Letter from 25+ Organizations Representing
the US Innovation Ecosystem
79. Venture Atlanta
80. Y Combinator
81. YMCA of USA
Mrs. WAGNER. Mr. Chair, I yield 3\1/2\ minutes to the gentleman from
Arkansas (Mr. Hill), the esteemed chairman of the Financial Services
Committee and my wonderful partner in this capital markets endeavor.
{time} 2000
Mr. HILL of Arkansas. Mr. Chairman, I thank Mrs. Wagner for her work
as our subcommittee chair of Capital Markets in this Congress. I thank
our vice chairman of the full committee that you will hear from
tonight, the gentleman from Michigan (Mr. Huizenga) who for three
Congresses served as chair of Capital Markets or ranking member on this
subcommittee.
This work tonight represents over a decade of effort on a bipartisan
basis, both sides of the aisle, to advance economic growth for our
citizens, and for our businesses by advancing their ability--at a lower
cost, in a more effective way--of raising money from working out of
their garage and crowdsourcing their idea to bring their idea to life,
through angel investing all the way through to lowering the cost to be
a public company.
Mr. Chairman, exactly 1 year ago this week, when I aspired to serve
as chair of the House Financial Services Committee, I asked my
colleagues: Can you tell me how many companies are in the Wilshire 5000
Index? There was silence in the room.
Mr. Chairman, there was silence in the room because it is not 5,000
companies, it was 3,700. Why? It is because we don't have enough
qualified public companies in this great Nation--the largest economy in
the world--to have 5,000 public companies in the Wilshire 5000.
Tonight we do something about that. We make it easier to be a public
company in America. We make it easier if you have a great idea to
crowdsource that idea, raise money from friends and family, and we make
it easier if you are an individual investor to have other opportunities
in which to invest.
Before I served in this House, I conducted many private placements to
help people start their own business, and Reg D of the SEC is what you
do that under. Those are the rules of the SEC to privately raise money
to help somebody start a business.
In that effort, you have to be an accredited investor in order to
invest. What if you invented the technology that is doing the business,
but you did
[[Page H5537]]
not have a million-dollar net worth and a $250,000 income? Mr.
Chairman, you can't be an investor--it is your technology--unless you
are the CEO or a board member.
This bill corrects that. It says if you have an expertise in a
particular area, you can become an accredited investor.
Tonight, Mr. Chair, we believe in Steve Case's admonition to the
whole Nation, ``The Rise of the Rest.'' We want America to thrive no
matter what side of the tracks you grow up on or what your education
level is. We want hard work, savings, and investment rewarded.
Mrs. Wagner, Mr. Gottheimer, and Mr. Meeks have delivered that in the
INVEST Act, and I urge a ``yes'' vote.
Ms. WATERS. Mr. Chairman, I have no further speakers, and I am
prepared to close if the gentlewoman from Missouri has no further
speakers.
Mrs. WAGNER. Mr. Chairman, I am not even close to closing. I yield 2
minutes to the gentleman from Michigan (Mr. Huizenga), my good friend
and the sponsor of the Improving Disclosures for Investors Act in this
package.
Mr. HUIZENGA. Mr. Chairman, I rise in strong support of the
Incentivizing New Ventures and Economic Strength Through Capital
Formation, the INVEST Act, and ask for its immediate passage.
Mr. Chair, this package of bills before the House today is the
culmination, as the Chair was saying, of literally a decade's worth of
work, bipartisan work, I might add. The time has ripened and the time
has come for us to pass all of these.
H.R. 3383 expands access to capital for small businesses, increases
investor opportunities for all, and strengthens our public markets.
Last year, as part of the committee's capital formation agenda, we
heard from everyday Americans who, despite the odds, succeeded in
achieving their dreams.
Today's bill reflects their priorities and the priorities of millions
of Americans who are looking for financial security and a better
future. I want to take a minute to highlight my bill which is included
in this package.
The Improving Disclosure for Investors Act directs the Securities and
Exchange Commission to promulgate rules with respect to electronic
delivery of certain required disclosures to investors.
Here is what that means: If you have an email, you are able to
receive these documents electronically. You are not forced, but you are
able to get it. If you don't have an email, by definition you don't
even qualify. You will not get these.
By the way, I will note, Mr. Chairman, that the standard for the
Social Security Administration is through electronic communications.
This bipartisan bill is straightforward. It provides ample time for
transition, notices to consumers, and an ability for anyone to opt out
for any reason if they choose to do so.
I was proud to work with the ranking member of the Capital Markets
Subcommittee, the gentleman from California (Mr. Sherman), to make sure
that consumer protection, especially for seniors, Mr. Chairman, was the
foundation of this bill.
There are no poison pills in here, Mr. Chairman. There are no
surprises in this. We are champions for American competitiveness, and I
urge my colleagues to vote ``yes.''
Ms. WATERS. Mr. Chair, I yield myself such time as I may consume.
Now, this so-called e-delivery provision makes electronic delivery
the default communication method for all investors, whether they like
it or not.
AARP research indicates that a majority of American investors, 80
percent of which are 55 years of age or older, prefer to receive their
documents in paper. However, under this provision, investors who prefer
to receive information about their investments by paper will need to
opt in to paper delivery by computer even if they previously opted for
paper statements.
This is why the e-delivery provision is opposed by the AARP and most
major unions and investor protection organizations, including, again:
Americans for Financial Reform; American Federation of Labor and
Congress of Industrial Organizations, AFL-CIO; Communications Workers
of America, CWA; Consumer Federation of America, CFA; National
Education Association, NEA; the American Federation of Teachers, AFT;
National Nurses United, NNU; Public Citizen; Service Employees
International Union, SEIU; The Academy of Financial Education, AFE;
United Auto Workers, UAW; the North American Securities Administrators
Association, NASAA; and the American Federation of State, County, and
Municipal Employees, AFSCME.
Now, I have two big problems with this provision. Number one:
Investors who previously told their adviser that they had to have paper
statements should still be able to receive them because investors
should be the ones in charge of how they monitor their own money.
Number two: Any savings advisers earn because they are not sending
paper notices should be refunded to the investor as a credit on their
statement. Financial advisers should not be able to make a profit by
providing fewer services to their investors, especially a service that
most investors want and demand.
However, Republicans flatly refuse to include either provision,
demonstrating what this section really is: a holiday gift to Wall
Street.
{time} 2010
Financial firms will save potentially billions of dollars by making
it harder for American investors to access information about their own
accounts.
For these reasons, I strongly encourage you to vote against H.R.
3383.
Let me just say to the Members of this House of Representatives that
if, in fact, we were working on a bipartisan agreement on this INVEST
Act and we found that we could agree on maybe 19 out of 22, that they
would literally walk away from the negotiations. They would walk away
from our chance to be bipartisan rather than have a bill that would
actually be a bill that we all want, understanding what our businesses
need for capital improvement, et cetera, because Wall Street wants
these three poison pills. They would walk away from all the work that
we have done. It does not make good sense.
Mr. Chair, for that reason, we can't vote for it. We cannot vote for
it with these poison pills. They are too harmful.
Mr. Chair, I reserve the balance of my time.
Mrs. WAGNER. Mr. Chair, I yield 3 minutes to the gentleman from New
York (Mr. Meeks), the co-lead of this bill and my very good friend here
in Congress.
Mr. MEEKS. Mr. Chair, I thank Chairwoman Wagner, Chairman French
Hill, Mr. Gottheimer, and to my dear friend and person that I respect
and admire, the Ranking Member Maxine Waters, for their leadership.
Mr. Chair, I am here today to say why I support this bill and why it
was important for me to be a cosponsor.
I support this bill because I believe it is a meaningful step for
working families. At a time when families continue to feel the
pressures of rising costs and financial uncertainty, the INVEST Act
represents a meaningful, commonsense step to help Americans secure
their financial futures.
Mr. Chair, 62 percent of Americans are invested in the stock market
and the vast majority are not day traders or wealthy investors. There
are millions of everyday workers who participate through mutual funds,
pensions, and retirement plans like the 401(k)'s and IRAs.
I support this bill because it expands access to capital for
underserved and under-networked entrepreneurs. This bill modernizes
outdated rules that have made it especially hard for Black and Brown
founders and minority-owned small businesses to meet investors, to
participate in community investment events, and raise early capital.
The INVEST Act broadens who can responsibly participate in private
markets. It preserves investor protections and strengthens oversight
while recognizing that these opportunities for wealth building
shouldn't just be for the super rich. It makes it easier for small
businesses by reducing regulatory friction and compliance burdens that
disproportionately impact them.
This package of 22 bills is fundamentally really a pro small business
bill focused on addressing the affordability crisis and not a Wall
Street deregulatory bill.
[[Page H5538]]
Mr. Chair, 16 of these bills have passed the House nearly unanimously
in this Congress, and I supported every individual bill when we
considered them before the Financial Services Committee, as did many of
my committee colleagues.
I sponsored three of the bills in this package that I have worked on
for multiple Congresses. These bills increase transparency in
multiclass stock structures, protect against activist investors in
closed-end funds, and encourage startups to test the waters when
considering an IPO.
These issues aren't just a flash in the pan. These bills have come
together after long thought and deliberation with partners like the
U.S. Black Chambers, like minority banks, institutional investor
advocates, and nonprofits. They are about closing the wealth gap of
which I have been focused on my entire career.
The Acting CHAIR (Mr. Mackenzie). The time of the gentleman has
expired.
Mrs. WAGNER. Mr. Chair, I yield an additional 30 seconds to the
gentleman from New York.
Mr. MEEKS. That is why I support this bill. That is one of the main
reasons why I am here in the United States Congress.
Strengthening our capital markets is not about helping the big guys.
It is about improving the financial security of working families.
Supporting the INVEST Act will give Americans more opportunities to
grow their retirement savings and build long-term economic stability.
Mr. Chair, I support this bill and urge my colleagues to do the same.
Ms. WATERS. Mr. Chair, I reserve the balance of my time.
Mrs. WAGNER. Mr. Chair, I yield 2 minutes to the gentleman from
Wisconsin (Mr. Steil), the sponsor of the Expanding WKSI Eligibility
Act in this package.
Mr. STEIL. Mr. Chair, I thank the chairman of the full committee, Mr.
Hill, for his leadership as well as the chair of the subcommittee, Mrs.
Wagner, not only for her hard work but also for the flawless Luxembourg
pronunciation of my last name as the former ambassador to Luxembourg.
Mr. Chair, I rise because we have an opportunity here to make the
world's best capital markets even better. In a period of time when
Americans are struggling with higher costs, we have an opportunity to
lower costs, and the legislation before us tonight accomplishes both of
those goals.
Outdated capital market rules are holding back innovation and
limiting investor access. By weighing down the engine of our economy,
they are raising costs and stifling growth.
The INVEST Act will help to address these challenges. It expands
access to capital for smaller companies by making targeted reforms to
crowdfunding rules and venture investment restrictions. It opens up
investment opportunities to more working Americans saving for their
retirements, opportunities that are currently reserved for the rich.
INVEST also streamlines disclosures for startups, and I like that it
includes my WKSI bill that alters the status of more companies. More
companies can sell securities to the public quicker and with less cost.
This bill helps modernize our capital markets, Mr. Chair, to lower
costs, reduce complexity, and open opportunities for more Americans.
Mr. Chair, I encourage my colleagues to support this legislation.
Ms. WATERS. Mr. Chair, I reserve the balance of my time.
Mrs. WAGNER. Mr. Chair, I yield 1 minute to the gentleman from
Nebraska (Mr. Flood), the sponsor of the Equal Opportunity for All
Investors Act in this package.
Mr. FLOOD. Mr. Chair, I strongly support the INVEST Act, and I
commend Congresswoman Ann Wagner and Congressman Greg Meeks for their
hard work on this bipartisan project. This is how Congress is supposed
to work.
The INVEST Act will expand access to capital for startups and small
businesses, create new pathways for retail investors, and provide
greater opportunity to more Americans. One bill in this package I will
highlight is the Equal Opportunity for All Investors Act, a bill I lead
with Congressman Cleo Fields, Congresswoman Sarah McBride, and
Congressman Mike Lawler.
The Equal Opportunity for All Investors Act would expand the
accredited investor definition to include individuals that are
certified through an exam written by the SEC and administered by FINRA.
Accredited investors are individuals that are allowed to participate in
investment opportunities that are not generally available to the
broader public, like private offerings.
Most current pathways to become an accredited investor are based upon
wealth and income. This bill opens up a new pathway, allowing for
investors' knowledge to be the determining factor in whether they are
able to become an accredited investor.
The Acting CHAIR. The time of the gentleman has expired.
Mrs. WAGNER. Mr. Chair, I yield an additional 30 seconds to the
gentleman from Nebraska.
Mr. FLOOD. The examination created by this bill is meant to strike a
balance between rigorously testing for sophistication and not being set
to such a difficult standard that even an intelligent investor could
not pass it.
Mr. Chair, I urge my colleagues to support the INVEST Act.
Ms. WATERS. Mr. Chair, I yield myself such time as I may consume.
Mr. Chair, Republicans claim that section 202 purports to modernize
retirement options for nurses, teachers, and nonprofit workers. Let me
be clear: It does not.
In reality, this provision opens these workers' retirement accounts
called 403(b) plans to complex, high-fee products like collective
investment trusts and variable annuities. It also removes these plans
from the protections and oversight of our Federal securities laws.
{time} 2020
I cannot imagine why we would want to make it more difficult and
dangerous for some of the most valuable members of our community to
save for retirement, but that is exactly what section 202 does. We did
not debate this section. We did not have a hearing on it. No one has
asked questions about it.
I have to wonder, why is it here? Is it because those whose savings
are in 403(b) plans, the teachers and nurses, asked for it? No, they
did not. They do not support this provision. In fact, this section is
opposed by major unions and investor protection groups.
Let me make sure that it is very well understood who is opposing
these poison pills: American Federation of Labor and Congress of
Industrial Organizations, AFL-CIO; Communications Workers of America,
CWA; Consumer Federation of America, CFA; National Education
Association, NEA; American Federation of Teachers, AFT; National Nurses
United, NNU; Public Citizen; Service Employees International Union,
SEIU; The Academy of Financial Education, AFE; the United Auto Workers,
UAW; North American Securities Administrators Association, NASAA; and
American Federation of State, County and Municipal Employees, AFSCME.
To be clear, this provision is in this bill because Wall Street asked
for it. They want to be able to spend the retirement savings of public
employees on these most expensive, riskier assets so they can get
richer.
Voting for this bill means choosing Wall Street over the interests of
the American people, and I cannot imagine doing that. That is why I
urge my colleagues to vote against this bill with these poison pills in
it that I have described over and over again.
Mr. Chair, I reserve the balance of my time.
Mrs. WAGNER. Mr. Chair, I yield 2 minutes to the gentleman from Iowa
(Mr. Nunn), my good friend and the sponsor of the ELEVATE Act in this
package.
Mr. NUNN of Iowa. Mr. Chair, Chairwoman Ann Wagner has been a great
leader on capital markets and driving real innovation, but also real
investment across this country through our INVEST Act. That is why I
rise in support today of the INVEST Act, legislation that will
transform the way we bring capital to the heart of the heartland, in
places like Missouri and Iowa.
Consider, if you will, Mr. Chair, a precision agriculture company in
Atlantic, Iowa, that develops a new soil monitoring technology. They
want to raise capital to manufacture sensors and hire engineers. Under
current rules, they face excessive auditing requirements that cost up
to $200,000 just
[[Page H5539]]
in compliance alone. That is an amount that a coastal tech giant might
spend in a day, but for a heartland company, that is a year's worth of
an entire payroll for multiple employees.
My ELEVATE Act, included in this package, fixes this challenge. It
reduces auditing requirements for emerging growth companies from 3
years to 2 years, cutting costs while protecting investors.
Iowa's innovators and America's innovators are creators of solutions
that help feed the world and drive America forward. We should remove
barriers, not continue to create or make them harder, because a startup
in Perry, Iowa, deserves the same shot at success as one in Palo Alto,
California.
The INVEST Act delivers fairness, and my work on the ELEVATE Act
delivers it right to the heart of this country.
Mr. Chair, I urge passage.
Ms. WATERS. 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 also would like to pull up a few more of the
organizations supporting the INVEST Act of our 81 total that we have
received to date: the American Council of Life Insurers, the American
Heart Association, the American Retirement Association, the Association
of Women's Business Centers, Habitat for Humanity, the Lutheran
Services in America, even Meals on Wheels America.
Mr. Chairman, I yield 2 minutes to the gentleman from Florida (Mr.
Haridopolos), a sponsor of the Greenlighting Growth Act in this
package.
Mr. HARIDOPOLOS. Mr. Chair, I rise in support of H.R. 3383, the
Increasing Investor Opportunities Act.
Our country did not get to the top of the world by playing it safe.
We got here by putting capital to work, the very engine that former Fed
Chair Alan Greenspan wrote about in ``Capitalism in America.''
Our capital markets are the fuel and, ultimately, the rocket boosters
for innovation, and this bill, the INVEST Act, launches economic
growth.
I am also proud that my bill, the Greenlighting Growth Act, is a part
of this package, ripping away the red tape that has strangled emerging
companies in the JOBS Act. There are no more bureaucratic handcuffs.
Instead, we are giving startups the engine they need to grow.
We are fortunate to have Chair Hill and Chair Wagner's leadership on
this laser-focused bill. They do not just talk about innovation. They
have delivered it with this legislation.
This bill will make sure America's capital markets drive down costs,
lift up families, and keep us the number one place to do business in
the world. This is not theory. This is the American blueprint for
prosperity in action. Let's pass this good bill and greenlight the
future.
Ms. WATERS. Mr. Chair, I continue to reserve my time.
Mrs. WAGNER. Mr. Chair, I yield 1 minute to the gentleman from North
Carolina (Mr. McDowell).
Mr. McDOWELL. Mr. Chairman, the INVEST Act calls us to review a
simple truth: A nation that unleashes the talent of its people will
never be left behind.
For too long, outdated regulations have stood in the way of our
brightest entrepreneurs gaining the capital that they need to build,
grow, and compete.
The INVEST Act changes that and opens the door for new investment. It
gives small businesses from rural America, in districts like mine, more
opportunity at raising capital without drowning in red tape. It expands
opportunities for the everyday investor, not just those who already
have an accounting department that is big enough to actually navigate
through the Federal bureaucracy.
The INVEST Act makes it easier for companies to tap into American
capital markets so we can continue strengthening our financial system
here at home rather than abroad.
Mr. Chair, small businesses and innovators are the backbone of our
domestic economy, and access to capital is vital to their success. The
INVEST Act clears a path for just that.
Mr. Chair, I urge a ``yes'' vote.
{time} 2030
Ms. WATERS. Mr. Chair, I yield myself the balance of my time.
Mr. Chair, I have heard a lot from Republicans about how the INVEST
Act will expand access to capital and increase investor opportunity.
The inclusion of three poison pills in this bill shows they are not
serious about protecting the investors. They care more about funneling
their money to Wall Street.
If the Republicans are serious about increasing investment in small
business and expanding opportunities for investors to participate in
new markets, we could have passed a clean bill with nearly unanimous
support. Instead, the Republicans, unable to say ``no'' to Wall Street,
have jammed in three bills that hurt workers and those saving for a
dignified retirement.
Don't just take my word for it. These provisions are opposed by the
actual people who would be harmed. Again, these are teachers, nurses,
seniors, and others.
The bill is opposed by the AFL-CIO; the American Federation of
Teachers; the Americans for Financial Reform; Public Citizen; Service
Employees International Union; Communications Workers of America Union;
American Federation of State, County, and Municipal Employees; National
Education Association; National Nurses United; and the United Auto
Workers.
These unions represent over 20 million Americans. Other organizations
are fighting for the interests of everyday Americans, and so should
everyone in this Chamber.
Mr. Chair, let me close by saying, oftentimes we hear from both sides
of the aisle how much they care about our seniors and how they want to
do so much for our seniors. Here they have the opportunity to resist a
poison pill that would absolutely be opposed to what seniors have said
they want and they don't want.
I want Members of this Chamber to ask their grandmothers and their
great-grandmothers and others who are investors, who have spent their
time working and earning and making sure that they have retirement, et
cetera: Do they want to receive their information on the internet or on
a computer they don't have or they don't use or they haven't learned
how to use?
Would my colleagues on the opposite side of the aisle simply try and
understand why getting paper information about their investments is
what seniors want?
If they want to support seniors, why would they allow Wall Street to
stop sending the paper information and make billions of dollars and not
even talk about making them spend the billions of dollars on seniors in
some way? I don't get it.
Mr. Chair, I am raising the question. My colleagues on the other side
of the aisle should raise the question. If they want to help seniors,
this poison pill does not help them in any way. It denies them the
opportunity to understand what is happening to their investments on
paper that they can read, because they don't have access to or don't
engage with the digital platform offered to all of us. They cannot
engage because they are not ready to.
Mr. Chair, I yield back the balance of my time.
Mrs. WAGNER. Mr. Chair, I yield myself the balance of my time.
Mr. Chair, in closing, I ask every American to talk to their parents
and to their grandparents. Talk to the 81 groups supporting this piece
of incredible legislation including the INVEST Act, most especially the
American Retirement Association; Lutheran Services in America; Meals on
Wheels; MissionSquare Retirement; the Small Business and
Entrepreneurship Council; the United Way; the U.S. Black Chambers,
Inc.; the U.S. Chamber of Commerce; and the YMCA. Why are they signing
onto and supporting this tremendous piece of legislation?
Mr. Chair, I want to address the statements of the ranking member. A
few of the statements about the INVEST Act are simply incorrect, and I
want to set the record straight.
The ranking member claims that this bill creates a loophole for bad
actors to sell, as we just spoke about, the retirees' products outside
of government oversight and regulations. The collective investment
trusts are overseen and regulated by the OCC and other Federal or State
banking regulators, the IRS, and the Department of Labor.
[[Page H5540]]
In addition, investors have additional protections under the bill by
requiring either the plan to be subject to ERISA protections, the
employer sponsor to serve as a plan fiduciary, or a government plan
subject to additional State protections.
The ranking member claims that this bill would make it harder for
investors to receive disclosures. That is just simply and categorically
untrue. The INVEST Act requires an initial paper communication, a
transition period, annual paper reminders of the right to opt out,
mechanisms to detect failed deliveries, and readability retention
standards. Plus, there is standing anytime to opt out back to paper.
It modernizes disclosures in line with recent actions by the Thrift
Savings Plan, TSP, while preserving protections for low-tech, low-
income, and older investors.
The ranking member claims that this bill will turn closed-end funds
into a vehicle for private funds to add unlimited amounts of risky
private assets to everyday investors. That is categorically false. This
provision does not change the strong regulatory obligations for both
closed-end funds and their advisers under the securities law.
These protections include robust requirements with respect to
fiduciary obligations, liquidity, transparency, valuation, and
disclosure on fees, risks, strategies, and costs.
Mr. Chair, this bill is simply a bipartisan, targeted approach to
modernizing outdated rules and expanding access to capital, while
preserving strong investor protections. We have an opportunity today to
unleash innovation and opportunity in every community we represent,
putting more money in the pockets of our constituents and making life
more affordable. That means more opportunities for workers, for savers,
and for entrepreneurs.
The INVEST Act opens the door for everyone to share in the wealth of
America, not just Wall Street.
Mr. Chair, I urge a ``yes'' vote so Congress can invest in our
community, invest in our jobs, and invest for our future. I thank my
colleagues on both sides of the aisle, again, for their very hard work
and support
Mr. Chair, I yield back the balance of my time.
Mr. SHERMAN. Mr. Chair, I rise today in support of the Access to
Small Business Investor Capital Act, Section 302 of H.R. 3383 the
Increasing Investor Opportunities Act or the INVEST Act. Section 302 of
the INVEST Act is identical to my bill H.R. 2225 the Access to Small
Business Investor Capital Act, which passed the House of
Representatives in June. I want to first thank Ranking Member Waters
for her tireless work to protect investors as well as Chairman Hill and
Chairwoman Wagner for including my bill in this larger capital markets
package. I also want to thank Reps. Huizenga, Bynum, and Garbarino for
joining me as co-leads on this important piece of legislation.
The bipartisan Access to Small Business Investor Capital Act makes a
narrow technical correction to a federal securities rule that has had
major unintended consequences over the last two decades.
In 1980, Congress created Business Development Companies (BDCs) to
facilitate capital formation into small and medium-sized businesses.
BDCs provide both investment capital and management assistance to
growing businesses that are often underserved by traditional lending
institutions. By law, BDCs must invest at least 70 percent of their
assets in small and mid-sized domestic companies.
Over time, BDCs have filled a crucial gap in our economy by funding
businesses in industries and geographies often overlooked by other
financial institutions. BDCs are often the first institutional
investors to step in. Despite this success, a 2006 SEC rule has
inadvertently discouraged capital flows into BDCs, constraining their
ability to serve small businesses. The rule--part of the SEC's Acquired
Fund Fees and Expenses (AFFE) disclosure framework--requires mutual
funds and other investment vehicles that invest in BDCs to disclose the
management fees, expenses, and AFFE of the BDC itself.
This has the effect of double-counting BDC expenses, because BDC
costs are already factored into their share price and returns. By
adding them again as acquired fund fees, the SEC rule artificially
inflates the expense ratios of funds holding BDCs.
The result is misleading: investors see a fund's expenses as higher
than they actually are, simply because it invests in BDCs. This
perception has led many fund managers to exclude BDCs from their
portfolios, not because of performance, but because of distorted
regulatory accounting.
The intent of the rule--to provide transparency--was well-meaning.
But the execution, particularly when applied to BDCs, has proven
counterproductive. Research by U.S. and international finance
professors shows that after BDCs were removed from major U.S. stock
indexes--a consequence of the AFFE rule--BDCs experienced 29 percent to
33 percent lower investment growth compared to peers. The effects were
not limited to the financial sector: companies that relied on BDC
capital saw lower job creation, with employment growth falling by 1.5
to 6.4 percentage points compared to pre-exclusion levels.
The rule also fails to recognize the unique structure and mission of
BDCs. Unlike passive funds, BDCs are actively managed and intentionally
incur higher costs to provide tailored investment and advisory services
to small businesses. This model creates long-term value, but the AFFE
rule unfairly penalizes it. This is similar to the model of a REIT or
bank, which the SEC AFFE rule excluded.
If the SEC had the benefit of hindsight--of knowing the capital
formation and job creation losses that followed this rule--it's likely
that BDCs would have been carved out of the AFFE framework from the
start similar to REITs and banks. That is why Congress must act now to
reverse this unintended consequence.
Section 302, the Access to Small Business Investor Capital Act fixes
this by allowing funds to omit a BDC's ``acquired fund fees and
expenses'' from disclosures while still maintaining transparency around
the BDC's management fees and costs. This restores fairness in the
treatment of BDCs, aligns regulatory disclosures with economic reality,
and gives investors a clear view of true costs.
Importantly, it does so without rolling back investor protections or
weakening existing SEC oversight.
This bipartisan legislation will open the door for more investment in
BDCs, thereby unlocking more capital for small and mid-sized businesses
across the country. The most important thing that our financial
institutions and capital markets do is provide capital for businesses,
particularly small, medium-sized, and growing enterprises.
Business Development Companies play a vital role in meeting this
need, and I'm proud to work with a bipartisan group of Members to
remove an outdated and unnecessary regulatory barrier.
Finally, the Access to Small Business Investor Capital Act seeks to
resolve the AFFE issue with BDCs being removed from indices by
eliminating the double counting of fees and, consistent with this
intent, it is expected that comparable 1940 Act funds--such as interval
and tender-offer funds--would also receive identical AFFE treatment.
The Access to Small Business Investor Capital Act passed the
Financial Services Committee and this House once before, and I am glad
that it was included in the INVEST Act.
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.
In lieu of the amendment in the nature of a substitute recommended by
the Committee on Financial Services, printed in the bill, and the
amendment in the nature of a substitute consisting of the text of Rules
Committee Print 119-15, shall be considered as adopted. The bill, as
amended, shall be considered as an original bill for purpose of further
amendment under the 5-minute rule and shall be considered as read.
The text of the bill, as amended, is as follows:
H.R. 3383
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
``Incentivizing New Ventures and Economic Strength Through
Capital Formation Act of 2025'' or the ``INVEST Act of
2025''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I--EXPANDING ACCESS TO CAPITAL FOR SMALL BUSINESSES
Sec. 101. Expanding access to capital for rural job creators.
Sec. 102. Helping angels lead our startups.
Sec. 103. Amendment for crowdfunding capital enhancement and small-
business support.
Sec. 104. Small business investor capital access.
Sec. 105. Advocating for small business.
Sec. 106. Small entity update.
Sec. 107. Improving access to small business information.
Sec. 108. Improving capital allocation for newcomers.
Sec. 109. Developing and empowering our aspiring leaders.
TITLE II--INCREASING OPPORTUNITIES FOR INVESTORS
Sec. 201. Fair investment opportunities for professional experts.
[[Page H5541]]
Sec. 202. Retirement fairness for charities and educational
institutions.
Sec. 203. Equal opportunity for all investors.
Sec. 204. Senior Security.
Sec. 205. Improving disclosure for investors.
Sec. 206. Increasing investor opportunities.
TITLE III--STRENGTHENING PUBLIC MARKETS
Sec. 301. Encouraging local emerging ventures and economic growth.
Sec. 302. Access to small business investor capital.
Sec. 303. Encouraging public offerings.
Sec. 304. Greenlighting growth.
Sec. 305. Middle market IPO cost.
Sec. 306. Expanding WKSI eligibility.
Sec. 307. Enhancing multi-class share disclosures.
TITLE I--EXPANDING ACCESS TO CAPITAL FOR SMALL BUSINESSES
SEC. 101. EXPANDING ACCESS TO CAPITAL FOR RURAL JOB CREATORS.
Section 4(i) of the Securities Exchange Act of 1934 (15
U.S.C. 78d(i)) is amended--
(1) in paragraph (4)(C), by inserting ``, rural-area small
businesses'' after ``women-owned small businesses''; and
(2) in paragraph (6)(B)(iii), by inserting ``, rural-area
small businesses'' after ``women-owned small businesses''.
SEC. 102. HELPING ANGELS LEAD OUR STARTUPS.
(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 federally recognized
Indian Tribe, a political subdivision of any State,
territory, or federally recognized Indian Tribe, 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) an incubator or accelerator;
(F) a venture forum, venture capital association, or trade
association, other than an association created solely for the
purpose of sponsoring an event described under this
subsection; or
(G) any other group, person, or entity as the Securities
and Exchange Commission may determine by rule;
(2) that is not held in any facility that is owned or
operated by a religious organization, other than an
institution of higher education that is accredited and
operated primarily for post-secondary education;
(3) where any advertising for the event does not reference
any specific offering of securities by the issuer;
(4) 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
(5) 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).
SEC. 103. AMENDMENT FOR CROWDFUNDING CAPITAL ENHANCEMENT AND
SMALL-BUSINESS SUPPORT.
(a) In General.--Section 4A of the Securities Act of 1933
(15 U.S.C. 77d-1) is amended--
(1) in subsection (b)(1)(D), by striking ``$100,000'' each
place such term appears and inserting ``$250,000''; and
(2) by adding at the end the following:
``(i) Discretion to Adjust Amount.--The Commission may
increase the amount specified in subsections (b)(1)(D)(i) and
(b)(1)(D)(ii) from $250,000 to an amount not greater than
$400,000 upon the recommendation of the Office of the
Advocate for Small Business Capital Formation and the Office
of the Investor Advocate.''.
(b) Technical Corrections.--The Securities Act of 1933 (15
U.S.C. 77a et seq.) is amended--
(1) in section 4A--
(A) by striking ``section 4(6)'' each place such term
appears and inserting ``section 4(a)(6)''; and
(B) by striking ``section 4(6)(B)'' each place such term
appears and inserting ``section 4(a)(6)(B)'';
(2) in section 16(f)(3), by striking ``section 4(2)'' and
inserting ``section 4(a)(2)''; and
(3) in section 18--
(A) in subsection (b)(4)--
(i) in subparagraph (B), by striking ``section 4(4)'' and
inserting ``section 4(a)(4)'';
(ii) in subparagraph (C), by striking ``section 4(6)'' and
inserting ``section 4(a)(6)''; and
(iii) in subparagraph (F), by striking ``section 4(2)''
each place such term appears and inserting ``section
4(a)(2)''; and
(B) in subsection (c)(1)(B), by striking ``section 4(6)''
and inserting ``section 4(a)(6)'';
SEC. 104. SMALL BUSINESS INVESTOR CAPITAL ACCESS.
Section 203(m) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-3(m)) is amended--
(1) in paragraph (1), by striking ``$150,000,000'' and
inserting ``$175,000,000''; and
(2) by adding at the end the following:
``(5) Inflation adjustment.--The Commission shall, every 5
years, adjust the dollar amount described under paragraph (1)
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, and round such dollar amount to
the nearest multiple of $1,000,000.''.
SEC. 105. ADVOCATING FOR SMALL BUSINESS.
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C.
78d) is amended by adding at the end the following:
``(k) Offices of Small Business.--The Commission shall
ensure that, within each of the Division of Corporation
Finance, the Division of Investment Management, and the
Division of Trading and Markets, an Office of Small Business
is established that shall coordinate with the Office of the
Advocate for Small Business Capital Formation on rules and
policy priorities related to capital formation.''.
SEC. 106. SMALL ENTITY UPDATE.
(a) Definitions.--In this section--
(1) the term ``Commission'' means the Securities and
Exchange Commission; and
(2) the term ``small entity''--
(A) has the meaning given the term in section 601 of title
5, United States Code, with respect to the activities of the
Commission; and
(B) includes any definition established by the Commission
of the term ``small business'', ``small organization'',
``small governmental jurisdiction'', or ``small entity''
under paragraph (3), (4), (5), or (6), respectively, of
section 601 of title 5, United States Code, with respect to
the activities of the Commission.
(b) Studies and Reports.--Not later than 1 year after the
date of enactment of this Act, and again 5 years thereafter,
the Commission shall--
(1) conduct a study of the definition of the term ``small
entity'' with respect to the activities of the Commission for
the purposes of chapter 6 of title 5, United States Code,
which shall consider--
(A) the extent to which the definition of the term ``small
entity'', as in effect during the period in which the study
is conducted, aligns with the findings and declarations made
under section 2(a) of the Regulatory Flexibility Act (5
U.S.C. 601 note);
(B) the amount by which financial markets in the United
States have grown since the last time the Commission amended
the definition of the term ``small entity'', if applicable;
and
(C) how the Commission should define the term ``small
entity'' to ensure that the entities that would fall under
that definition be appropriately considered a ``small
entity'' consistent with subparagraphs (A) and (B); and
(2) submit to Congress a report that includes--
(A) the results of the applicable study conducted under
paragraph (1); and
(B) specific and detailed recommendations on the ways in
which the Commission could amend the definition of the term
``small entity'' to--
(i) be consistent with the results described in
subparagraph (A); and
(ii) expand the number of entities covered by such
definition.
(c) Proposed Rule Revisions in Lieu of Study.--
(1) Initial study.--The Commission may satisfy the
requirement to conduct the first study described in
subsection (b)(1) and submit the associated report described
in subsection (b)(2) by, within 1 year of the date of
enactment of this Act, proposing revisions to the rules of
the Commission relating to the term ``small entity'' in
[[Page H5542]]
consideration of subparagraphs (A), (B), and (C) of
subsection (b)(1).
(2) Second study.--The Commission may satisfy the
requirement to conduct the second study described in
subsection (b)(1) and submit the associated report described
in subsection (b)(2) by, no sooner than 5 years and no later
than 6 years after the date of enactment of this Act,
proposing revisions to the rules of the Commission relating
to the term ``small entity'' in consideration of
subparagraphs (A), (B), and (C) of subsection (b)(1).
(d) Rulemaking.--Concurrently with, or after the completion
of, each study required under subsection (b), the Commission
shall, subject to public notice and comment, revise the rules
of the Commission consistent with the results of such study.
(e) Inflation Adjustments.--After the Commission issues the
final rule revisions required under subsection (c), and every
5 years thereafter, the Commission shall adjust any dollar
figures under the definition of small entity established by
the Commission to reflect the change in the Consumer Price
Index for All Urban Consumers published by the Bureau of
Labor Statistics of the Department of Labor.
SEC. 107. IMPROVING ACCESS TO SMALL BUSINESS INFORMATION.
Section 4(i) of the Securities Exchange Act of 1934 (15
U.S.C. 78d(i)) is amended by adding at the end the following:
``(10) Preservation of information collection burden
review.--
``(A) In general.--Actions taken by the Advocate for Small
Business Capital Formation under this subsection shall not be
a `collection of information' for purposes of subchapter I of
chapter 35 of title 44, United States Code (commonly known as
the `Paperwork Reduction Act').
``(B) Exceptions.--Notwithstanding subparagraph (A), the
requirements under subsections (c)(1), (c)(4), and (i) of
section 3506 of title 44, United States Code, and section
3507(a)(1)(A) of such title shall apply to actions taken by
the Advocate for Small Business Capital Formation under this
subsection, except that the Commission shall not be
required--
``(i) to submit a collection of information by the Advocate
to the Director of the Office of Management and Budget, as
referenced under section 3506(c)(1)(A) of such title;
``(ii) to display a control number on a collection of
information by the Advocate, as described under section
3506(c)(1)(B)(i) of such title (or to inform a person
receiving a collection of information from the Advocate that
the collection of information needs to display a control
number, as described under section 3506(c)(1)(B)(iii)(V) of
such title); or
``(iii) to indicate a collection of information by the
Advocate is in accordance with the clearance requirements of
section 3507 of such title, as described under section
3506(c)(1)(B)(ii) of such title.''.
SEC. 108. IMPROVING CAPITAL ALLOCATION FOR NEWCOMERS.
(a) 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 ``500 persons''; and
(2) in subparagraph (C)(i)--
(A) by striking ``$10,000,000'' and inserting
``$50,000,000''; and
(B) by striking ``beginning from a measurement made by the
Commission on a date selected by the Commission'' and
inserting ``beginning from a measurement made on the date of
the enactment of the INVEST Act of 2025''.
(b) Study and Rulemaking.--
(1) In general.--Beginning 5 years after the date of
enactment of this Act, the Advocate for Small Business
Capital Formation, in consultation with the Investor
Advocate, shall conduct a study on the effect of the
amendments made by subsection (a) on the businesses and
startup entities in which qualifying venture capital funds
invest, specifically including, with respect to such
businesses and startup entities, changes or trends relating
to--
(A) the geographic distribution of capital to portfolio
companies;
(B) the socio-economic characteristics of founders or
controlling persons;
(C) the veteran status of founders or controlling persons;
(D) the industry sector, size, stage of development, and
related details; and
(E) other factors or metrics determined by the Advocate for
Small Business Capital Formation.
(2) Authorities related to required study.--For purposes of
conducting the study required by paragraph (1), the Advocate
for Small Business Capital Formation and the Investor
Advocate shall have the authority to--
(A) obtain from the Securities and Exchange Commission (in
this section referred to as the ``Commission'') and utilize
any data or information necessary to carry out the study;
(B) request and receive assistance from any division or
office of the Commission, including the Division of Economic
and Risk Analysis; and
(C) enter into agreements with third parties to assist in
data analysis.
(3) Report.--The Advocate for Small Business Capital
Formation shall issue a report to the Congress containing all
findings and determinations made in carrying out the study
required in paragraph (1), and make such report available to
the public on the website of the Commission.
(4) Public comment.--During the 180-day period beginning on
the date the report is issued under paragraph (3), the
Commission shall solicit feedback from the public on the
findings and determinations contained in the report.
(5) Rulemaking.--
(A) In general.--The Commission, in consultation with the
Investor Advocate and the Advocate for Small Business Capital
Formation, may, after considering all comments received under
paragraph (3) and only if the Commission determines in such
report that the amendments made by subsection (a) have had a
demonstrable effect on increasing the geographic distribution
of capital to portfolio companies, increasing the variety of
the socio-economic characteristics of founders or controlling
persons, or increasing the number of founders or controlling
persons who are veterans, issue rules to--
(i) increase or decrease the 500 person threshold described
in the matter preceding subparagraph (A) of section 3(c)(1)
of the Investment Company Act of 1940, but such threshold may
not exceed 750 persons or be reduced below 250 persons; and
(ii) increase or decrease the $50,000,000 dollar figure in
section 3(c)(1)(C)(i) of the Investment Company Act of 1940,
but such dollar figure may not exceed $100,000,000 or be
reduced below $10,000,000.
(B) Deadline for rulemaking.--The rulemaking authority in
subparagraph (A) only applies to a rule with respect to which
the proposed rule was issued during the 180-day period
beginning at the end of the public comment period described
in paragraph (4).
(C) No effect on inflation adjustments.--A rule issued
under this subsection shall have no effect on the requirement
under clause (i) of section 3(c)(1)(C) of the Investment
Company Act of 1940 (15 U.S.C. 80a-3(c)(1)(C)) to index the
first dollar amount in such clause for inflation.
SEC. 109. DEVELOPING AND EMPOWERING OUR ASPIRING LEADERS.
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--
(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 (as defined in paragraph (a) section 275.203(l)-
1 of title 17, Code of Federal Regulations) 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, immediately after the
acquisition of any asset, such fund holds no more than 49
percent of the amount of the fund's aggregate capital
contributions and uncalled committed capital (excluding
short-term holdings) in--
(A) one or more venture capital funds; or
(B) qualifying investments acquired in a secondary
acquisition, valued at cost or fair value, consistently
applied by the fund.
TITLE II--INCREASING OPPORTUNITIES FOR INVESTORS
SEC. 201. FAIR INVESTMENT OPPORTUNITIES FOR PROFESSIONAL
EXPERTS.
(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 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 license 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
[[Page H5543]]
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).
SEC. 202. RETIREMENT FAIRNESS FOR CHARITIES AND EDUCATIONAL
INSTITUTIONS.
(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 (15 U.S.C. 77c(a)(2)(C));
``(D) collective trust fund maintained by a bank consisting
solely of assets of one or more--
``(i) trusts described in subparagraph (A);
``(ii) governmental 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;
``(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 (15 U.S.C. 77e) by section 3(a)(2)(C)
of such Act (15 U.S.C. 77c(a)(2)(C));
``(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)''.
SEC. 203. EQUAL OPPORTUNITY FOR ALL INVESTORS.
(a) In General.--The Commission shall revise the definition
of ``accredited investor'' under Regulation D (section
230.500 et seq. of title 17, Code of Federal Regulations) to
include any natural person who is certified through the
examination required under subsection (b).
(b) Establishment of Examination.--Not later than 1 year
after the date of the enactment of this Act, the Commission
shall establish an examination (including a test,
certification, or examination program)--
(1) to certify an individual as an accredited investor; and
(2) that--
(A) is designed with an appropriate level of difficulty
such that an individual with financial sophistication would
be unlikely to fail; and
(B) includes methods to determine whether an individual
seeking to be certified as an accredited investor
demonstrates competency with respect to--
(i) the different types of securities;
(ii) the disclosure requirements under the securities laws
applicable to issuers and offerings of securities exempt from
registration under section 5 of the Securities Act of 1933 as
compared to issuers and offerings of securities subject to
such section 5;
(iii) corporate governance;
(iv) financial statements and the components of such
statements;
(v) aspects of unregistered securities, securities issued
by private companies, and investments into private funds,
including risks associated with--
(I) limited liquidity;
(II) limited disclosures;
(III) subjectivity and variability in valuations and the
analytical tools investors may use to assess such valuations;
(IV) information asymmetry;
(V) leverage risks;
(VI) concentration risk; and
(VII) longer investment horizons;
(vi) potential conflicts of interest, when the interests of
financial professionals and their clients are misaligned or
when their professional responsibilities may be in conflict
with financial motivations; and
(vii) such other criteria as the Commission determines
necessary or appropriate in the public interest or for the
protection of investors.
(c) Administration.--Beginning not later than 180 days
after the date the examination is established under
subsection (b), such examination shall be administered and
offered free of charge to the public by a registered national
securities association under section 15A of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-3).
(d) Commission Defined.--In this section, the term
``Commission'' means the Securities and Exchange Commission.
SEC. 204. SENIOR SECURITY.
(a) Senior Investor Taskforce.--Section 4 of the Securities
Exchange Act of 1934 (15 U.S.C. 78d), as amended by section
105 is further amended by adding at the end the following:
``(l) Senior Investor Taskforce.--
``(1) Establishment.--There is established within the
Commission the Senior Investor Taskforce (in this subsection
referred to as the `Taskforce').
``(2) Director of the taskforce.--The head of the Taskforce
shall be the Director, who shall--
``(A) report directly to the Chairman; and
``(B) be appointed by the Chairman, in consultation with
the Commission, from among individuals--
``(i) currently employed by the Commission or from outside
of the Commission; and
``(ii) having experience in advocating for the interests of
senior investors.
``(3) Staffing.--The Chairman shall ensure that--
``(A) the Taskforce is staffed sufficiently to carry out
fully the requirements of this subsection; and
``(B) such staff shall include individuals from the
Division of Enforcement, Office of Compliance Inspections and
Examinations, and Office of Investor Education and Advocacy.
``(4) No compensation for members of taskforce.--All
members of the Taskforce appointed under paragraph (2) or (3)
shall serve without compensation in addition to that received
for their services as officers or employees of the United
States.
``(5) Minimizing duplication of efforts.--In organizing and
staffing the Taskforce, the Chairman shall take such actions
as may be necessary to minimize the duplication of efforts
within the divisions and offices described under paragraph
(3)(B) and any other divisions, offices, or taskforces of the
Commission.
``(6) Functions of the taskforce.--The Taskforce shall--
``(A) identify challenges that senior investors encounter,
including problems associated with financial exploitation and
cognitive decline;
``(B) identify areas in which senior investors would
benefit from changes in the regulations of the Commission or
the rules of self-regulatory organizations;
``(C) coordinate, as appropriate, with other offices within
the Commission, other taskforces that may be established
within the Commission, self-regulatory organizations, and the
Elder Justice Coordinating Council; and
``(D) consult, as appropriate, with State securities and
law enforcement authorities, State insurance regulators, and
other Federal agencies.
``(7) Report.--The Taskforce, in coordination, as
appropriate, with the Office of the Investor Advocate and
self-regulatory organizations, and in consultation, as
appropriate, with State securities and law enforcement
authorities, State insurance regulators, and Federal
[[Page H5544]]
agencies, shall issue a report every 2 years to the Committee
on Banking, Housing, and Urban Affairs and the Special
Committee on Aging of the Senate and the Committee on
Financial Services of the House of Representatives, the first
of which shall not be issued until after the report described
in section 3 of the National Senior Investor Initiative Act
of 2025 has been issued and considered by the Taskforce,
containing--
``(A) appropriate statistical information and full and
substantive analysis;
``(B) a summary of recent trends and innovations that have
impacted the investment landscape for senior investors;
``(C) a summary of regulatory initiatives that have
concentrated on senior investors and industry practices
related to senior investors;
``(D) key observations, best practices, and areas needing
improvement, involving senior investors identified during
examinations, enforcement actions, and investor education
outreach;
``(E) a summary of the most serious issues encountered by
senior investors, including issues involving financial
products and services;
``(F) an analysis with regard to existing policies and
procedures of brokers, dealers, investment advisers, and
other market participants related to senior investors and
senior investor-related topics and whether these policies and
procedures need to be further developed or refined;
``(G) recommendations for such changes to the regulations,
guidance, and orders of the Commission and self-regulatory
organizations and such legislative actions as may be
appropriate to resolve problems encountered by senior
investors; and
``(H) any other information, as determined appropriate by
the Director of the Taskforce.
``(8) Request for reports.--The Taskforce shall make any
report issued under paragraph (7) available to a Member of
Congress who requests such a report.
``(9) Sunset.--The Taskforce shall terminate after the end
of the 10-year period beginning on the date of the enactment
of this subsection.
``(10) Senior investor defined.--In this subsection, the
term `senior investor' means an investor over the age of 65.
``(11) Use of existing funds.--The Commission shall use
existing funds to carry out this subsection.''.
(b) GAO Study.--
(1) Study.--Not later than 2 years after the date of
enactment of this Act, the Comptroller General of the United
States shall submit to Congress and the Senior Investor
Taskforce the results of a study of financial exploitation of
senior citizens.
(2) Contents.--The study required under paragraph (1) shall
include information with respect to--
(A) economic costs of the financial exploitation of senior
citizens--
(i) associated with losses by victims that were incurred as
a result of the financial exploitation of senior citizens;
(ii) incurred by State and Federal agencies, law
enforcement and investigatory agencies, public benefit
programs, public health programs, and other public programs
as a result of the financial exploitation of senior citizens;
(iii) incurred by the private sector as a result of the
financial exploitation of senior citizens; and
(iv) any other relevant costs that--
(I) result from the financial exploitation of senior
citizens; and
(II) the Comptroller General determines are necessary and
appropriate to include in order to provide Congress and the
public with a full and accurate understanding of the economic
costs resulting from the financial exploitation of senior
citizens in the United States;
(B) frequency of senior financial exploitation and
correlated or contributing factors--
(i) information about percentage of senior citizens
financially exploited each year; and
(ii) information about factors contributing to increased
risk of exploitation, including such factors as race, social
isolation, income, net worth, religion, region, occupation,
education, home-ownership, illness, and loss of spouse; and
(C) policy responses and reporting of senior financial
exploitation--
(i) the degree to which financial exploitation of senior
citizens unreported to authorities;
(ii) the reasons that financial exploitation may be
unreported to authorities;
(iii) to the extent that suspected elder financial
exploitation is currently being reported--
(I) information regarding which Federal, State, and local
agencies are receiving reports, including adult protective
services, law enforcement, industry, regulators, and
professional licensing boards;
(II) information regarding what information is being
collected by such agencies; and
(III) information regarding the actions that are taken by
such agencies upon receipt of the report and any limits on
the agencies' ability to prevent exploitation, such as
jurisdictional limits, a lack of expertise, resource
challenges, or limiting criteria with regard to the types of
victims they are permitted to serve;
(iv) an analysis of gaps that may exist in empowering
Federal, State, and local agencies to prevent senior
exploitation or respond effectively to suspected senior
financial exploitation; and
(v) an analysis of the legal hurdles that prevent Federal,
State, and local agencies from effectively partnering with
each other and private professionals to effectively respond
to senior financial exploitation.
(3) Senior citizen defined.--In this subsection, the term
``senior citizen'' means an individual over the age of 65.
SEC. 205. IMPROVING DISCLOSURE FOR INVESTORS.
(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
(g)(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.
(c) Exemption From Certain Requirements.--Section 101(c) of
the Electronic Signatures in Global and National Commerce Act
(15 U.S.C. 7001(c)) shall not apply with respect to a
regulatory document delivered in accordance with this
section.
(d) 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.
(e) 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.
(f) 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 section 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
paper documents to investors.
(g) 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) of 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 such terms are
defined, respectively, in paragraphs (4) and (5) of section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)));
(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 such terms are defined, respectively,
in paragraphs (43) and (44) of section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)));
(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
[[Page H5545]]
Securities Exchange Act of 1934 (15 U.S.C. 78c(a))).
(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 delivery of an appropriate notice of the
availability of the regulatory document to an electronic
address of the investor; or
(C) any other 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)(2) 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 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
3(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, including a mobile application.
SEC. 206. INCREASING INVESTOR OPPORTUNITIES.
(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.--Except
as otherwise prohibited or restricted by this Act (or any
rule issued under this Act), the Commission may not impose
any condition on, restrict, or otherwise limit--
``(A) 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
``(B) the listing of the securities of a closed-end company
described in subparagraph (A) on a national securities
exchange.
``(3) Unrelated restrictions.--The Commission may impose a
condition on, restrict, or otherwise limit an activity
described in paragraph (1) or subparagraph (A) or (B) of
paragraph (2) 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.
``(4) Rule of 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 in
section 202(a) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-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.
TITLE III--STRENGTHENING PUBLIC MARKETS
SEC. 301. ENCOURAGING LOCAL EMERGING VENTURES AND ECONOMIC
GROWTH.
Section 12(b) of the Securities Exchange Act of 1934 (15
U.S.C. 78l(b)) is amended--
(1) in paragraph (1)(K), by striking ``years,'' and
inserting ``years (or, in the case of an emerging growth
company, not more than the two preceding years),''; and
(2) by adding at the end the following:
``Any issuer may confidentially submit to the Commission a
draft registration statement for confidential nonpublic
review by the staff of the Commission prior to public filing,
provided that the initial confidential submission and all
amendments thereto shall be publicly filed with the
Commission not later than 10 days before listing on a
national securities exchange. Notwithstanding any other
provision of this title, the Commission shall not be
compelled to disclose any information provided to or obtained
by the Commission pursuant to this subsection. For purposes
of section 552 of title 5, this subsection shall be
considered a statute described in subsection (b)(3)(B) of
such section 552. Information described in or obtained
pursuant to this subsection shall be deemed to constitute
confidential information for purposes of section 24.''.
SEC. 302. ACCESS TO SMALL BUSINESS INVESTOR CAPITAL.
(a) Definitions.--For purposes of this section:
(1) Acquired fund.--The term ``Acquired Fund'' has the
meaning given the term in Forms N-1A, N-2, and N-3.
(2) Acquired fund fees and expenses.--The term ``Acquired
Fund Fees and Expenses'' means the Acquired Fund Fees and
Expenses sub-caption in the Fee Table Disclosure.
(3) Business development company.--The term ``business
development company'' has the meaning given the term in
section 2(a) of the Investment Company Act of 1940 (15 U.S.C.
80a-2(a)).
(4) Fee table disclosure.--The term ``Fee Table
Disclosure'' means the fee table described in Item 3 of Form
N-1A, Item 3 of Form N-2, or Item 4 of Form N-3 (as
applicable, and with respect to each, in any successor fee
table disclosure that the Securities and Exchange Commission
adopts).
(5) Form n-1a.--The term ``Form N-1A'' means the form
described in section 274.11A of title 17, Code of Federal
Regulations, or any successor regulation.
(6) Form n-2.--The term ``Form N-2'' means the form
described in section 274.11a-1 of title 17, Code of Federal
Regulations, or any successor regulation.
(7) Form n-3.--The term ``Form N-3'' means the form
described in section 274.11b of title 17, Code of Federal
Regulations, or any successor regulation.
(8) Registered investment company.--The term ``registered
investment company'' means an investment company, as defined
under section 3(a) of the Investment Company Act of 1940 (15
U.S.C. 80a-3(a)), registered with the Securities and Exchange
Commission under such Act.
(b) Excluding Business Development Companies From Acquired
Fund Fees and Expenses.--A registered investment company may,
on any investment company registration statement filed
pursuant to section 8(b) of the Investment Company Act of
1940 (15 U.S.C. 80a-8(b)), omit from the calculation of
Acquired Fund Fees and Expenses those fees and expenses that
the investment company incurred indirectly as a result of
investment in shares of one or more Acquired Funds that is a
business development company.
SEC. 303. ENCOURAGING PUBLIC OFFERINGS.
(a) Expanding Testing the Waters.--Section 5(d) of the
Securities Act of 1933 (15 U.S.C. 77e(d)) is amended--
(1) by striking ``Notwithstanding'' and inserting the
following:
[[Page H5546]]
``(1) In general.--Notwithstanding'';
(2) by striking ``an emerging growth company or any person
authorized to act on behalf of an emerging growth company''
and inserting ``an issuer or any person authorized to act on
behalf of an issuer''; and
(3) by adding at the end the following:
``(2) Additional requirements.--
``(A) In general.--The Commission may promulgate
regulations, subject to public notice and comment, to impose
such other terms, conditions, or requirements on the engaging
in oral or written communications described under paragraph
(1) by an issuer other than an emerging growth company as the
Commission determines appropriate.
``(B) Report to congress.--Prior to any rulemaking
described under subparagraph (A), the Commission shall submit
to Congress a report containing a list of the findings
supporting the basis of the rulemaking.''.
(b) Confidential Review of Draft Registration Statements.--
Section 6(e) of the Securities Act of 1933 (15 U.S.C. 77f(e))
is amended--
(1) in the heading, by striking ``Emerging Growth
Companies'' and inserting ``Confidential Review of Draft
Registration Statements'';
(2) by redesignating paragraph (2) as paragraph (3); and
(3) by striking paragraph (1) and inserting the following:
``(1) In general.--Any issuer may, with respect to an
initial public offering, initial registration of a security
of the issuer under section 12(b) of the Securities Exchange
Act of 1934 (15 U.S.C. 78l(b)), or follow-on offering,
confidentially submit to the Commission a draft registration
statement, for confidential nonpublic review by the staff of
the Commission prior to public filing, provided that the
initial confidential submission and all amendments thereto
shall be publicly filed with the Commission not later than--
``(A) in the case of an initial public offering, 10 days
before the effective date of such registration statement;
``(B) in the case of an initial registration of a security
of the issuer under such section 12(b), 10 days before
listing on an exchange; or
``(C) in the case of any offering after an initial public
offering or an initial registration under such section 12(b),
48 hours before the effective date of such registration
statement.
``(2) Additional requirements.--
``(A) In general.--The Commission may promulgate
regulations, subject to public notice and comment, to impose
such other terms, conditions, or requirements on the
submission of draft registration statements described under
this subsection by an issuer other than an emerging growth
company as the Commission determines appropriate.
``(B) Report to congress.--Prior to any rulemaking
described under subparagraph (A), the Commission shall submit
to Congress a report containing a list of the findings
supporting the basis of the rulemaking.''.
SEC. 304. GREENLIGHTING GROWTH.
(a) Securities Act of 1933.--Section 7(a)(2) of the
Securities Act of 1933 (15 U.S.C. 77g(a)(2)) is amended--
(1) in subparagraph (A), by striking ``and'' at the end;
(2) by redesignating subparagraph (B) as subparagraph (C);
and
(3) by inserting after subparagraph (A) the following:
``(B) need not present acquired company financial
statements or information otherwise required under section
210.3-05 or section 210.8-04 of title 17, Code of Federal
Regulations, or any successor thereto, for any period prior
to the earliest audited period of the emerging growth company
presented in connection with its initial public offering and,
thereafter, in no event shall an issuer that was an emerging
growth company but is no longer an emerging growth company be
required to present financial statements of the issuer (or
acquired company financial statements or information
otherwise required under section 210.3-05 or section 210.8-04
of title 17, Code of Federal Regulations, or any successor
thereto) for any period prior to the earliest audited period
of the emerging growth company presented in connection with
its initial public offering; and''.
(b) Securities Exchange Act of 1934.--Section 12(b)(1)(K)
of the Securities Exchange Act of 1934 (15 U.S.C.
78l(b)(1)(K)) is amended by striking ``firm'' and inserting
``firm, provided that the application of an emerging growth
company need not present acquired company financial
statements or information otherwise required under section
210.3-05 or section 210.8-04 of title 17, Code of Federal
Regulations, or any successor thereto, for any period prior
to the earliest audited period of the emerging growth company
presented in connection with its application and, thereafter,
in no event shall an issuer that was an emerging growth
company but is no longer an emerging growth company be
required to present financial statements of the issuer (or
acquired company financial statements or information
otherwise required under section 210.3-05 or section 210.8-04
of title 17, Code of Federal Regulations, or any successor
thereto) for any period prior to the earliest audited period
of the emerging growth company presented in connection with
any application under this subsection''.
SEC. 305. MIDDLE MARKET IPO COST.
(a) Study.--The Comptroller General of the United States,
in consultation with the Securities and Exchange Commission
and the Financial Industry Regulatory Authority, shall carry
out a study of the costs associated with small- and medium-
sized companies to undertake initial public offerings
(``IPOs''). In carrying out such study, the Comptroller
General shall--
(1) consider the direct and indirect costs of an IPO,
including--
(A) fees of accountants, underwriters, and any other
outside advisors with respect to the IPO;
(B) compliance with Federal and State securities laws at
the time of the IPO; and
(C) such other IPO-related costs as the Comptroller General
may consider;
(2) compare and analyze the costs of an IPO with the costs
of obtaining alternative sources of financing and of
liquidity;
(3) consider the impact of such costs on capital formation;
(4) analyze the impact of these costs on the availability
of public securities of small- and medium-sized companies to
retail investors; and
(5) analyze trends in IPOs over a time period the
Comptroller General determines is appropriate to analyze IPO
pricing practices, considering--
(A) the number of IPOs;
(B) how costs for IPOs have evolved over time for
underwriters, investment advisory firms, and other
professions for services in connection with an IPO;
(C) the number of brokers and dealers active in
underwriting IPOs;
(D) the different types of services that underwriters and
related persons provide before and after a small- or medium-
sized company IPO and the factors impacting IPOs costs;
(E) changes in the costs and availability of investment
research for small- and medium-sized companies; and
(F) the impacts of litigation and its costs on being a
public company.
(b) Report.--Not later than the end of the 360-day period
beginning on the date of the enactment of this Act, the
Comptroller General of the United States shall issue a report
to the Congress containing all findings and determinations
made in carrying out the study required under subsection (a)
and any administrative or legislative recommendations the
Comptroller General may have.
SEC. 306. EXPANDING WKSI ELIGIBILITY.
(a) In General.--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
$400,000,000 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 (as
in effect on the date of enactment of this Act) 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.
(b) Report on Withdrawn Applications Related to Well-known
Seasoned Issuer Status.--The Securities and Exchange
Commission shall, not later than 90 days after the end of
each calendar year, publish the total number of applications
submitted during such calendar year where the applicant--
(1) submitted the application under section 230.405 of
title 17, Code of Federal Regulations, for a determination by
the Commission that the applicant not be considered an
ineligible issuer under such section;
(2) requested such determination in order to meet the
definition of a well-known seasoned issuer under such
section; and
(3) withdrew the application.
SEC. 307. ENHANCING MULTI-CLASS SHARE DISCLOSURES.
Section 14 of the Securities Exchange Act of 1934 (15
U.S.C. 78n) is amended by adding at the end the following:
``(l) Disclosure Relating to Multi-class Share
Structures.--
``(1) Disclosure.--The Commission shall, by rule, require
each issuer with a multi-class share structure to disclose
the information described in paragraph (2) in any proxy or
consent solicitation material for an annual meeting of the
shareholders of the issuer, or any other filing as the
Commission determines appropriate.
``(2) Content of disclosure.--A disclosure made under
paragraph (1) shall include, with respect to each person who
is a director, director nominee, or named executive officer
of the issuer, or who is the beneficial owner of securities
with 5 percent or more of the total combined voting power of
all classes of securities entitled to vote in the election of
directors--
``(A) the number of shares of all classes of securities
entitled to vote in the election of directors beneficially
owned by such person, expressed as a percentage of the total
number of the outstanding securities of the issuer entitled
to vote in the election of directors; and
``(B) the amount of voting power held by such person,
expressed as a percentage of the total combined voting power
of all classes of the securities of the issuer entitled to
vote in the election of directors.
``(3) Multi-class share structure.--In this subsection, the
term `multi-class share structure' means a capitalization
structure that contains 2 or more types of securities that
have differing amounts of voting rights in the election of
directors.''.
The Acting CHAIR. No further amendment to the bill, as amended, shall
be in order except those printed in Part B of House Report 119-399.
Each such further amendment may be offered only in the order printed in
the report, by a Member designated in the report, shall be considered
read, shall
[[Page H5547]]
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} 2040
Amendment No. 1 Offered by Mr. Self
The Acting CHAIR. It is now in order to consider amendment No. 1
printed in part B of House Report 119-399.
Mr. SELF. Mr. Chairman, I have an amendment at the desk.
The Acting CHAIR. The Clerk will designate the amendment.
The text of the amendment is as follows:
Strike section 307.
The Acting CHAIR. Pursuant to House Resolution 936, the gentleman
from Texas (Mr. Self) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from Texas.
Mr. SELF. Mr. Chairman, I rise in support of my amendment to H.R.
3383 to strike section 307.
Section 307 directs the SEC to issue new rules forcing issuers with
multi-class share structures to include prescribed ownership and
voting-power disclosures in annual-meeting proxy or consent materials,
and potentially other filings.
That is statutory micromanagement and another compliance mandate.
More fundamentally, Washington should not be holding investors' hands.
The key facts about control and voting rights are already available to
the market through public filings and governing documents, and
investors can decide for themselves whether they want to buy into a
multi-class structure.
My amendment keeps this package focused on capital formation and
avoids turning it into another paperwork bill.
Mr. Chairman, I urge adoption, and I reserve the balance of my time.
Ms. WATERS. Mr. Chairman, I rise in opposition to the amendment.
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.
Mr. Chair, I oppose Mr. Self's amendment to strike section 307 of the
INVEST Act.
Section 307 is identical to H.R. 3357 sponsored by guess who? It is
sponsored by Mr. Meeks.
It closes gaps in the disclosures made to investors where there are
multi-class government structures. Companies that use these structures
offer different share classes, such classes having different rights
like voting rights. These structures can allow corporate insiders to
retain an outsize amount of voting power relative to their shares.
For instance, Mark Zuckerberg has been able to consolidate control
over Facebook, and now Meta, primarily due to the dual-class share
structure that he established. This structure allows him and a small
group of insiders to hold class B shares which have 10 times the voting
power of the class A shares sold on the open market.
As a result, Zuckerberg has maintained nearly 60 percent of the
voting power in Facebook, even though his shares account for only about
18 percent of shares.
Mr. Meeks' provision was recommended by the SEC's Investors Advisory
Committee and passed out of committee with unanimous support, and it
has also passed both this Congress and the prior two nearly
unanimously.
Investors should have the clearest information available to make the
best decision for themselves, but Mr. Self's amendment would deny them
that.
Mr. Chair, I therefore encourage all Members to vote against this
amendment, and I reserve the balance of my time.
Mr. SELF. I say, again, Mr. Chairman, the information that she is
referencing is already readily discoverable by investors, and they have
the choice whether or not they want to invest in a multi-class
structure.
I will tell you, Mr. Chair, this section 307 specifically targets
directors, director nominees, named executive officers, and any holder
with 5 percent or more of total combined voting power. It requires
their share ownership and voter power to be expressed as percentages.
Mr. Chairman, investors are not children. The Federal Government
should not be in the business of holding investors' hands over
congressionally mandated proxy script disclosures. This section turns a
capital formation package into another compliance mandate by hardwiring
a one-size-fits-all disclosure regime into statutes instead of letting
the markets and existing disclosures do their jobs.
Striking section 307 keeps the INVEST Act focused on expanding
opportunity and liquidity rather than adding a new paperwork burden for
public companies. If the goal of this bill is to increase investor
opportunities and expand public markets, then Congress should be
cutting friction, not adding a new compliance hook that falls on public
companies and ultimately on shareholders.
Mr. Chairman, I reserve the balance of my time.
Ms. WATERS. Mr. Chair, I yield 2 minutes to the gentlewoman from
Missouri (Mrs. Wagner) to speak in opposition to Mr. Self's amendment.
Mrs. WAGNER. Mr. Chairman, I rise in respectful opposition to this
amendment which would remove an important provision from the INVEST
Act. Section 307 is not new or untested policy. This exact language
passed the House floor earlier this Congress as H.R. 3357, the
Enhancing Multi-Class Share Disclosure Act, with overwhelming
bipartisan support.
Multi-class share structures date back to the late 1800s and were
first conceived to allow companies, particularly family enterprises, to
maintain control over voting decisions even without holding a majority
of shares. These structures have become increasingly common,
particularly among newer public companies.
Currently the SEC does not require the company to disclose the
disparity between an individual's equity ownership and their
controlling or controlled voting shares, though many companies already
voluntarily provide this information.
Section 307 simply standardizes the information shareholders receive
in proxy materials by requiring this information be provided in a
consistent manner when it comes to voting power, particularly from the
officers, directors, and those with more than a 5 percent stake.
This is a thoughtful, balanced approach. It enhances transparency for
retail investors while preserving multi-class structures as a mechanism
to encourage founders to go public. We are not banning these
structures. We are simply ensuring investors understand what they are
buying before they invest.
Enhanced disclosures protect retail investors who may not have the
resources or expertise to navigate complex corporate structures. It
levels the playing field by providing the same information to all
market participants.
Given the strong bipartisan support, Mr. Chair, this provision has
already received, I respectfully urge my colleagues to oppose this
amendment and retain section 307.
Ms. WATERS. Mr. Chairman, I have the greatest respect for the
gentlewoman from Missouri and have enjoyed working with her, but she
tends not only to agree with me on this amendment but she feels very
strongly about it. I urge my colleagues to reject this amendment so
that investors have the basic information they need about a company's
governing structure to make the best investment decisions for
themselves.
Mr. Chair, I yield back the balance of my time.
Mr. SELF. Mr. Chair, as the chairwoman referenced, organizations that
want to do this are already doing it voluntarily. We should not add
micromanagement to it.
Mr. Chair, I urge adoption of 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 Texas (Mr. Self).
The question was taken; and the Acting Chair announced that the noes
appeared to have it.
Mr. SELF. Mr. Chairman, 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 Texas will
be postponed.
[[Page H5548]]
Amendment No. 2 Offered by Mr. Self
The Acting CHAIR. It is now in order to consider amendment No. 2
printed in part B of House Report 119-399.
Mr. SELF. 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:
Page 9, line 14, insert after the first period the
following: ``This subsection may not be construed to
authorize expenditures for additional full-time equivalent
employees.''.
The Acting CHAIR. Pursuant to House Resolution 936, the gentleman
from Texas (Mr. Self) and a Member opposed each will control 5 minutes.
The Chair recognizes the gentleman from Texas.
{time} 2050
Mr. SELF. Mr. Chair, I rise in support of my amendment of H.R. 3383,
the INVEST Act.
Section 105 creates offices of small business within key SEC
divisions to coordinate on capital formation priorities. My amendment
makes one commonsense clarification. It says this subsection may not be
construed to authorize expenditures for additional full-time equivalent
employees.
In other words, if the SEC wants better coordination for small
businesses, it should do so with existing resources, not by treating
this bill as a blank check for new hires. This keeps the policy goal
intact while protecting taxpayers.
I urge adoption, and 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.
I oppose Mr. Self's amendment to limit the ability of the SEC to
carry out its mandate in section 105.
Section 105, which is identical to H.R. 4449, sponsored by Mr.
Vicente Gonzalez and Mr. Garbarino, directs the SEC to promote and
protect small businesses by creating a small business office within
each rulemaking division of the SEC, ensuring that the SEC has small
business experts across the agency.
Mr. Gonzalez' provision will ensure that the SEC rules are tailored
to the needs of small businesses.
Mr. Self's amendment makes this provision impossible to implement by
blocking the SEC from hiring any new employees to carry out the work.
At a time when small businesses are struggling to stay afloat due to
the impacts of Trump's harmful tariffs and disastrous economic
policies, it is crucial that small businesses are represented through
every step of the regulatory process.
If we are serious about helping small businesses, we must make sure
our regulators have the expertise needed to support them. I, therefore,
encourage all Members to vote ``no'' on this amendment.
Mr. Chair, I reserve the balance of my time.
Mr. SELF. Mr. Chair, I yield to the gentlewoman from Missouri (Mrs.
Wagner).
Mrs. WAGNER. Mr. Chair, I thank the gentleman for yielding.
I rise in support of the gentleman from Texas' amendment. This is a
commonsense clarification that ensures section 105 cannot be
misinterpreted as a blank check for expanding the Federal bureaucracy.
The INVEST Act is about modernizing our capital markets and expanding
opportunities for investors and entrepreneurs, not about growing
government.
This amendment provides helpful statutory clarity that protects
taxpayers while preserving the important work this legislation
accomplishes. I thank the gentleman from Texas for his amendment, and I
urge my colleagues to support it.
Ms. WATERS. Mr. Chair, with costs soaring and small businesses
struggling to weather the impacts of the Trump tariffs and his
administration's war on small businesses, it is crucial that we do what
we can to make sure government is working for them, not against them.
I urge my colleagues to vote ``no'' on this amendment.
Mr. Chair, I yield back the balance of my time.
Mr. SELF. Mr. Chair, I will point out that those words are dangerous
words, ``do what we can,'' because normally that means we are going to
spend a lot more money. Congress, in this case, should not accidentally
write an open-ended staffing authorization into statute just because we
want better cooperation. This is a narrow, practical guardrail that
keeps the INVEST Act focused on capital formation instead of quietly
growing bureaucracy.
Mr. Chair, I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentleman from Texas (Mr. Self).
The amendment was agreed to.
Amendment No. 3 Offered by Ms. Waters
The Acting CHAIR. It is now in order to consider amendment No. 3
printed in part B of House Report 119-399.
Ms. WATERS. Mr. Chair, as the designee of Ms. Garcia of Texas, 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:
TITLE IV--ACCOUNTABILITY AND TRANSPARENCY BY FOREIGN HEDGE FUNDS
SEC. 401. KNOW YOUR CUSTOMER AND ANTI-MONEY LAUNDERING
REQUIREMENTS FOR FOREIGN CLIENTS.
(a) In General.--The Secretary of the Treasury shall issue
rules to require each investment adviser and hedge fund to
comply with know your customer and anti-money laundering
requirements under subchapter II of chapter 53 of title 31,
United States Code, with respect to the foreign clients of
the investment adviser or hedge fund, to the same extent as
such requirements apply to financial institutions under such
subchapter.
(b) Hedge Fund Defined.--In this section, the term ``hedge
fund'' means an issuer that would be an investment company,
as defined in the Investment Company Act of 1940 (15 U.S.C.
80a-1 et seq.), but for section 3(c)(1) or 3(c)(7) of that
Act.
The Acting CHAIR. Pursuant to House Resolution 936, the gentlewoman
from California (Ms. Waters) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentlewoman from California.
Ms. WATERS. Mr. Chair, I rise in support of this amendment originally
offered by my colleague, Representative Garcia. Ms. Garcia's amendment
would make law an important requirement that was already carefully
considered and made final by FinCEN, but which has been delayed
potentially indefinitely under this administration. Her amendment
requires foreign hedge funds to put in place anti-money laundering
policies that will ensure the safety of our markets and prevent bad
actors from using these funds to launder criminal profits.
During a time when our markets are seeing unprecedented fraud and
abuse, we should not wait to increase AML protections. We should not
wait for FinCEN. We should do what we can to strengthen our markets
now.
Mr. Chair, I reserve the balance of my time.
Mrs. WAGNER. Mr. Chair, I claim the time in opposition.
The Acting CHAIR. The gentlewoman from Missouri is recognized for 5
minutes.
Mrs. WAGNER. Mr. Chair, I rise in opposition to this amendment, which
would impose sweeping new regulatory requirements on investment
advisers and hedge funds serving foreign clients.
While combating illicit finance and addressing national security
threats are critical objectives we all share, this amendment takes the
wrong approach, one that FinCEN itself recognized as flawed.
Let's be clear about what happened. The Financial Crimes Enforcement
Network, FinCEN, proposed a substantially similar rule and then
postponed it before implementation. That postponement wasn't arbitrary.
It came after careful consideration of the rules, operational
challenges, compliance burdens, and questions about its effectiveness.
This amendment would impose requirements that even the agency charged
with combating financial crimes determined needed further review.
Investment advisers are already subject to robust oversight under the
Investment Advisers Act of 1940. They owe a fiduciary duty to their
clients and must comply with comprehensive Federal securities laws and
regulations.
[[Page H5549]]
The SEC has extensive authority to examine advisers and enforce
compliance. Moreover, imposing duplicative know-your-customer and anti-
money laundering requirements specifically on foreign clients creates a
two-tiered system that could harm U.S. competitiveness and global
capital markets. International investors would face additional barriers
when working with American advisers, potentially driving capital and
business relationships to foreign jurisdictions with less stringent
oversight.
If we believe gaps exist in our anti-money laundering framework, the
solution is thoughtful, coordinated rulemaking by the appropriate
agencies, not legislating requirements that are still under active
consideration by FinCEN.
I urge my colleagues to reject this amendment and allow our Financial
Crimes Enforcement Network to develop effective, practical solutions
rather than imposing requirements they themselves abandoned.
Mr. Chair, I reserve the balance of my time.
Ms. WATERS. Mr. Chair, I reserve the right to close.
Mrs. WAGNER. Mr. Chair, I am prepared to close.
{time} 2100
The Acting CHAIR (Mr. Wied). The gentlewoman from Missouri has the
right to close.
The gentlewoman from California is recognized.
Ms. WATERS. Mr. Chair, I reserve the right to close.
The Acting CHAIR. The gentlewoman from Missouri has the right to
close.
Mrs. WAGNER. Mr. Chair, has the gentlewoman-- The Acting CHAIR. The
gentlewoman from California is recognized.
Mrs. WAGNER. Okay.
Ms. WATERS. Mr. Chairman, I believe I have the right to close. Are
you indicating that I do not have the right to close?
The Acting CHAIR. The gentlewoman from Missouri has the right to
close as the manager in opposition to the amendment.
Mrs. WAGNER. I would ask the Chair who is closing first: the
gentlewoman from California (Ms. Waters) or myself?
The Acting CHAIR. The gentlewoman from Missouri has the right to
close.
Mrs. WAGNER. Thank you, Mr. Chair.
The Acting CHAIR. The Chair recognizes the gentlewoman from
California.
Ms. WATERS. I have the right to close?
The Acting CHAIR. You do not.
Ms. WATERS. Mr. Chair, if I don't have the right to close, I am
prepared to close, and I yield myself the balance of my time.
The Acting CHAIR. The gentlewoman is recognized.
Ms. WATERS. Mr. Chair, I encourage all Members to vote ``yes'' on Ms.
Garcia's amendment to strengthen the Bank Secrecy Act and anti-money
laundering requirements for foreign investment advisers. This
reasonable and well-considered provision will ensure increased safety
for our markets from abuse by terrorists, prohibited entities, and
other bad actors abroad.
Mr. Chairman, I yield back the balance of my time.
Mrs. WAGNER. Mr. Chairman, I rise one more time in closing to oppose
this amendment by Ms. Garcia that requires investment advisers and
hedge funds to perform know-your-customer verifications and implement
anti-money laundering procedures for foreign clients. It is a sweeping
new regulatory requirement on investment advisers and hedge funds that
serve foreign clients.
Mr. Chair, I will be clear here that if we believe that any kind of
gaps exist in our anti-money laundering frame, the solution that we
have is thoughtful, coordinated rulemaking by the appropriate agencies.
Obviously, FinCEN is still actively considering how to move forward.
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
gentlewoman from California (Ms. Waters).
The question was taken; and the Acting Chair announced that the noes
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 gentlewoman from California
will be postponed.
Amendment No. 4 Offered by Ms. Waters
The Acting CHAIR. It is now in order to consider amendment No. 4
printed in part B of House Report 119-399.
Ms. WATERS. 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:
In title III, add at the end the following:
SEC. 308. INVESTOR OPPORTUNITY AND ACCESS TO CAPITAL THROUGH
TRANSPARENCY.
(a) Additional Requirement for Issuers Relying on
Regulation D.--
(1) Filling of form d.--Not later than 1 year after the
date of the enactment of this Act, the Securities and
Exchange Commission shall amend sections 230.503 through
230.508 of title 17, Code of Federal Regulations (in this
section referred to as ``Regulation D'') to require any
issuer that offers securities in reliance on section
230.506(c) of title 17, Code of Federal Regulations (in this
section referred to as ``Rule 506(c)''), and has not
previously filed a Form D under section 239.500 of title 17,
Code of Regulations, for the offering to file an Advance Form
D with the Commission not later than 15 calendar days before
the first use of general solicitation or general advertising
for the offering.
(2) Contents of advance form d.--In amending Regulation D
pursuant to paragraph (1), the Commission shall--
(A) determine the information needed from each issuer in
each Advance Form D to allow the Commission to understand the
overall marketplace for securities offerings in reliance on
Rule 506(c);
(B) require issuers to include in each Advance Form D--
(i) any information the Commission determines is necessary
pursuant to subparagraph (A);
(ii) the issuer's identity;
(iii) the issuer's principal place of business and contact
information;
(iv) a means of verifying the accuracy of the issuer's
identifying and contact information, such as a link to the
issuer's registration with a Secretary of State, BrokerCheck,
or such other form of verification as the Commission
determines appropriate;
(v) related persons, including control persons, promoters,
general partners, placement agents, portals and platforms,
verification providers, auditors, administrators, custodians,
valuation agents, and all recipients of sales compensation;
(vi) industry group;
(vii) Federal exemptions and exclusions claimed;
(viii) type of filing;
(ix) each type of securities offered, to the extent such
information is known at the time of the filing of the Advance
Form D;
(x) business combination transaction;
(xi) sales compensation, to the extent such information is
known at the time of the filing of the Advance Form D;
(xii) use of proceeds; and
(xiii) such other information as the Commission may
require;
(C) specify that the failure of an issuer who offers
securities in reliance on Rule 506(c) and has not previously
filed a Form D for the offering to file an Advance Form D
with the Commission shall result in loss of the exemption
from registration for the offering for which the issuer
failed to file the Advance Form D; and
(D) specify that the issuer shall certify that the
information stated on the Advance Form D is truthful and
accurate.
(b) Amendments to Form D.--
(1) Filing of an amended form d.--Not later than 1 year
after the date of the enactment of this Act, the Commission
shall amend sections 230.500 and 230.503 of title 17, Code of
Federal Regulations, to--
(A) require an issuer to file an amendment to a previously
filed notice for an offering--
(i) to provide the information required by Form D for each
new offering of securities in reliance on Rule 506(c) not
later than 15 calendar days after the first sale of
securities in the offering;
(ii) to correct a material mistake of fact or error in the
previously filed notice, as soon as practicable after
discovery of the mistake or error;
(iii) to reflect a change in the information provided in
the previously filed notice, other than --
(I) an increase or decrease of less than 5 percent in the
amount sold;
(II) a change in the minimum investment amount of less than
10 percent; or
(III) a change to issuer contact information, which shall
be updated in the next annual amendment; and
(iv) annually, on or before the date that is 1 year after
the date of filing of the most recent previously filed
notice, if the offering is continuing at that time;
(B) specify that the failure of an issuer to file an
amendment to a previously filed notice for an offering
pursuant to subparagraph (A) with the Commission shall result
in the loss of the exemption from registration for the
offering for which the issuer failed to file an amendment to
the previously filed notice
[[Page H5550]]
for an offering pursuant to subparagraph (A); and
(C) specify that an issuer shall certify that the
information stated on an amended Form D is truthful and
accurate.
(2) Closing amendments.--
(A) In general.--Not later than 1 year after the date of
the enactment of this Act, the Commission shall amend
Regulation D to require any issuer who offers securities in
reliance on Rule 506(c) to, not later than 30 calendar days
after the termination of such offering, file a closing
amendment to Form D with the Commission, unless a previously
filed Form D amendment for such issuer with respect to the
same offering includes the information that would have been
disclosed in the amendment following termination of such
offering and such previously filed amendment indicates that
it is the closing amendment to Form D for the offering.
(B) Contents of amendment to regulation d.--In amending
Regulation D pursuant to subparagraph (A), the Commission
shall--
(i) define the term ``termination of an offering'' as the
Commission determines appropriate; and
(ii) specify that the failure of an issuer to file a
closing amendment to Form D with the Commission shall result
in loss of the exemption from registration for the offering
for which the issuer failed to file the closing statement. An
offering for which the exemption is lost under this section
shall be deemed a sale in violation of section 5 of the
Securities Act, and each purchaser shall have a right of
rescission under section 12(a), without prejudice to
Commission enforcement.
The Acting CHAIR. Pursuant to House Resolution 936, the gentlewoman
from California (Ms. Waters) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentlewoman from California.
Ms. WATERS. Mr. Chairman, I yield myself such time as I may consume.
Mr. Chairman, H.R. 3383 seeks to provide small businesses with more
opportunities to access capital. A key avenue for most small companies
to raise money is by seeking investments from a small number of
accredited investors.
These offerings, made under SEC regulation D, are exempt from
registration with the SEC. However, these companies are required to
file basic disclosures with the SEC on Form D, which is available to
the public. The information provided on Form D is often bare bones,
incomplete, or false.
This makes it difficult for investors to understand the parameters of
an exempt offering. What is worse, many bad actors located in the
United States and all around the world are using reg D to misrepresent
that they are SEC compliant, using false information on Form D and
posting it to the SEC's public database, EDGAR. These fraudsters tell
unsuspecting U.S. investors that they are registered with the SEC.
We must stop these bad actors from using Form D to take hard-earned
money out of Americans' savings and putting it into the hands of
criminals.
My amendment aims to fix this problem by requiring additional
information about the identity of the company and the scope of its
offering prior to making any sales. My amendment also requires a
company to update Form D when there is a mistake or material change in
the information and when the offering is complete.
Furthermore, to prevent fraud, the amendment requires Form D filers
to provide additional verification of their identity: who they are,
such as registrations with the State Secretary of State, and to certify
that the information in the Form D is accurate.
Mr. Chairman, providing false information on Form D would expose the
filer to criminal penalties. Form D reforms are a key priority for our
States' securities regulators. They argue that many bad actors are
harming legitimate businesses needing to raise capital under SEC's
regulation D and that Form D reforms would lead to more capital
formation.
Mr. Chair, this is simple. It is very clear. I urge my colleagues to
support this amendment, and I reserve the balance of my time.
Mrs. WAGNER. Mr. Chair, I rise in opposition to the amendment.
The Acting CHAIR. The gentlewoman from Missouri is recognized for 5
minutes.
Mrs. WAGNER. Mr. Chairman, I rise in strong opposition to this
amendment, which would pose a significant obstacle for the same small
businesses and startups that we aim to support.
These proposed new requirements would act as a speed bump for smaller
issuers. These are not massive Wall Street institutions. These are
often first-time founders, small businesses, and innovative startups
relying on 506(c) to raise essential seed and growth capital. Adding
complex or ambiguous new filing requirements diverts their precious
time and scarce resources away from innovation and job creation and
toward burdensome compliance.
These additional disclosure burdens will actively discourage the
startups and small businesses that desperately need access to this
private market capital. They will choose to forgo fundraising
altogether rather than navigate this complex, costly, and legally risky
environment.
In fact, the Securities and Exchange Commission has examined similar
ideas twice in the last decade. In both instances, the market response
was a resounding chorus of concern. In both cases, the message was
clear: New filing or disclosure obligations would significantly raise
costs and ultimately chill early-stage capital formation.
We should be focused on expanding opportunities for American
entrepreneurs, not erecting new bureaucratic barriers. We must
prioritize a system that makes it easier and not harder for startups
and small businesses to secure the capital that they need to grow,
hire, and innovate.
Mr. Chair, I urge my colleagues to reject these unnecessary and
harmful reporting burdens. I urge a ``no'' vote on this amendment, and
I reserve the balance of my time.
Ms. WATERS. Mr. Chairman, I reserve the balance of my time.
Mrs. WAGNER. Mr. Chairman, I yield 2 minutes to the gentleman from
Pennsylvania (Mr. Meuser), the sponsor of the ACCESS Act in this
package.
{time} 2110
Mr. MEUSER. Mr. Chairman, I thank Chairwoman Wagner for her
leadership and, with all due respect to our minority leader, I oppose
this amendment. I do support the INVEST Act, led by Chairman Hill and
subcommittee Chairwoman Wagner strongly.
The INVEST Act broadens opportunities for everyday Americans to
invest in public and private markets, expands access to capital,
facilitates capital formation, promotes transparency, and helps
charitable organizations build retirement security for their employees.
For example, it allows people to invest in private markets based on
their knowledge and experience, whereas previously they could only
qualify based on their income.
It encourages new public companies to issue more shares without
burdensome regulations so they can focus on hiring and expanding
instead of diverting limited resources to filing paperwork with the
SEC.
Thanks to Representative Huizenga's leadership, investors can now
access important disclosure forms electronically for the first time
instead of only on paper through the mail.
The INVEST Act also includes my bill, H.R. 3645, the ACCESS Act,
which passed the Financial Services Committee earlier this year 51-0.
Right now, if a small business uses crowdfunding--which is raising
money online for everyday people who want to invest--the moment the
business raises more than $100,000, they have to pay for financial
statements that can cost up to $10,000. For many start-ups, that is a
huge chunk of their money that they are trying to raise. This makes
this an improved situation.
The ACCESS Act simply lifts the limit to $250,000 so small businesses
can raise the early capital they need. Its inclusion in the INVEST Act
is a significant bipartisan step toward making capital formation more
practical and affordable.
This legislation puts everyday Americans first and uses the strength
of our capital markets to fuel growth on Main Street, not Wall Street.
The INVEST Act is a major win for workers, entrepreneurs, and small
businesses, and I support its passage.
Ms. WATERS. Mr. Chair, I yield myself the balance of my time to
close.
I encourage all Members to vote ``yes'' on my amendment to strengthen
information for people investing in private markets. As the
opportunities to invest in private companies grow, in particular
through measures promoted in this bill, we must take steps to ensure
that investors are provided with accurate and complete information
about what they are investing in.
[[Page H5551]]
These are simple, commonsense protections that will make a big
difference in ensuring accountability for exempt offerings and
preventing the proliferation of fraud around form D filings.
Mr. Chairman, I yield back the balance of my time.
Mrs. WAGNER. Mr. Chairman, I simply urge my colleagues to reject
these unnecessary and harmful reporting burdens, and I ask that they
oppose this amendment. I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentlewoman from California (Ms. Waters).
The amendment was rejected.
Amendment No. 5 Offered by Ms. Waters
The Acting CHAIR. It is now in order to consider amendment No. 5
printed in part B of House Report 119-399.
Ms. WATERS. 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:
TITLE IV--NO JUNK FEES
SEC. 401. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This title may be cited as the ``No Junk
Fee Act of 2025''.
(b) Table of Contents.--The table of contents for this
title is as follows:
TITLE IV--NO JUNK FEES
Sec. 401. Short title; table of contents.
Sec. 402. Junk fee defined.
Subtitle A--Investment Companies
Sec. 411. Fee disclosure requirements for investment companies.
Sec. 412. Prohibition on certain fees by investment funds.
Subtitle B--Brokers and Dealers
Sec. 421. Fee disclosure requirements for brokers and dealers.
Sec. 422. Prohibition on certain fees by brokers and dealers.
Subtitle C--Investment Advisers
Sec. 431. Fee disclosure requirements for investment advisers.
Sec. 432. Prohibition on certain fees by investment advisers.
Subtitle D--Transparency on Fees Collected From Individual Investors
Sec. 441. Reports by registered investment companies.
Sec. 442. Reports by brokers and dealers.
Sec. 443. Reports by registered investment advisers.
Subtitle E--Transparency and Prohibition of Certain Fees on Trading
Venues
Sec. 451. Transparent fee structures for exchanges and ATSs.
Sec. 452. Prohibition of excessive fees by exchanges and ATSs.
SEC. 402. JUNK FEE DEFINED.
(a) In General.--In this title, with respect to a service
or a transaction, the term ``junk fee'' means any fee or
charge imposed on an investor or consumer that is--
(1) not clearly and conspicuously disclosed prior to the
investor or consumer entering into the agreement for the
service or transaction; or
(2) excessive and not reasonably related to the actual cost
of the service or transaction.
(b) Identification of Specific Junk Fees.--The Securities
and Exchange Commission may issue a rule to identify specific
fees or charges that are a junk fee under paragraph (1),
which may include--
(1) a sales load fee;
(2) a variable performance-based fee;
(3) a fee related to the paper or electronic delivery of
regulatory documents;
(4) undisclosed or misleading trading commissions;
(5) excessive or undisclosed markups or markdowns;
(6) padded or mislabeled processing, handling, service,
ticket, or platform fees;
(7) mislabeled or marked-up regulatory, registered national
securities exchange, ``SEC'', FINRA, or clearing fees;
(8) excessive or unnecessary front-end, back-end, or level
sales loads and contingent deferred sales charges where
lower-cost or no-load alternatives are available;
(9) the use of higher-cost mutual fund or exchange-traded
fund share classes when identical or substantially similar
lower-cost share classes are reasonably available;
(10) wrap fees marketed as ``all-in'' that exclude
significant trading, product, or platform costs or are
charged on largely inactive accounts (commonly referred to as
``reverse churning'');
(11) unreasonable or surprise account maintenance,
custodial, or inactivity fees that are not tied to bona fide
services;
(12) unreasonable or punitive individual retirement account
(``IRA'') or brokerage account termination, closure, or
transfer fees that impede switching;
(13) excessive paper statement, confirmation, or tax
document fees;
(14) wire, transfer, overnight delivery, or check fees that
materially exceed underlying provider costs;
(15) abusive or undisclosed cash sweep arrangements,
including sweep of client assets into low-yield or
proprietary vehicles;
(16) charging advisory or wrap fees on idle cash;
(17) excessive or opaque margin interest charges and
securities borrowing fees;
(18) payment for order flow, internalization arrangements,
maker-taker or similar pricing practices, and routing
incentives that hide costs or inferior execution quality for
customers;
(19) spreads or markups on principal trades;
(20) foreign exchange conversions that are in excess of
actual costs associate with the exchange;
(21) revenue-sharing arrangements with product sponsors,
custodians, or trading venues that are not clearly disclosed;
(22) receipt of 12b-1 fees, trails, or other distribution-
related compensation by registrants or their affiliates,
where such compensation and the availability of cheaper
alternatives are not clearly disclosed;
(23) undisclosed or unfair soft-dollar or research
arrangements effectively causing clients or funds to pay for
firm overhead through elevated commissions;
(24) undisclosed or conflicted principal trades or cross
trades with embedded markups or markdowns;
(25) subscription, retainer, financial planning, or
monitoring fees charged where little or no ongoing service is
actually provided;
(26) technology, data, portal, platform, or reporting fees
that double-charge investors for core services already
covered by other compensation;
(27) add-on ``paperwork,'' ``document handling,''
``compliance,'' or ``administrative'' fees not tied to
incremental, client-specific services;
(28) unreasonable or surprise inactivity or minimum-balance
penalties;
(29) private fund monitoring, consulting, transaction,
director, or similar portfolio company fees that are
undisclosed, duplicative, accelerated, or not properly offset
against management fees;
(30) misallocated broken-deal, organizational, or operating
expenses charged to clients or funds contrary to disclosures
or reasonable expectations;
(31) fees pursuant to complex, opaque, or discriminatory
exchange, alternative trading system, and other trading venue
fee schedules (including excessive access, connectivity, co-
location, port, and market data fees, and opaque tiered or
rebate structures) that obscure the true all-in cost of
trading or unfairly advantage certain participants;
(32) misleading zero commission or free trading offerings
that rely on undisclosed spreads, inferior execution, or
hidden monetization of order flow or customer data;
(33) mischaracterized network or gas fees or similar
charges where the firm retains undisclosed spreads;
(34) unreasonable or undisclosed early redemption,
surrender, or contract change charges in pooled or packaged
products; and
(35) any other fee, charge, spread, or rebate that--
(A) is not clearly, prominently, and timely disclosed in
plain language before the relevant decision;
(B) is disproportionate to any reasonable estimate of the
cost or value of the service provided;
(C) impedes investors from moving or closing accounts or
switching products through unreasonable financial penalties;
or
(D) is structured or labeled in a manner reasonably likely
to mislead, obscure the total economic cost, or exploit
information asymmetries or conflicts of interest.
Subtitle A--Investment Companies
SEC. 411. FEE DISCLOSURE REQUIREMENTS FOR INVESTMENT
COMPANIES.
Section 30 of the Investment Company Act of 1940 (15 U.S.C.
80a-29) is amended by adding at the end the following:
``(l) Fee Disclosure Requirements for Investment
Companies.--
``(1) In general.--Not later than 1 year after the date of
enactment of this subsection, the Commission shall issue
rules to enhance fee transparency for registered investment
companies.
``(2) Requirements.--The rules issued under paragraph (1)
shall, at a minimum, require each registered investment
company to--
``(A) provide to each prospective investor, before the
purchase of any security issued by the registered investment
company, a clear and concise disclosure of all fees and
expenses that the investor will incur, including management
fees, advisory fees, distribution or marketing fees,
redemption fees, and any other charges;
``(B) disclose in any prospectus, offering document, or
periodic report the total annual fees and expenses of the
registered investment company, expressed as a percentage of
assets and as a dollar amount for a standard investment
amount, such as $10,000, including an itemization of each
component fee (such as management fees, 12b-1 or other
distribution fees, and administrative costs);
``(C) clearly disclose any one-time or transactional fees,
including sales loads, purchase fees, or redemption fees,
that may be charged to investors, with an explanation of the
purpose of each such fee; and
``(D) present the disclosures required under this section
in a prominent location and in plain language and format, as
prescribed by the Commission, so that investors can easily
understand and compare fee information.''.
[[Page H5552]]
SEC. 412. PROHIBITION ON CERTAIN FEES BY INVESTMENT FUNDS.
Section 12 of the Investment Company Act of 1940 (15 U.S.C.
80a-12) is amended by adding at the end the following:
``(h) Prohibition on Certain Fees by Investment Funds.--
``(1) In general.--A registered investment company may not
charge or collect any junk fee from an investor.
``(2) Junk fee defined.--In this subsection, the term `junk
fee' has the meaning given that term in section 402 of the No
Junk Fee Act of 2025, as the Commission may further define,
by rule.''.
Subtitle B--Brokers and Dealers
SEC. 421. FEE DISCLOSURE REQUIREMENTS FOR BROKERS AND
DEALERS.
Section 15 of the Securities Exchange Act of 1934 (15
U.S.C. 78o) is amended by adding at the end the following:
``(p) Fee Disclosure Requirements for Brokers and
Dealers.--
``(1) In general.--Not later than 1 year after the date of
enactment of this subsection, the Commission shall issue
rules to require clear disclosure of all fees and charges
imposed by brokers and dealers on retail investors.
``(2) Requirements.--The rules issued under paragraph (1)
shall require each broker and dealer to--
``(A) furnish to each new retail investor, at the time of
account opening, a complete schedule of all fees, charges,
and commissions that may be imposed on the investor's account
or transactions, including trading commissions, mark-ups or
mark-downs on trades, account maintenance or inactivity fees,
wire transfer or withdrawal fees, and account closing or
transfer fees;
``(B) prominently disclose on each trade confirmation the
amount of any commission, fee, or other compensation charged
on the transaction, including any payment the broker or
dealer receives from third parties in connection with the
transaction (such as payment for order flow or other
remuneration), expressed in dollar terms or, if not known at
the time of transaction, a reasonable estimate thereof;
``(C) provide each retail investor at least annually an
itemized summary of all fees and charges paid by that
investor over the reporting period, including total
commissions, fees, and any other charges deducted from the
investor's accounts; and
``(D) maintain a publicly accessible schedule of standard
fees and charges on the broker or dealer's website, and
update investors in writing of any increases in fees or
introduction of new fees at least 30 days before such changes
take effect.''.
SEC. 422. PROHIBITION ON CERTAIN FEES BY BROKERS AND DEALERS.
Section 15 of the Securities Exchange Act of 1934 (15
U.S.C. 78o), as amended by section 421, is further amended by
adding at the end the following:
``(q) Prohibition on Certain Fees by Brokers and Dealers.--
``(1) In general.--A broker or dealer may not, directly or
indirectly, impose any of the following fees on a retail
investor:
``(A) Any account maintenance, closure, or inactivity fee
that is not reasonably related to the actual cost of
maintaining or closing the investor's account.
``(B) Any surcharge, markup, or add-on fee applied at the
time of a transaction's execution or settlement that was not
clearly disclosed to the investor before the transaction.
``(C) Any so-called `processing' or `paperwork' fee charged
to an investor that exceeds the actual administrative cost of
the service provided.
``(D) Any undisclosed or misleading trading commissions.
``(E) Fees for services or features that are not actually
provided or utilized by a client.
``(F) Fees that are grossly disproportionate to the cost or
value of the services provided.
``(G) Any junk fee (as defined in section 402 of the No
Junk Fee Act of 2025) as the Commission determines
appropriate or necessary to protect investors.
``(2) Prohibition on certain related practices by brokers
and dealers.--A broker or dealer may not, directly or
indirectly, engage in any of the following practices:
``(A) Providing investors with higher-cost mutual fund or
exchange-traded fund share classes when identical or
substantially similar lower-cost share classes are reasonably
available.
``(B) Engaging in any revenue-sharing arrangements with
product sponsors, custodians, or trading venues that are not
clearly disclosed to investors.
``(C) Characterizing a product or service as a zero
commission or free trading product or service, when such
product or service relies on undisclosed spreads, inferior
execution, or hidden monetization of order flow or customer
data.''.
Subtitle C--Investment Advisers
SEC. 431. FEE DISCLOSURE REQUIREMENTS FOR INVESTMENT
ADVISERS.
Section 204 of the Investment Advisers Act of 1940 (15
U.S.C. 80b-4) is amended by adding at the end the following:
``(g) Fee Disclosure Requirements for Investment
Advisers.--
``(1) In general.--Not later than 1 year after the date of
enactment of this subsection, the Commission shall issue
rules to require investment advisers to provide full and
clear disclosure of all fees and compensation to their
clients.
``(2) Requirements.--The rules issued under subsection (a)
shall require an investment adviser to--
``(A) deliver to each client or prospective client, before
entering into an advisory agreement, a plain-language fee
schedule describing all fees and charges the client will
incur for advisory services and any related services or
products, including advisory fees (whether fixed, hourly,
percentage of assets, or performance-based) and any
additional fees for ancillary services or third-party
products;
``(B) disclose to each client any compensation the
investment adviser or affiliates of the investment adviser
receive from third parties in connection with the client's
investments or transactions (including referral fees,
solicitation fees, or revenue-sharing payments), along with a
clear explanation of how such compensation is earned and any
conflict of interest it presents;
``(C) provide each client, at least annually, a written
summary showing the actual amount of fees paid by the client
for advisory services during the period, including advisory
fees debited from the account of the client and any other
charges directly or indirectly paid by the client to the
adviser; and
``(D) prominently disclose, in the investment adviser's
Form ADV or equivalent disclosure brochure given to clients,
whether the adviser receives any indirect compensation (such
as commissions on products or other benefits) and, if so,
include a concise explanation of how such compensation is
factored into or in addition to the direct fees paid by the
client.''.
SEC. 432. PROHIBITION ON CERTAIN FEES BY INVESTMENT ADVISERS.
Section 206 of the Investment Advisers Act of 1940 (15
U.S.C. 80b-6) is amended--
(1) by striking ``It shall'' and inserting the following:
``(a) In General.--It shall''; and
(2) by adding at the end the following:
``(b) Prohibition on Certain Fees by Investment Advisers.--
``(1) In general.--The Commission may prohibit an
investment adviser from, directly or indirectly, charging or
collecting any junk fee (as defined in section 402 of the No
Junk Fee Act of 2025) if the Commission determines such
prohibition to be appropriate or necessary to protect
investors, which may include--
``(A) any account maintenance, closure, or inactivity fee
that is not reasonably related to the actual cost of
maintaining or closing the investor's account;
``(B) any surcharge, markup, or add-on fee applied at the
time of a transaction's execution or settlement that was not
clearly disclosed to the investor before the transaction;
``(C) any so-called `processing' or `paperwork' fee charged
to an investor that exceeds the actual administrative cost of
the service provided;
``(D) any undisclosed or misleading commissions;
``(E) fees for services or features that are not actually
provided or utilized by a client; and
``(F) fees that are grossly disproportionate to the cost or
value of the services provided.
``(2) Inclusion of certain related practices by investment
advisers.--In issuing any rule pursuant to paragraph (1), the
Commission may also prohibit an investment adviser from,
directly or indirectly, engaging in the following practices,
if the Commission determines such prohibition to be
appropriate or necessary to protect investors:
``(A) Providing investors with higher-cost mutual fund or
exchange-traded fund share classes when identical or
substantially similar lower-cost share classes are reasonably
available.
``(B) Engaging in any revenue-sharing arrangements with
product sponsors, custodians, or trading venues that are not
clearly disclosed to investors.
``(C) Characterizing a product or service as a zero
commission or free trading product or service, when such
product or service relies on undisclosed spreads, inferior
execution, or hidden monetization of order flow or customer
data.
``(3) Fiduciary duty.--Any violation of paragraph (1) by an
investment adviser shall be deemed a breach of the investment
adviser's fiduciary duty under this Act.''.
Subtitle D--Transparency on Fees Collected From Individual Investors
SEC. 441. REPORTS BY REGISTERED INVESTMENT COMPANIES.
Section 30 of the Investment Company Act of 1940 (15 U.S.C.
80a-29), as amended by section 411, is further amended by
adding at the end the following:
``(m) Report on Fees Collected From Individual Investors.--
``(1) In general.--Each registered investment company shall
annually file with the Commission a report that includes,
with respect to the year preceding such report--
``(A) the total amount of fees the registered investment
company collected from individual investors with assets in
individual accounts;
``(B) the total amount of fees described in subparagraph
(A) divided by assets under management (`AUM'); and
``(C) the table described in paragraph (2).
``(2) Fee disaggregation.--A registered investment company
shall, with respect to each total amount reported under
paragraph (1)(A), include in each report under such paragraph
a table that disaggregates the amount into the following
categories:
``(A) The amount of management fees collected.
``(B) The amount of frequent trading fees collected.
[[Page H5553]]
``(C) The amount of account inactivity fees collected.
``(D) The amount of transfer agent fees collected.
``(E) The amount of exchange fees collected.
``(F) The amount of low account balance fees collected.
``(G) The amount of account opening fees collected.
``(H) The amount of retirement account rollover fees
collected.
``(I) The amount of fees collected other than fees
described in subparagraphs (A) through (H).
``(3) Publication of data.--
``(A) Online database.--The Commission shall publish the
data received under paragraph (1) on an online database
(which shall be similar to BrokerCheck) where individual
investors can search by registered investment company name.
``(B) Visual meter comparing registered investment company
fees.--The online database required under subparagraph (A)
shall include, with respect to each registered investment
company, a visual meter that--
``(i) indicates whether the registered investment company's
fees are, when compared to all other registered investment
companies that filed a report under paragraph (1) for the
most recent reporting year--
``(I) in the highest quartile, which shall be indicated
with a background of red and the word `high';
``(II) in the 25 percent to 50 percent or 50 percent to 75
percent quartile, which shall be indicated with a background
of white and the word `average'; or
``(III) in lowest quartile, which shall be indicated with a
background of green and the word `low'; and
``(ii) includes--
``(I) a line running perpendicular to the meter that
corresponds to the quartile under clause (i) applicable to
the registered investment company's fees; and
``(II) the amount of such fees shown clearly next to such
line.
``(C) Landing pages of registered investment company.--Each
registered investment company's landing page (which may
contain the regulatory or disciplinary history of the
registered investment company, and such other information as
the Commission determines useful for investors and account
holders) shall include the data required under paragraph (1).
``(4) Report to individual investors.--Each registered
investment company shall provide an annual individualized fee
report to the investors of the registered investment company.
Each report shall allow each investor to compare the fees
charged to the investor to those charged by other registered
investment companies and include a 10-year fee projection,
assuming no changes in the products, services, or fee tiers
offered. The report shall include--
``(A) the information provided to the Commission under
paragraph (1); and
``(B) the information published by the Commission under
paragraph (3)(B) relating to such registered investment
company.
``(5) Financial intermediaries.--The Commission shall issue
a rule to apply the requirements of this subsection to any
financial intermediary that functions in the manner of an
registered investment company but is not registered as a
registered investment company.''.
SEC. 442. REPORTS BY BROKERS AND DEALERS.
Section 15 of the Securities Exchange Act of 1934 (15
U.S.C. 78o), as amended by section 422, is further amended by
adding at the end the following
``(r) Report on Fees Collected From Individual Investors.--
``(1) In general.--Each broker and dealer shall annually
file with the Commission a report that includes, with respect
to the year preceding such report--
``(A) the total amount of fees the broker and dealer
collected from individual investors with assets in individual
accounts;
``(B) the total amount of fees described in subparagraph
(A) divided by assets under management (`AUM');
``(C) the average fee paid by an individual account (i.e.,
the average fee across all investor accounts); and
``(D) the table described in paragraph (2).
``(2) Fee disaggregation.--Each broker and dealer shall,
with respect to each total amount reported under paragraph
(1)(A), include in each report under such paragraph a table
that disaggregates the amount into the following categories:
``(A) The amount of management fees collected.
``(B) The amount of frequent trading fees collected.
``(C) The amount of account inactivity fees collected.
``(D) The amount of transfer agent fees collected.
``(E) The amount of exchange fees collected.
``(F) The amount of low account balance fees collected.
``(G) The amount of account opening fees collected.
``(H) The amount of retirement account rollover fees
collected.
``(I) The amount of fees collected other than fees
described in subparagraphs (A) through (H).
``(3) Publication of data.--
``(A) Online database.--The Commission shall publish the
data received under paragraph (1) on an online database
(which shall be similar to BrokerCheck) where individual
investors can search by registered investment company name.
``(B) Visual meter comparing registered investment company
fees.--The online database required under subparagraph (A)
shall include, with respect to each registered investment
company, a visual meter that--
``(i) indicates whether the registered investment company's
fees are, when compared to all other registered investment
companies that filed a report under paragraph (1) for the
most recent reporting year--
``(I) in the highest quartile, which shall be indicated
with a background of red and the word `high';
``(II) in the 25 percent to 50 percent or 50 percent to 75
percent quartile, which shall be indicated with a background
of white and the word `average'; or
``(III) in lowest quartile, which shall be indicated with a
background of green and the word `low'; and
``(ii) includes--
``(I) a line running perpendicular to the meter that
corresponds to the quartile under clause (i) applicable to
the registered investment company's fees; and
``(II) the amount of such fees shown clearly next to such
line.
``(C) Landing pages of registered investment company.--Each
registered investment company's landing page (which may
contain the regulatory or disciplinary history of the
registered investment company, and such other information as
the Commission determines useful for investors and account
holders) shall include the data required under paragraph (1).
``(4) Report to individual investors.--Each registered
investment company shall provide an annual individualized fee
report to the investors of the registered investment company.
Each report shall allow each investor to compare the fees
charged to the investor to those charged by other registered
investment companies and include a 10-year fee projection,
assuming no changes in the products, services, or fee tiers
offered. The report shall include--
``(A) the information provided to the Commission under
paragraph (1); and
``(B) the information published by the Commission under
paragraph (3)(B) relating to such registered investment
company.
``(5) Financial intermediaries.--The Commission shall issue
a rule to apply the requirements of this subsection to any
financial intermediary that functions in the manner of a
broker or dealer but is not registered as a broker or
dealer.''.
SEC. 443. REPORTS BY REGISTERED INVESTMENT ADVISERS.
Section 204 of the Investment Advisers Act of 1940 (15
U.S.C. 80b-4), as amended by section 431, is further amended
by adding at the end the following:
``(h) Report on Fees Collected From Individual Investors.--
``(1) In general.--Each registered investment adviser shall
annually file with the Commission a report that includes,
with respect to the year preceding such report--
``(A) the total amount of fees the registered investment
adviser collected from individual investors with assets in
individual accounts;
``(B) the total amount of fees described in subparagraph
(A) divided by assets under management (`AUM');
``(C) the average fee paid by an individual account (i.e.,
the average fee across all investor accounts); and
``(D) the table described in paragraph (2).
``(2) Fee disaggregation.--Each registered investment
adviser shall, with respect to each total amount reported
under paragraph (1)(A), include in each report under such
paragraph a table that disaggregates the amount into the
following categories:
``(A) The amount of management fees collected.
``(B) The amount of frequent trading fees collected.
``(C) The amount of account inactivity fees collected.
``(D) The amount of transfer agent fees collected.
``(E) The amount of exchange fees collected.
``(F) The amount of low account balance fees collected.
``(G) The amount of account opening fees collected.
``(H) The amount of retirement account rollover fees
collected.
``(I) The amount of fees collected other than fees
described in subparagraphs (A) through (H).
``(3) Publication of data.--
``(A) Online database.--The Commission shall publish the
data received under paragraph (1) on an online database
(which shall be similar to BrokerCheck) where individual
investors can search by registered investment company name.
``(B) Visual meter comparing registered investment company
fees.--The online database required under subparagraph (A)
shall include, with respect to each registered investment
company, a visual meter that--
``(i) indicates whether the registered investment company's
fees are, when compared to all other registered investment
companies that filed a report under paragraph (1) for the
most recent reporting year--
``(I) in the highest quartile, which shall be indicated
with a background of red and the word `high';
``(II) in the 25 percent to 50 percent or 50 percent to 75
percent quartile, which shall be indicated with a background
of white and the word `average'; or
[[Page H5554]]
``(III) in lowest quartile, which shall be indicated with a
background of green and the word `low'; and
``(ii) includes--
``(I) a line running perpendicular to the meter that
corresponds to the quartile under clause (i) applicable to
the registered investment company's fees; and
``(II) the amount of such fees shown clearly next to such
line.
``(C) Landing pages of registered investment company.--Each
registered investment company's landing page (which may
contain the regulatory or disciplinary history of the
registered investment company, and such other information as
the Commission determines useful for investors and account
holders) shall include the data required under paragraph (1).
``(4) Report to individual investors.--Each registered
investment company shall provide an annual individualized fee
report to the investors of the registered investment company.
Each report shall allow each investor to compare the fees
charged to the investor to those charged by other registered
investment companies and include a 10-year fee projection,
assuming no changes in the products, services, or fee tiers
offered. The report shall include--
``(A) the information provided to the Commission under
paragraph (1); and
``(B) the information published by the Commission under
paragraph (3)(B) relating to such registered investment
company.
``(5) Financial intermediaries.--The Commission shall issue
a rule to apply the requirements of this subsection to any
financial intermediary that functions in the manner of an
registered investment adviser but is not registered as a
registered investment adviser.''.
Subtitle E--Transparency and Prohibition of Certain Fees on Trading
Venues
SEC. 451. TRANSPARENT FEE STRUCTURES FOR EXCHANGES AND ATSS.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
is amended by inserting after section 6 the following:
``SEC. 6A. TRANSPARENT FEE STRUCTURES FOR EXCHANGES AND ATSS.
``(a) In General.--The Commission shall adopt rules to
improve the transparency of fee structures imposed by
exchanges and alternative trading systems on their
participants.
``(b) Requirements.--The rules issued under subsection (a)
shall require that each exchange and each alternative trading
system--
``(1) publicly disclose, in a complete and readily
accessible format (including on the website of the exchange
or the alternative trading system), a schedule of all fees,
dues, charges, and rebates that the exchange or alternative
trading system imposes on members, subscribers, or other
users for trading, market data, access, connectivity, or any
other services, and update such disclosure promptly upon any
change;
``(2) provide advance notice to the users of the exchange
or alternative trading system of any new fee or increase in
an existing fee at least 30 days before the effective date of
such fee or increase (unless a longer notice period is
otherwise required by law or regulation);
``(3) if the exchange or alternative trading system offers
volume-based rebates or other incentives, clearly disclose
the terms of such programs and the effective fee after
accounting for such rebates or incentives, in a manner that
allows market participants to determine the true net cost or
rebate for their trading activity; and
``(4) issue regular billing statements or reports to users
of the exchange or alternative trading system that itemize
each fee or charge incurred for the period by category (such
as execution fees, market data fees, connectivity fees), to
allow users to verify the fees charged.
``(c) Alternative Trading System Defined.--In this section,
the term `alternative trading system' means any organization,
association, or system that meets the definition of an
alternative trading system under regulations prescribed by
the Commission, including section 242.300(a) of title 17,
Code of Federal Regulations.''.
SEC. 452. PROHIBITION OF EXCESSIVE FEES BY EXCHANGES AND
ATSS.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.), as amended by section 451, is further amended by
inserting after section 6A the following:
``SEC. 6B. PROHIBITION OF EXCESSIVE FEES BY EXCHANGES AND
ATSS.
``An exchange or alternative trading system (as defined in
section 6A) may not, directly or indirectly, impose any of
the following fees:
``(1) Any fee or charge that is not reasonable and
proportional to the cost of the product or service for which
the fee is charged.
``(2) Any fee pursuant to a fee structure that is designed
in a way that unfairly disadvantages or advantages certain
participants relative to others without a legitimate business
justification.
``(3) Any fee pursuant to a fee model that obscures or
conceals the true cost of trading, market data, or access to
the market.
``(4) Any junk fee (as defined in section 402 of the No
Junk Fee Act of 2025) or other fee that is excessive,
unreasonable, or unjustly discriminatory, as the Commission
determines appropriate or necessary to protect investors.''.
The Acting CHAIR. Pursuant to House Resolution 936, the gentlewoman
from California (Ms. Waters) and a Member opposed each will control 5
minutes.
The Chair recognizes the gentlewoman from California.
Ms. WATERS. Mr. Chairman, I rise to offer an amendment that would
make junk fees illegal and require investment firms to clearly disclose
the other fees they charge.
For far too long, Wall Street has been charging junk fees that sap
the investment returns of hardworking Americans and make it harder to
save for retirement.
This amendment makes clear that investment firms, be they an
investment company, an investment adviser, or a broker-dealer, cannot
charge any fees that are either not clearly disclosed to investors in
advance or exceed the value of the services provided. These could
include dubious fees like account closure fees, excessive markups, and
undisclosed compensation or sales arrangements, inactivity fees, and
so-called regulatory compliance fees.
In addition to outright banning junk fees, this amendment requires
investment firms to clearly disclose to their customers in advance any
fees that they charge that customer.
Investors should not face any surprises when it comes to the cost of
investing their savings. Making sure that investors clearly know the
risk and costs of choosing an investment firm or product should receive
unanimous support from all Members of this body.
Finally, this amendment would bring unprecedented transparency to how
investment firms profit from the fees they charge investors. These
firms would be required to annually report to the SEC the total profit
earned from fees as a percentage of assets under management.
The SEC would publish this information on a public database similar
to a broker check along with a visual that shows whether these fees are
high, low, or average when compared with their peer firms.
By making this data public, American investors would be able to know
how the fees charged by their investment firm compare to others and
would also create market pressure on firms to make savings for the
future more affordable for Americans.
I strongly, strongly encourage all Members to support this amendment
because this amendment is a commonsense solution that protects
investors and brings accountability to the industry.
Mr. Chair, I reserve the balance of my time.
Mrs. WAGNER. Mr. Chairman, I claim the time in opposition.
The Acting CHAIR. The gentlewoman from Missouri is recognized for 5
minutes.
Mrs. WAGNER. Mr. Chairman, I rise in strong opposition to this
amendment, which represents a fundamental departure from the careful,
deliberative process that has guided the INVEST Act.
Let me be clear about what we are being asked to consider. This is
not a modest technical correction or a narrow clarification. These are
sweeping, complex changes that redefine fee structures across the
entire securities industry. They create new prohibitions, and they
establish an unprecedented public ranking system for SEC registrants.
It has never been vetted by participants, investor groups, legal
experts, or Congress. It has not even been considered or marked up
through the Financial Services Committee through regular order, the
very process that every other provision in the INVEST Act has
undergone.
We are being asked to inject unexamined policy into a carefully
crafted bill at the 11th hour. This is not how we should legislate,
particularly on matters affecting trillions of dollars in American
retirement savings and investment accounts.
Beyond the procedural concerns, the policy itself is deeply flawed.
SEC-registered advisers and broker-dealers are already subject to
comprehensive fee disclosure requirements under existing law. They must
provide clear, written disclosures about all fees and compensation.
They are subject to fiduciary duties or Regulation Best Interest
standards that require fees to be reasonable and in clients' best
interests.
This amendment creates vague, undefined standards about what
constitutes
[[Page H5555]]
a fee that is ``not proportional to services provided.'' Who decides
proportionality? By what standard? This invites endless litigation and
regulatory uncertainty that will ultimately harm investors by
increasing costs and limiting service offerings.
I urge my colleagues to reject this substantively flawed amendment,
and I reserve the balance of my time.
Ms. WATERS. Mr. Chairman, I yield myself the balance of my time to
close.
I urge all Members to vote ``yes'' in support of my amendment to
prohibit junk fees and make all other fees more transparent to
investors.
My amendment will make sure that hardworking Americans are safe from
undisclosed or unreasonable fees. It will require advanced notice on
fees before they are charged to an investor and will make public the
amount that financial firms earn from fees.
{time} 2120
I am sure you can agree that every American should have a right to
know what they are paying for, and that is why I am asking for a vote
on this amendment.
It has been acknowledged by the supporters that they are so pleased
for this debate that we are having this evening. They have indicated it
is long past due that consumers have this kind of advocacy and that
consumers have this kind of support from the Members of Congress who
understand the rip-offs and the fraud and the disrespect that they have
received for far too long.
This amendment is supported by all of those organized unions and
advocacy groups that I have spoken about earlier this evening. They all
support this amendment as they support the bill that we have been
working so hard for.
Mr. Chair, I yield back the balance of my time.
Mrs. WAGNER. Mr. Chair, as we come to a close on what I believe is
the final amendment of H.R. 3383, the INVEST Act, I thank my colleagues
who have been so bipartisan in this package of 22 amazing capital
formation bills that are going to lift up retail and mainstream
investors, that are going to grow small business and entrepreneurs, and
give more companies the possibility of having the capital for them to
go public.
Mr. Chair, I thank my wonderful co-lead, Mr. Gregory Meeks from New
York and Josh Gottheimer, and also Chairman Hill for their tremendous
support in this effort and my entire Capital Markets Subcommittee, the
staff, and the team that has brought what is years and years of hard
work together that is going to grow this economy, grow jobs, and grow
the future of the United States of America and our economy.
Mr. Chair, I thank the ranking member for the good, healthy debate
this evening and the collaboration that we have, but I must say still,
Mr. Chair, I urge my colleagues to reject this specific amendment, and
I yield back the balance of my time.
The Acting CHAIR. The question is on the amendment offered by the
gentlewoman from California (Ms. Waters).
The question was taken; and the Acting Chair announced that the noes
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 gentlewoman 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.
Mackenzie) having assumed the chair, Mr. Wied, 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. 3383) to
amend the Investment Company Act of 1940 with respect to the authority
of closed-end companies to invest in private funds, had come to no
resolution thereon.
____________________