[Congressional Record (Bound Edition), Volume 162 (2016), Part 11]
[House]
[Pages 15729-15733]
[From the U.S. Government Publishing Office, www.gpo.gov]




     CREATING FINANCIAL PROSPERITY FOR BUSINESSES AND INVESTORS ACT

  Mr. GARRETT. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 6427) to improve the operation of United States capital 
markets, and for other purposes.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 6427

       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 ``Creating 
     Financial Prosperity for Businesses and Investors Act''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

         TITLE I--SMALL BUSINESS CAPITAL FORMATION ENHANCEMENT

Sec. 101. Annual review of government-business forum on capital 
              formation.

                 TITLE II--SEC SMALL BUSINESS ADVOCATE

Sec. 201. Establishment of Office of the Advocate for Small Business 
              Capital Formation and Small Business Capital Formation 
              Advisory Committee.

               TITLE III--SUPPORTING AMERICA'S INNOVATORS

Sec. 301. Investor limitation for qualifying venture capital funds.

                       TITLE IV--FIX CROWDFUNDING

Sec. 401. Crowdfunding vehicles.
Sec. 402. Crowdfunding exemption from registration.

    TITLE V--FAIR INVESTMENT OPPORTUNITIES FOR PROFESSIONAL EXPERTS

Sec. 501. Definition of accredited investor.

             TITLE VI--U.S. TERRITORIES INVESTOR PROTECTION

Sec. 601. Termination of exemption.

         TITLE I--SMALL BUSINESS CAPITAL FORMATION ENHANCEMENT

     SEC. 101. ANNUAL REVIEW OF GOVERNMENT-BUSINESS FORUM ON 
                   CAPITAL FORMATION.

       Section 503 of the Small Business Investment Incentive Act 
     of 1980 (15 U.S.C. 80c-1) is amended by adding at the end the 
     following:
       ``(e) The Commission shall--
       ``(1) review the findings and recommendations of the forum; 
     and
       ``(2) each time the forum submits a finding or 
     recommendation to the Commission, promptly issue a public 
     statement--
       ``(A) assessing the finding or recommendation of the forum; 
     and
       ``(B) disclosing the action, if any, the Commission intends 
     to take with respect to the finding or recommendation.''.

                 TITLE II--SEC SMALL BUSINESS ADVOCATE

     SEC. 201. ESTABLISHMENT OF OFFICE OF THE ADVOCATE FOR SMALL 
                   BUSINESS CAPITAL FORMATION AND SMALL BUSINESS 
                   CAPITAL FORMATION ADVISORY COMMITTEE.

       (a) Office of the Advocate for Small Business Capital 
     Formation.--Section 4 of the Securities Exchange Act of 1934 
     (15 U.S.C. 78d) is amended by adding at the end the 
     following:
       ``(j) Office of the Advocate for Small Business Capital 
     Formation.--
       ``(1) Office established.--There is established within the 
     Commission the Office of the Advocate for Small Business 
     Capital Formation (hereafter in this subsection referred to 
     as the `Office').
       ``(2) Advocate for small business capital formation.--
       ``(A) In general.--The head of the Office shall be the 
     Advocate for Small Business Capital Formation, who shall--
       ``(i) report directly to the Commission; and
       ``(ii) be appointed by the Commission, from among 
     individuals having experience in advocating for the interests 
     of small businesses and encouraging small business capital 
     formation.
       ``(B) Compensation.--The annual rate of pay for the 
     Advocate for Small Business Capital Formation shall be equal 
     to the highest rate of annual pay for other senior executives 
     who report directly to the Commission.
       ``(C) No current employee of the commission.--An individual 
     may not be appointed as the Advocate for Small Business 
     Capital Formation if the individual is currently employed by 
     the Commission.
       ``(3) Staff of office.--The Advocate for Small Business 
     Capital Formation, after consultation with the Commission, 
     may retain or employ independent counsel, research staff, and 
     service staff, as the Advocate for Small Business Capital 
     Formation determines to be necessary to carry out the 
     functions of the Office.
       ``(4) Functions of the advocate for small business capital 
     formation.--The Advocate for Small Business Capital Formation 
     shall--
       ``(A) assist small businesses and small business investors 
     in resolving significant problems such businesses and 
     investors may have with the Commission or with self-
     regulatory organizations;
       ``(B) identify areas in which small businesses and small 
     business investors would benefit from changes in the 
     regulations of the Commission or the rules of self-regulatory 
     organizations;
       ``(C) identify problems that small businesses have with 
     securing access to capital, including any unique challenges 
     to minority-owned and women-owned small businesses;
       ``(D) analyze the potential impact on small businesses and 
     small business investors of--
       ``(i) proposed regulations of the Commission that are 
     likely to have a significant economic impact on small 
     businesses and small business capital formation; and
       ``(ii) proposed rules that are likely to have a significant 
     economic impact on small businesses and small business 
     capital formation of self-regulatory organizations registered 
     under this title;
       ``(E) conduct outreach to small businesses and small 
     business investors, including through regional roundtables, 
     in order to solicit views on relevant capital formation 
     issues;
       ``(F) to the extent practicable, propose to the Commission 
     changes in the regulations or orders of the Commission and to 
     Congress any legislative, administrative, or personnel 
     changes that may be appropriate to mitigate problems 
     identified under this paragraph and to promote the interests 
     of small businesses and small business investors;
       ``(G) consult with the Investor Advocate on proposed 
     recommendations made under subparagraph (F); and
       ``(H) advise the Investor Advocate on issues related to 
     small businesses and small business investors.
       ``(5) Access to documents.--The Commission shall ensure 
     that the Advocate for Small Business Capital Formation has 
     full access to the documents and information of the 
     Commission and any self-regulatory organization, as necessary 
     to carry out the functions of the Office.
       ``(6) Annual report on activities.--
       ``(A) In general.--Not later than December 31 of each year 
     after 2016, the Advocate for Small Business Capital Formation 
     shall submit to the Committee on Banking, Housing, and Urban 
     Affairs of the Senate and the Committee on Financial Services 
     of the House of Representatives a report on the activities of 
     the Advocate for Small Business Capital Formation during the 
     immediately preceding fiscal year.
       ``(B) Contents.--Each report required under subparagraph 
     (A) shall include--
       ``(i) appropriate statistical information and full and 
     substantive analysis;
       ``(ii) information on steps that the Advocate for Small 
     Business Capital Formation has taken during the reporting 
     period to improve small business services and the 
     responsiveness of the Commission and self-regulatory 
     organizations to small business and small business investor 
     concerns;
       ``(iii) a summary of the most serious issues encountered by 
     small businesses and small business investors, including any 
     unique issues encountered by minority-owned and women-owned 
     small businesses and their investors, during the reporting 
     period;
       ``(iv) an inventory of the items summarized under clause 
     (iii) (including items summarized under such clause for any 
     prior reporting period on which no action has been taken or 
     that have not been resolved to the satisfaction of the 
     Advocate for Small Business Capital Formation as of the 
     beginning of the reporting period covered by the report) that 
     includes--

       ``(I) identification of any action taken by the Commission 
     or the self-regulatory organization and the result of such 
     action;
       ``(II) the length of time that each item has remained on 
     such inventory; and
       ``(III) for items on which no action has been taken, the 
     reasons for inaction, and an identification of any official 
     who is responsible for such action;

       ``(v) recommendations for such changes to the regulations, 
     guidance and orders of the

[[Page 15730]]

     Commission and such legislative actions as may be appropriate 
     to resolve problems with the Commission and self-regulatory 
     organizations encountered by small businesses and small 
     business investors and to encourage small business capital 
     formation; and
       ``(vi) any other information, as determined appropriate by 
     the Advocate for Small Business Capital Formation.
       ``(C) Confidentiality.--No report required by subparagraph 
     (A) may contain confidential information.
       ``(D) Independence.--Each report required under 
     subparagraph (A) shall be provided directly to the committees 
     of Congress listed in such subparagraph without any prior 
     review or comment from the Commission, any commissioner, any 
     other officer or employee of the Commission, or the Office of 
     Management and Budget.
       ``(7) Regulations.--The Commission shall establish 
     procedures requiring a formal response to all recommendations 
     submitted to the Commission by the Advocate for Small 
     Business Capital Formation, not later than 3 months after the 
     date of such submission.
       ``(8) Government-business forum on small business capital 
     formation.--The Advocate for Small Business Capital Formation 
     shall be responsible for planning, organizing, and executing 
     the annual Government-Business Forum on Small Business 
     Capital Formation described in section 503 of the Small 
     Business Investment Incentive Act of 1980 (15 U.S.C. 80c-1).
       ``(9) Rule of construction.--Nothing in this subsection may 
     be construed as replacing or reducing the responsibilities of 
     the Investor Advocate with respect to small business 
     investors.''.
       (b) Small Business Capital Formation Advisory Committee.--
     Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a 
     et seq.) is amended by adding at the end the following:

     ``SEC. 40. SMALL BUSINESS CAPITAL FORMATION ADVISORY 
                   COMMITTEE.

       ``(a) Establishment and Purpose.--
       ``(1) Establishment.--There is established within the 
     Commission the Small Business Capital Formation Advisory 
     Committee (hereafter in this section referred to as the 
     `Committee').
       ``(2) Functions.--
       ``(A) In general.--The Committee shall provide the 
     Commission with advice on the Commission's rules, 
     regulations, and policies with regard to the Commission's 
     mission of protecting investors, maintaining fair, orderly, 
     and efficient markets, and facilitating capital formation, as 
     such rules, regulations, and policies relate to--
       ``(i) capital raising by emerging, privately held small 
     businesses (`emerging companies') and publicly traded 
     companies with less than $250,000,000 in public market 
     capitalization (`smaller public companies') through 
     securities offerings, including private and limited offerings 
     and initial and other public offerings;
       ``(ii) trading in the securities of emerging companies and 
     smaller public companies; and
       ``(iii) public reporting and corporate governance 
     requirements of emerging companies and smaller public 
     companies.
       ``(B) Limitation.--The Committee shall not provide any 
     advice with respect to any policies, practices, actions, or 
     decisions concerning the Commission's enforcement program.
       ``(b) Membership.--
       ``(1) In general.--The members of the Committee shall be--
       ``(A) the Advocate for Small Business Capital Formation;
       ``(B) not fewer than 10, and not more than 20, members 
     appointed by the Commission, from among individuals--
       ``(i) who represent--

       ``(I) emerging companies engaging in private and limited 
     securities offerings or considering initial public offerings 
     (`IPO') (including the companies' officers and directors);
       ``(II) the professional advisors of such companies 
     (including attorneys, accountants, investment bankers, and 
     financial advisors); and
       ``(III) the investors in such companies (including angel 
     investors, venture capital funds, and family offices);

       ``(ii) who are officers or directors of minority-owned 
     small businesses or women-owned small businesses;
       ``(iii) who represent--

       ``(I) smaller public companies (including the companies' 
     officers and directors);
       ``(II) the professional advisors of such companies 
     (including attorneys, auditors, underwriters, and financial 
     advisors); and
       ``(III) the pre-IPO and post-IPO investors in such 
     companies (both institutional, such as venture capital funds, 
     and individual, such as angel investors); and

       ``(iv) who represent participants in the marketplace for 
     the securities of emerging companies and smaller public 
     companies, such as securities exchanges, alternative trading 
     systems, analysts, information processors, and transfer 
     agents; and
       ``(C) three non-voting members--
       ``(i) one of whom shall be appointed by the Investor 
     Advocate;
       ``(ii) one of whom shall be appointed by the North American 
     Securities Administrators Association; and
       ``(iii) one of whom shall be appointed by the Administrator 
     of the Small Business Administration.
       ``(2) Term.--Each member of the Committee appointed under 
     subparagraph (B), (C)(ii), or (C)(iii) of paragraph (1) shall 
     serve for a term of 4 years.
       ``(3) Members not commission employees.--Members appointed 
     under subparagraph (B), (C)(ii), or (C)(iii) of paragraph (1) 
     shall not be treated as employees or agents of the Commission 
     solely because of membership on the Committee.
       ``(c) Chairman; Vice Chairman; Secretary; Assistant 
     Secretary.--
       ``(1) In general.--The members of the Committee shall 
     elect, from among the members of the Committee--
       ``(A) a chairman;
       ``(B) a vice chairman;
       ``(C) a secretary; and
       ``(D) an assistant secretary.
       ``(2) Term.--Each member elected under paragraph (1) shall 
     serve for a term of 3 years in the capacity for which the 
     member was elected under paragraph (1).
       ``(d) Meetings.--
       ``(1) Frequency of meetings.--The Committee shall meet--
       ``(A) not less frequently than four times annually, at the 
     call of the chairman of the Committee; and
       ``(B) from time to time, at the call of the Commission.
       ``(2) Notice.--The chairman of the Committee shall give the 
     members of the Committee written notice of each meeting, not 
     later than 2 weeks before the date of the meeting.
       ``(e) Compensation and Travel Expenses.--Each member of the 
     Committee who is not a full-time employee of the United 
     States shall--
       ``(1) be entitled to receive compensation at a rate not to 
     exceed the daily equivalent of the annual rate of basic pay 
     in effect for a position at level V of the Executive Schedule 
     under section 5316 of title 5, United States Code, for each 
     day during which the member is engaged in the actual 
     performance of the duties of the Committee; and
       ``(2) while away from the home or regular place of business 
     of the member in the performance of services for the 
     Committee, be allowed travel expenses, including per diem in 
     lieu of subsistence, in the same manner as persons employed 
     intermittently in the Government service are allowed expenses 
     under section 5703 of title 5, United States Code.
       ``(f) Staff.--The Commission shall make available to the 
     Committee such staff as the chairman of the Committee 
     determines are necessary to carry out this section.
       ``(g) Review by Commission.--The Commission shall--
       ``(1) review the findings and recommendations of the 
     Committee; and
       ``(2) each time the Committee submits a finding or 
     recommendation to the Commission, promptly issue a public 
     statement--
       ``(A) assessing the finding or recommendation of the 
     Committee; and
       ``(B) disclosing the action, if any, the Commission intends 
     to take with respect to the finding or recommendation.
       ``(h) Federal Advisory Committee Act.--The Federal Advisory 
     Committee Act (5 U.S.C. App.) shall not apply with respect to 
     the Committee and its activities.''.
       (c) Annual Government-Business Forum on Small Business 
     Capital Formation.--Section 503(a) of the Small Business 
     Investment Incentive Act of 1980 (15 U.S.C. 80c-1(a)) is 
     amended by inserting ``(acting through the Office of the 
     Advocate for Small Business Capital Formation and in 
     consultation with the Small Business Capital Formation 
     Advisory Committee)'' after ``Securities and Exchange 
     Commission''.

               TITLE III--SUPPORTING AMERICA'S INNOVATORS

     SEC. 301. INVESTOR LIMITATION FOR 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) by inserting after ``one hundred persons'' the 
     following: ``(or, with respect to a qualifying venture 
     capital fund, 250 persons)''; and
       (2) by adding at the end the following:
       ``(C) The term `qualifying venture capital fund' means any 
     venture capital fund (as defined pursuant to section 
     203(l)(1) of the Investment Advisers Act of 1940 (15 U.S.C. 
     80b-3(l)(1)) with no more than $10,000,000 in invested 
     capital, as such dollar amount is annually adjusted 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.''.

                       TITLE IV--FIX CROWDFUNDING

     SEC. 401. CROWDFUNDING VEHICLES.

       (a) Amendments to the Securities Act of 1933.--The 
     Securities Act of 1933 (15 U.S.C. 77a et seq.) is amended--
       (1) in section 4A(f)(3), by inserting ``by any of 
     paragraphs (1) through (14) of'' before ``section 3(c)''; and
       (2) in section 4(a)(6)(B), by inserting after ``any 
     investor'' the following: ``, other than a crowdfunding 
     vehicle (as defined in section 2(a) of the Investment Company 
     Act of 1940),''.

[[Page 15731]]

       (b) Amendments to the Investment Company Act of 1940.--The 
     Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) is 
     amended--
       (1) in section 2(a), by adding at the end the following:
       ``(55) The term `crowdfunding vehicle' means a company--
       ``(A) whose purpose (as set forth in its organizational 
     documents) is limited to acquiring, holding, and disposing 
     securities issued by a single company in one or more 
     transactions and made pursuant to section 4(a)(6) of the 
     Securities Act of 1933;
       ``(B) which issues only one class of securities;
       ``(C) which receives no compensation in connection with 
     such acquisition, holding, or disposition of securities;
       ``(D) no associated person of which receives any 
     compensation in connection with such acquisition, holding or 
     disposition of securities unless such person is acting as or 
     on behalf of an investment adviser registered under the 
     Investment Advisers Act of 1940 or registered as an 
     investment adviser in the State in which the investment 
     adviser maintains its principal office and place of business;
       ``(E) the securities of which have been issued in a 
     transaction made pursuant to section 4(a)(6) of the 
     Securities Act of 1933, where both the crowdfunding vehicle 
     and the company whose securities it holds are co-issuers;
       ``(F) which is current in its ongoing disclosure 
     obligations under Rule 202 of Regulation Crowdfunding (17 
     C.F.R. 227.202);
       ``(G) the company whose securities it holds is current in 
     its ongoing disclosure obligations under Rule 202 of 
     Regulation Crowdfunding (17 C.F.R. 227.202); and
       ``(H) is advised by an investment adviser registered under 
     the Investment Advisers Act of 1940 or registered as an 
     investment adviser in the State in which the investment 
     adviser maintains its principal office and place of 
     business.''; and
       (2) in section 3(c), by adding at the end the following:
       ``(15) Any crowdfunding vehicle.''.

     SEC. 402. CROWDFUNDING EXEMPTION FROM REGISTRATION.

       Section 12(g)(6) of the Securities Exchange Act of 1934 (15 
     U.S.C. 78l(g)(6)) is amended--
       (1) by striking ``The Commission'' and inserting the 
     following:
       ``(A) In general.--The Commission'';
       (2) by striking ``section 4(6)'' and inserting ``section 
     4(a)(6)''; and
       (3) by adding at the end the following:
       ``(B) Treatment of securities issued by certain issuers.--
     An exemption under subparagraph (A) shall be unconditional 
     for securities offered by an issuer that had a public float 
     of less than $75,000,000 as of the last business day of the 
     issuer's most recently completed semiannual period, computed 
     by multiplying the aggregate worldwide number of shares of 
     the issuer's common equity securities held by non-affiliates 
     by the price at which such securities were last sold (or the 
     average bid and asked prices of such securities) in the 
     principal market for such securities or, in the event the 
     result of such public float calculation is zero, had annual 
     revenues of less than $50,000,000 as of the issuer's most 
     recently completed fiscal year.''.

    TITLE V--FAIR INVESTMENT OPPORTUNITIES FOR PROFESSIONAL EXPERTS

     SEC. 501. DEFINITION OF ACCREDITED INVESTOR.

       Section 2(a)(15) of the Securities Act of 1933 (15 U.S.C. 
     77b(a)(15)) is amended--
       (1) by redesignating clauses (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) any natural person whose individual net worth, or 
     joint net worth with that person's spouse, 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 the sale of securities, 
     shall not be included as a liability (except that if the 
     amount of such indebtedness outstanding at the time of sale 
     of securities 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 the sale of 
     securities shall be included as a liability;
       ``(C) any natural person who had an individual income in 
     excess of $200,000 in each of the two most recent years or 
     joint income with that person's spouse 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 currently licensed or 
     registered as a broker or investment adviser by the 
     Commission, the Financial Industry Regulatory Authority, or 
     an equivalent self-regulatory organization (as defined in 
     section 3(a)(26) of the Securities Exchange Act of 1934), or 
     the securities division of a State or the equivalent State 
     division responsible for licensing or registration of 
     individuals in connection with securities activities;
       ``(E) any natural person the Commission determines, by 
     regulation, to have demonstrable education or job experience 
     to qualify such person as having professional knowledge of a 
     subject related to a particular investment, and whose 
     education or job experience is verified by the Financial 
     Industry Regulatory Authority or an equivalent self-
     regulatory organization (as defined in section 3(a)(26) of 
     the Securities Exchange Act of 1934); or''.

             TITLE VI--U.S. TERRITORIES INVESTOR PROTECTION

     SEC. 601. TERMINATION OF EXEMPTION.

       (a) In General.--Section 6(a) of the Investment Company Act 
     of 1940 (15 U.S.C. 80a-6(a)) is amended by striking paragraph 
     (1).
       (b) Effective Date and Safe Harbor.--
       (1) Effective date.--Except as provided in paragraph (2), 
     the amendment made by subsection (a) shall take effect on the 
     date of the enactment of this Act.
       (2) Safe harbor.--With respect to a company that is exempt 
     under section 6(a)(1) of the Investment Company Act of 1940 
     (15 U.S.C. 80a-6(a)(1)) on the day before the date of the 
     enactment of this Act, the amendment made by subsection (a) 
     shall take effect on the date that is 3 years after the date 
     of the enactment of this Act.
       (3) Extension of safe harbor.--The Securities and Exchange 
     Commission, by rule and regulation upon its own motion, or by 
     order upon application, may conditionally or unconditionally, 
     under section 6(c) of the Investment Company Act of 1940 (15 
     U.S.C. 80a-6(c)), further delay the effective date for a 
     company described in paragraph (2) for a maximum of 3 years 
     following the initial 3-year period if, before the end of the 
     initial 3-year period, the Commission determines that such a 
     rule, regulation, motion, or order is necessary or 
     appropriate in the public interest and for the protection of 
     investors.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New 
Jersey (Mr. Garrett) and the gentlewoman from New York (Ms. Velazquez) 
each will control 20 minutes.
  The Chair recognizes the gentleman from New Jersey.


                             General Leave

  Mr. GARRETT. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in which to revise and extend their remarks 
and include extraneous materials on this bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from New Jersey?
  There was no objection.
  Mr. GARRETT. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise today in support of H.R. 6427, the Creating 
Financial Prosperity for Businesses and Investors Act. It is a 
compilation of legislative initiatives that the Financial Services 
Committee has worked on in a very constructive and bipartisan manner 
during the 114th Congress.
  For 6 years, our committee, and, in particular, the Subcommittee on 
Capital Markets and Government Sponsored Enterprises, has sought to 
break through the bipartisan gridlock in Washington and to ensure that 
the SEC, or the Securities and Exchange Commission, fulfills an 
important part of its mission to facilitate capital formation.
  For example, the JOBS Act of 2012, much of which originated in our 
committee, has already been a measurable success, as hundreds of 
companies have used its provisions to file for an initial public 
offering, and other businesses have been able to raise well over $50 
billion worth of capital through private channels.
  Altogether, this translates to more growth, more innovation, and, 
most importantly, more jobs here for Americans who have been struggling 
in an economy that is producing only 1-2 percent growth, at best.
  We didn't stop at the JOBS Act, and both Republicans and Democrats on 
our committee came together and continued to generate good ideas that 
modernize our Nation's security laws for the benefit of the small- and 
medium-sized enterprises, which often pay a disproportionate share of 
the costs that come along with regulation.

[[Page 15732]]

  For example, during this Congress, our subcommittee has put forward 
nearly 40 bills to do just that, the vast majority of which gained, 
again, bipartisan support in both committee and here on the House 
floor. A year ago this month, a number of these measures were signed 
into law at the White House by the President.
  Today, we bring together a package of another six bills on the House 
floor with the hopes that we, once again, can improve the environment 
in which entrepreneurs and small businesses can operate.
  The provisions under H.R. 6427 include the following:
  First, a bill from Mr. Carney and Mr. Duffy that would create an 
Office of the Advocate for Small Business Capital Formation at the SEC. 
For too long, Mr. Speaker, the SEC has operated in a bureaucratic silo 
and ignored the needs of small and growing businesses and 
entrepreneurs. So we have Mr. Duffy's bill, which gives small 
businesses a permanent voice at the SEC, and it passed out of committee 
unanimously by a vote of 56-0. It also passed in the House 
overwhelmingly.
  Secondly, Mr. Speaker, is a bill from Mr. Poliquin that would require 
the SEC to respond to recommendations made at its annual government 
small business forum, ensuring that the SEC no longer simply ignores 
the ideas generated by small businesses at this event. This bill, 
again, passed our committee by a vote of 55-1 and passed the House by a 
vote of 390-1 earlier this year.
  It also includes two bills from Mr. McHenry, who is on the floor and 
will be speaking later, one which would fix some of the more unworkable 
provisions of the crowd funding title of the JOBS Act, and a second 
bill that would modernize the threshold for when venture capital funds 
would have to register with the SEC. Again, there was huge bipartisan 
support, both passing out of committee 57-2 and garnering near-
unanimous support here on the House floor.
  There are two more.
  Another title includes a bill from Dave Schweikert that would reform 
the definition of an accredited investor for certain securities 
offerings so that it is not just the wealthy or the well-connected who 
are able to invest in these companies. This bill passed the House 
earlier, again, with near-unanimous support.
  Finally, we have a bill from our Democratic colleague, Ms. Velazquez, 
that would make a technical correction to an outdated law that exempts 
investment companies from having to register in U.S. territories.
  In conclusion, Mr. Speaker, H.R. 6427 contains innovation and much-
needed legislation to help get our economy off the slow growth track 
that it has been on for too long, and it continues the good 
bipartisanship that our committee is known for.
  I want to take this moment to thank all my colleagues over the years 
for their hard work and willingness to work with us in a bipartisan 
manner to move legislation like this.

                              {time}  1700

  In particular, I thank our chairman, Jeb Hensarling, for his 
tremendous leadership of our full Financial Services Committee and for 
all the work that he has done to improve our capital markets in this 
country and to create a financial system that works for the benefit of 
all Americans.
  Mr. Speaker, I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may 
consume.
  I rise in support of H.R. 6427, a bipartisan package of commonsense 
measures that will help small businesses raise capital and better 
protect investors and retirees of the U.S. territories.
  Today's bill contains numerous bipartisan solutions to ensure the SEC 
is more responsive to small business regulatory concerns. For example, 
it creates a new Office of the Advocate for Small Business Capital 
Formation and a new Small Business Advisory Committee. Taken together, 
these efforts will ensure the agency is more responsive to 
entrepreneurs' needs.
  Furthermore, we have all heard that demand for small business capital 
outstrips supply. H.R. 6427 makes targeted changes to attract more 
investors to the small business market. By expanding definition of 
accredited investor, raising the investor cap on small venture capital 
funds, and making improvements to the equity crowdfunding rules 
implemented under the JOBS Act, this bill will help more startups and 
fast-growing businesses secure financing.
  Beyond the small business provisions, today's bill will provide 
investors and retirees in Puerto Rico and other U.S. territories the 
same protections as their mainland counterparts. For 7 decades, the 
Investment Company Act of 1940 provided U.S. investors with basic 
safeguards, regulating everything from leverage limits to 
capitalization levels, to preventing conflicts of interest.
  Due to a historical artifact, however, all funds located in and sold 
only to residents of U.S. territories are exempted from the act. The 
reason is U.S. territories were deemed to be too geographically distant 
from Washington, D.C. Obviously, the cost of air travel today is no 
longer an issue. Regulators routinely travel to Hawaii and Alaska to 
conduct oversight. In fact, SEC Chair White testified earlier this year 
that the exemption should be removed.
  To close the loophole and provide territorial residents with the 
protections they deserve, I introduced the U.S. Territories Investor 
Protection Act. Over the past year, we met with stakeholders, heard 
their concerns and further fine-tuned the bill.
  Investment companies will have an initial 3-year compliance period, 
with an option at the approval of the SEC, for an additional 3 years. 
This balances investor protections while granting more than reasonable 
time for financial institutions to comply. It is important to note that 
if investment companies need further relief, they are able to request 
such a reprieve under existing law.
  I thank Chairman Hensarling, Ranking Member Waters, and Congressman 
Garrett for working with me on this provision. Their cooperation was 
critical to developing an approach that would apply the act in a manner 
sensitive to investors and investment companies alike.
  In sum, I will argue that this is a strong bill. It will reduce 
compliance costs, facilitate access to capital for thousands of small 
businesses, and better protect investors and retirees in territories 
like Puerto Rico.
  I urge Members to support this legislation, and I reserve the balance 
of my time.
  Mr. GARRETT. Mr. Speaker, I yield such time as he may consume to the 
gentleman from North Carolina (Mr. McHenry). I appreciate all of his 
hard work for the JOBS Act and all the rest of his work as vice chair 
of the committee and the time together that we had.
  Mr. McHENRY. Mr. Speaker, I thank my colleague for his kind words and 
for his leadership on important issues in the capital markets.
  Today I rise to support the Creating Financial Prosperity for 
Businesses and Investors Act.
  Mr. Speaker, the title doesn't do the act justice. This is about 
helping families, communities, small businesses, entrepreneurs, those 
that are risk-takers in our society trying to make our society better, 
more prosperous, and helping families and communities like the one I 
represent in western North Carolina be better off. We need a growing 
economy to help families, to help small businesses, to help make us 
more prosperous as Americans.
  So this act deals with a couple of those areas in particular for 
families, small businesses, and entrepreneurs so they can gain greater 
access to lending, to loans, to capital that they need to help 
businesses grow and create jobs.
  Two of those bills, to that end, I authored earlier this year, which 
we passed with over 400 votes, as individual stand-alone items through 
the House of Representatives. Those two bills, Supporting America's 
Innovators Act, and the Fix Crowdfunding Act, in particular, amend 
existing securities

[[Page 15733]]

laws to make it easier for small businesses and entrepreneurs to use 
innovative forms of capital formation. Investment crowdfunding and 
angel investing are two of those areas, in particular, to support those 
ideas that enable us to create jobs.
  Those two bills were a part of the larger package, that are a part of 
the innovation initiative that Leader McCarthy and I launched at the 
beginning of this year. A number of bills have moved through the House 
with wide bipartisan support that update outdated laws.
  So, today, this package is an important step in the right direction; 
but our work is not done. We have to continue to work with our Federal 
regulators and Members on both sides of the aisle to ensure that we 
update and ensure investment crowdfunding, angel investing, and other 
areas of innovation can actually be better deployed across our society 
and to more people.
  I urge my colleagues to vote ``yes'' and ensure this bipartisan bill 
has wide approval here in the House today.
  Ms. VELAZQUEZ. Mr. Speaker, I continue to reserve the balance of my 
time.
  Mr. GARRETT. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Arizona (Mr. Schweikert).
  Mr. SCHWEIKERT. Mr. Speaker, I am here to speak about one of the 
ideas in this package that I have, shall we say, 5 or 6 years in; and 
the interesting thing, it was a conversation back and forth with a 
number of Democrats on the other side. It was one of those--it started 
as sort of a philosophical debate.
  Often you hear us fussing at each other here on the floor, and we 
will get into these debates of, well, the concentration of wealth in 
the country; you know, the number of folks who now hold so much wealth.
  Yet, if you take a step backwards and look at the way we have our 
laws set up in this country, we don't decide that you get to invest in 
certain types of activities because of your talent. We don't decide you 
get to invest in certain activities because you are an expert in the 
technology or the business model.
  We actually have a series of rules that, if you have $1 million, you 
and your wife have a certain income, then you are allowed to invest. 
You think about that. So if I came to you right now and said, I am 
going to judge you by the size of your bank account and not by your 
competence, that would be pretty outrageous.
  I guess for years and years, none of us had really sort of talked 
about it, thought about it in that way, that the arbitrary rules that 
the SEC and we had allowed to continue were a world where we judged 
people by their wealth and then gave them additional opportunities 
instead of handing those same opportunities to people because of their 
expertise in investing or the technology, their expertise in 
understanding the risk profile of such technology. I am hoping that is 
where we are heading.
  There was a number of compromises to make both sides feel 
comfortable, and that is actually one of the reasons we had such a 
bipartisan vote; and to that, I also thank my friend, Chairman Garrett. 
I am going to miss you because you have worked hard to shepherd many of 
these concepts through for years now.
  I think this is a great start because we are going to start judging 
our brothers and sisters by their talents and not necessarily their 
bank account size, and that is why I am so happy on this one.
  Ms. VELAZQUEZ. Mr. Speaker, I am prepared to close. I yield myself 
such time as I may consume.
  Mr. Speaker, access to capital is the lifeblood of every business. By 
expanding the pool of accredited investors and venture capital firms, 
improving the equity crowdfunding rules, and giving small business a 
bigger voice in SEC decisionmaking, H.R. 6427 provides the tools 
necessary to inject much-needed equity capital into our Main Street 
businesses.
  Finally, closing the U.S. territories loophole in the Investment 
Company Act of 1940 will harmonize regulatory oversight and give 
millions of investors and retirees, mostly in Puerto Rico, the peace of 
mind that their hard-earned money will receive the same level of 
protection afforded to those on the mainland.
  I thank the chairman, ranking member, and all of the cosponsors for 
their hard work in bringing this bipartisan package to the floor. I 
urge Members to support this bill, and I yield back the balance of my 
time.
  Mr. GARRETT. Mr. Speaker, I yield myself such time as I may consume.
  I rise again to support the legislation. It dawns on me also that, as 
I rise today, this may be the last time that I rise on the floor. So 
let me just say what an honor it has been to stand at this podium to 
bring forth legislation like this, as I have done over the last 14 
years, and to end where I began, to do so in a bipartisan manner, that 
they tell me we should be able to pass through today in a pretty 
overwhelmingly bipartisan manner as well.
  The gentleman from Arizona ended his remarks with the statement: 
Every day is a new beginning.
  So I look at that as my days ahead. This legislation is a new 
beginning for capital formation and is a new beginning for 
bipartisanship in future legislation as well.
  I thank my colleagues from the other side of the aisle that I have 
had the honor and privilege to work with on this legislation and other 
legislation as well. I thank my colleagues from my side of the aisle 
that I have had similar opportunity to do so as well. We have gone 
through challenging times, from good economic times and bad--maybe more 
bad than good--but, through it all, I think we have done so with the 
American public's interest in mind.
  Behind me also are some of our members of our committee who I also 
wish to recognize for their work as well. They have left a profound 
impact on myself during the time that I have known them, and I thank 
them humbly for their being willing to put up with me and to deal with 
me throughout the years, but be able to work together for the benefit 
of the American public as well.
  I think that, together, we have done great things. I look forward to 
watching what other great things will be done in a bipartisan manner as 
well.
  I think my time may be just about out, but let me also just say this 
as well. I want to end where I began, which was thanking the chairman 
of this committee, Mr. Jeb Hensarling, for his leadership and, most 
importantly, for his friendship in the years I have known him in this 
capacity.
  I urge every Member to support the underlying legislation, and I 
yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from New Jersey (Mr. Garrett) that the House suspend the 
rules and pass the bill, H.R. 6427.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. GARRETT. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this motion will be postponed.

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