[Congressional Record (Bound Edition), Volume 162 (2016), Part 4]
[House]
[Pages 5222-5231]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  HELPING ANGELS LEAD OUR STARTUPS ACT

  Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 701, I call 
up the bill (H.R. 4498) to clarify the definition of general 
solicitation under Federal securities law, and ask for its immediate 
consideration in the House.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore (Mr. Bost). Pursuant to House Resolution 701, 
the bill is considered read.
  The text of the bill is as follows:

                               H.R. 4498

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Helping Angels Lead Our 
     Startups Act'' or the ``HALOS Act''.

     SEC. 2. DEFINITION OF ANGEL INVESTOR GROUP.

       As used in this Act, the term ``angel investor group'' 
     means any group that--
       (1) is composed of accredited investors interested in 
     investing personal capital in early-stage companies;
       (2) 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
       (3) is neither associated nor affiliated with brokers, 
     dealers, or investment advisers.

     SEC. 3. CLARIFICATION OF GENERAL SOLICITATION.

       (a) In General.--Not later than 6 months after the date of 
     enactment of this Act, the Securities and Exchange Commission 
     shall revise Regulation D of its rules (17 C.F.R. 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, by the 
     District of Columbia, by any State, by a political 
     subdivision of any State or territory, or by any agency or 
     public instrumentality of any of the foregoing;
       (B) a college, university, or other institution of higher 
     education;
       (C) a nonprofit organization;
       (D) an angel investor group;
       (E) a venture forum, venture capital association, or trade 
     association; or
       (F) any other group, person or entity as the Securities and 
     Exchange Commission may determine by rule;
       (2) where any advertising for the event does not reference 
     any specific offering of securities by the issuer;
       (3) the sponsor of which--
       (A) does not make investment recommendations or provide 
     investment advice to event attendees;
       (B) does not engage in an active role in any investment 
     negotiations between the issuer and investors attending the 
     event;
       (C) does not charge event attendees any fees other than 
     administrative fees; and
       (D) does not receive any compensation with respect to such 
     event that would require registration of the sponsor as a 
     broker or a dealer under the Securities Exchange Act of 1934, 
     or as an investment advisor under the Investment Advisers Act 
     of 1940; and
       (4) where no specific information regarding an offering of 
     securities by the issuer is communicated or distributed by or 
     on behalf of the issuer, other than--
       (A) that the issuer is in the process of offering 
     securities or planning to offer securities;
       (B) the type and amount of securities being offered;
       (C) the amount of securities being offered that have 
     already been subscribed for; and
       (D) the intended use of proceeds of the offering.
       (b) Rule of Construction.--Subsection (a) 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.

  The SPEAKER pro tempore. The bill shall be debatable for 1 hour, 
equally divided and controlled by the chair and ranking minority member 
of the Committee on Financial Services.
  The gentleman from Texas (Mr. Hensarling) and the gentlewoman from 
California (Ms. Maxine Waters) each will control 30 minutes.
  The Chair recognizes the gentleman from Texas.


                             General Leave

  Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in which to revise and extend their remarks 
and submit extraneous materials on the bill under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in strong support today of H.R. 4498, the Helping 
Angels Lead Our Startups Act, known as the HALOS Act. This is yet 
another bipartisan bill that has been passed out of the Financial 
Services Committee that I know will help create jobs and grow our 
economy.
  We all know from listening to our constituents that jobs and the 
economy continue to be the number one issue of concern because this 
economy is still not working for working Americans. After many years, 
they still see their paychecks have stagnated. They have seen their 
savings evaporate. They are losing hope. We see entrepreneurship is at 
a generational low.
  The HALOS Act is a step in the right direction. It is one of many 
solutions that we need to enact in this body.
  I commend the bipartisan sponsor of the bill, Mr. Chabot, the 
chairman of the Small Business Committee; Mr. Hurt of Virginia and Ms. 
Sinema of Arizona, the latter two who serve with me on the Financial 
Services Committee.
  I want to thank all of my colleagues on the Financial Services 
Committee for voting overwhelmingly in favor of this bill. Almost 80 
percent of the membership of the committee voted to advance it to the 
floor.
  I am proud that our committee has a strong record of bipartisanship. 
Since the beginning of the 114th Congress, Mr. Speaker, the House has 
passed 56 of our measures--30 have been signed into law--and each one 
of these measures received bipartisan support. In an era of divided 
government, that is not a bad record.
  I believe that most Americans also believe that our economy works 
better for all Americans when small businesses can focus on creating 
jobs rather than navigating meaningless bureaucratic red tape.
  The HALOS Act provides an important fix to regulations so it will be 
easier for our small businesses to attract investments. Again, Mr. 
Speaker, so critical when entrepreneurship is at a generational low and 
our economy limps along at even less than 2 percent of economic growth.
  The HALOS Act provides a clearer path for startup businesses to 
connect with angel investors and allows investors to make their own 
informed decisions. Angel investors play an incredibly active role in 
helping small businesses open their doors and grow so they can open 
their doors even wider and hire more workers.
  We should remember--and many of our colleagues are now aware--that 
companies like Amazon, Costco, Google, Facebook, and Starbucks were all 
first funded by angel investors. Now, today, not only the services they 
provide in our economy, but approximately 600,000 employees earn their 
paychecks and provide for their families working for companies that 
were started with angel investors.
  Unfortunately, as so often happens, when Washington regulators get 
out of control, they step into the picture and we have yet more 
unintended consequences. Four years ago, Congress passed a bipartisan 
JOBS Act to make it easier for business startups to gain access to 
capital, but the Securities and Exchange Commission issued misguided 
regulations on angel investors that had exactly the opposite effect.
  By inappropriately classifying events where entrepreneurs showcased 
their business models to angel investors as general solicitations, the 
SEC regulations are causing innovative startups to lose access to 
capital, which means our economy loses jobs. This is counter to 
Congress' intent when we passed the JOBS Act, and it is certainly 
counter to what our economy needs now. Mr. Speaker, what is so ironic 
is that the practice was legal and proper before

[[Page 5223]]

the passage of the JOBS Act. It should remain legal and proper after 
the passage of the JOBS Act.
  This is a problem that Congress can easily fix by approving the HALOS 
Act. It is not a complicated bill, Mr. Speaker. It is four pages long. 
It simply ensures that funding from angel investors remains available 
to business startups.
  The bipartisan bill makes sure that events where entrepreneurs and 
angel investors get together are not classified as general 
solicitations because they are not. Instead of onerous bureaucratic red 
tape that deters investors from backing new business startups, the 
four-page HALOS Act will help new businesses gain investor support when 
they need it most.
  Mr. Speaker, as I mentioned earlier, this bill sailed through the 
House Financial Services Committee with strong bipartisan support. Out 
of 57 members voting in committee that day, only 13 opposed the bill. 
In other words, 80 percent of the committee voted in favor of the HALOS 
Act.
  The bill has strong bipartisan support because it is common sense. It 
is about jobs; it is about helping small businesses overcome misguided 
regulation; and it is about making sure that Congress makes the law--
not the regulators, who are unelected and who are unaccountable.
  Mr. Speaker, I reserve the balance of my time.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself such 
time as I may consume.
  I rise in opposition to H.R. 4498, the Helping Angels Lead Our 
Startups Act.
  This bill will make changes to investor protections under the JOBS 
Act that I believe are ill-advised and could lead to unintended 
consequences for our regulatory framework.

                              {time}  1600

  It would do so by broadening the scope of when private securities 
offerings can be solicited or advertised to the public without first 
verifying that the purchaser is financially sophisticated enough to 
understand the risk involved, what we call ``accredited investors.''
  Specifically, the bill would require the SEC to amend its safe harbor 
rules for private placements under Rule 506 of Regulation D so that the 
current verification requirements for general solicitation and 
advertising do not effectively apply to sales events that are sponsored 
by certain groups, colleges, nonprofits, trade associations, or angel 
investor groups, for example.
  The bill's intent is to expand the role of angel investors in capital 
formation. It is a laudable goal, but it is one that needs appropriate 
rules to ensure investors have the protection and legal recourse needed 
to make sound investments.
  So, while the bill would limit the amount and type of information 
that can be communicated for these events, it would still allow 
companies to condition the markets for their securities and offer them 
to any member of the public who walks in the door.
  Let me be clear. If a university wants to sponsor a so-called demo 
day with companies that want to pitch their ideas and products, they 
already can, and the entire public can attend. The companies, however, 
just can't talk about offers or sell securities in their companies.
  I am concerned that this bill, however, would cause real harm to 
retail investors. For example, a hedge fund could set up an event that 
is sponsored by a questionable college, like Corinthian, could pass out 
flyers on campus that advertise their shares, and then sell those 
shares to anyone who had attended the event, including the students who 
may know nothing about how this whole operation works. They would not 
have to take reasonable steps to verify that these purchasers are 
accredited investors.
  Furthermore, events sponsored by government entities, nonprofits, and 
universities are likely to attract the very people we are trying to 
protect, investors who are not accredited and do not have enough 
financial sophistication or wherewithal to understand the investments 
or bear their high risk of loss.
  We created the Rule 506 exemption under the JOBS Act to expand the 
market for private offerings. Private companies can now advertise and 
solicit offerings to the general public, which helps them to raise the 
capital they need to grow their businesses.
  In exchange for the expanded framework and lower levels of investor 
protection, we passed a simple amendment that I offered to require 
companies to just take reasonable steps to verify that the purchaser of 
the security is an accredited investor.
  The intent was simple. If a company is going to advertise riskier 
private offerings, it must ensure that the buyer has the necessary 
income and assets to qualify for such a purchase rather than rely on 
so-called self-certification. The bill would effectively reverse this 
sensible amendment during these sales events.
  At best, the bill is also unnecessary. The SEC has already provided 
relief to angel investor groups if they curate the people who attend 
these sales events. They have to either make sure they have a 
preexisting relationship with the investor or verify their income and 
assets at the time of purchase, which is consistent with our regulatory 
framework.
  I have offered an amendment, which will be debated later today, that 
would codify the SEC's relief and prevent harm to everyday investors. 
It would also limit the exemptions to operating companies so that shell 
companies and investment vehicles, like hedge funds, can't solicit 
potentially risky offerings to unknowing investors.
  These revisions to the bill would strike an appropriate balance 
between capital formation and investor protection while still 
supporting angel investor groups. However, without my amendment, I 
cannot support this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I yield 1 minute to the gentleman from 
California (Mr. McCarthy), the distinguished Republican leader and a 
leader in the JOBS Act and in innovation.
  Mr. McCARTHY. I thank the gentleman for yielding. Before I move on, I 
thank the gentleman for his work on the Committee on Financial 
Services.
  Mr. Speaker, this is another bill that comes to the floor with a 
large bipartisan vote coming out so as to create jobs, and that is what 
this floor is all about. Today we are talking about an American economy 
that is ripe for innovation. This is what is needed to create jobs and 
opportunity.
  To my colleagues, I ask them: How many times have you traveled back 
to your districts and sat down and seen individuals who crave to be 
entrepreneurs? It could be that single mom or maybe it is that person 
who is stuck in a job or is a young kid with a great idea.
  But as they roll out their ideas, they find they are not going to get 
stopped except by, maybe, a government regulation. Think of the jobs 
they could create and the places in which we can grow.
  Because of the technological revolution of our country's experience, 
the startups we have come to know are now some of the largest companies 
in our economy. Our goal shouldn't be to stop the next great American 
company from coming into existence. We should actually enable it.
  We should tear down the government-made barriers to their potential 
and embrace the positive disruption that will keep America as the world 
leader in innovation. That is the goal of the Innovation Initiative, 
and that is what we are doing here today.
  We will pass today the Helping Angels Lead Our Startups Act, which 
enables ready investors to invest in startups. Startups are in a world 
of high risk and high reward.
  They can't just go to a bank for a loan. They need angel investors 
who are willing to take that risk for the next company that will change 
the world, and Washington should not stand in the way of making that 
happen.
  Several years ago Congress passed and the President did sign the JOBS 
Act. Our goal was to help increase access to capital. Unfortunately, 
some of the provisions in our bill were misinterpreted by the SEC 
against the

[[Page 5224]]

spirit of entrepreneurship, thus keeping the barriers to capital in 
place.
  Today's bill gives new companies an opportunity to identify and to 
interact with potential investors, thus opening the door for the next 
great idea to get the funding it needs to get up and running.
  I give a special thanks to Chairman Chabot for identifying this 
inefficiency and acting to solve it.
  I started my first business when I was 19 years old. There are three 
lessons you learn: you are the first one to work; you are the last one 
to leave; and you are the last one to be paid. The last thing you need 
is for government to stop you from achieving your dream.
  It is very simple, when I talk to my colleagues here, in that there 
are one or two ways to go on this bill. If you sit back and you look at 
Facebook, Amazon, or Starbucks, they are amazing success stories in 
America and are where millions of people work.
  The idea would be, if you believe America needs to continue the 
opportunity for our entrepreneurs and for more companies such as those, 
it starts with angel investing. So you would vote ``yes.''
  If you believe America doesn't need innovation, that America thinks 
that the new Facebook shouldn't be there, that we should put up new 
barriers to stop a dream, to stop the growth, you would probably vote 
``no.''
  That is why later today, when this bill gets through, it will be a 
big bipartisan vote: because we believe in America.
  Ms. MAXINE WATERS of California. Mr. Speaker, I yield 3 minutes to 
the gentlewoman from Arizona (Ms. Sinema).
  Ms. SINEMA. Mr. Speaker, I thank Ranking Member Maxine Waters for 
granting me time.
  I thank Mr. Chabot and Mr. Hurt and others for working with me on 
this bipartisan bill to help entrepreneurs and startup companies create 
jobs and grow our economy.
  Mr. Speaker, American startup businesses are growing both in number 
and diversity. Entrepreneurs are finding new and better ways to bring 
together talent, innovation, and investment capital in an increasingly 
competitive small-business environment.
  The HALOS Act clarifies SEC regulations to ensure small businesses 
may participate in educational demo days without the burden of having 
to verify that attendees are accredited investors. These events provide 
invaluable opportunities for entrepreneurs to meet and exchange ideas 
with students, professors, business professionals, and potential future 
investors.
  The HALOS Act creates a clear path for startups to participate in 
demo days that are sponsored by a government entity, a nonprofit 
organization, an angel investor group, a venture association, or other 
entity that is permitted by the SEC.
  Specifically, this act clarifies the definition of ``general 
solicitation'' to exempt communications and presentations at these 
events where advertising does not make specific investment offerings 
and where no specific securities offering information is communicated 
at the event.
  This permits startups to connect with business experts, potential 
future investors, and other entrepreneurs while maintaining existing 
accredited investor verification requirements and exceptions already 
under Regulation D for the actual purchase or sale of securities. It 
does not in any way permit the sale of securities to unaccredited 
investors at demo days.
  Companies such as Amazon, Costco, Facebook, Google, and Starbucks 
were all initially funded by angel investors. As we work to make 
America more competitive in the new global economy, we need to 
encourage the growth of innovative startups and job-creating small 
businesses.
  Again I thank my cosponsors and the chairman for working with us on 
this commonsense, bipartisan bill. I am committed to working with my 
colleagues on both sides of the aisle to ensure that Arizona startups 
have the support that they need to grow their businesses and create 
jobs.
  Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from 
Ohio (Mr. Chabot), who is the chief sponsor of the HALOS Act and is the 
chairman of our Small Business Committee.
  Mr. CHABOT. I thank Mr. Hensarling for his leadership on this. I 
thank the gentlewoman from Arizona, who just spoke, for her leadership 
on this as well.
  Mr. Speaker, as the chairman of the House Small Business Committee, I 
have the pleasure of hearing from America's small-business owners each 
and every day, both in my district and up here in Washington.
  The stories of success are always encouraging to hear, but all too 
often, what I am told is how the government is making it difficult for 
small businesses to grow and succeed and to, therefore, create jobs.
  Perhaps the most common concern is just how difficult it is for 
entrepreneurs who are starting out to access the needed capital to 
grow. This bill expands access to capital by ensuring small businesses 
can continue to connect with so-called angel investors.
  One popular way small businesses have connected with angel investors 
is through demo days. These are events that are sponsored by 
universities, nonprofits, local governments, accelerators, incubators, 
and other groups that allow entrepreneurs to showcase their products 
and to informally meet investors and customers.
  However, SEC regulations are threatening to force these events out of 
business by imposing unwieldy regulations that dictate who is and who 
is not allowed to simply attend.
  These regulations would force everybody who merely walks through the 
door to go through what is essentially a full financial interrogation 
in one's handing over of tax documents and bank statements, paybook 
information, and on and on and on.
  Mr. Speaker, this doesn't make any sense. We should be encouraging 
participation in demo days, not creating obstacles. After all, not only 
are these events places at which to connect investors with our 
communities' small businesses and entrepreneurs, but they also provide 
a great opportunity for students, for example, and our next generation 
of entrepreneurs to ask questions and learn what it takes to get a 
business off the ground.
  Mr. Speaker, again I thank Chairman Hensarling for his leadership in 
getting this bill through the committee, as well as to thank 
Representative Hurt, Representative Sinema, and Representative Takai 
for working in a cooperative and bipartisan manner to move this bill to 
the House floor.
  It was very bipartisan. All of the Republicans voted for it, and 
almost half of the Democrats voted for it in committee. It is always 
wonderful when we are able to work together to support small business, 
and there is no better time than now.
  Next week is National Small Business Week, when we will be 
celebrating the contributions of small businesses and entrepreneurs in 
every community all across America. Every one of us has small 
businesses in our districts. It serves as a reminder to us in this 
Chamber of how important it is to create policies that promote an 
environment for small businesses to succeed, and this bill is one more 
step in that direction.
  I urge my colleagues to support H.R. 4498. Again, I really appreciate 
the bipartisan nature of this bill and its support thus far.

                                  1615

  Ms. MAXINE WATERS of California. Mr. Speaker, I reserve the balance 
of my time.
  Mr. HENSARLING. Mr. Speaker, I yield 3 minutes to the gentleman from 
Virginia (Mr. Hurt), a sponsor of the bill.
  Mr. HURT of Virginia. Mr. Speaker, I rise in support of the HALOS 
Act. I first would like to thank the chairman of the Financial Services 
Committee, Mr. Hensarling, for his leadership on the JOBS Act and on 
this issue specifically.
  I would also like to commend the efforts of Representatives Chabot 
and Sinema. It has been an honor to be able to work with them on such 
an important issue, and it is an honor to be able

[[Page 5225]]

to work with them to craft a sensible bipartisan bill aimed at removing 
a regulatory hurdle for innovative companies and startups seeking 
early-stage equity capital investment.
  Mr. Speaker, I represent a rural district in Virginia, Virginia's 
Fifth District, that stretches from the northern Piedmont of Virginia 
to the North Carolina border. As I travel across my district, a 
recurring theme that I hear from my constituents is that they are 
concerned about jobs and the economy.
  At a time when our economy is struggling, Congress must do everything 
possible to help small businesses achieve success. These entities are 
our Nation's most dynamic job creators, and their success is essential 
to our economy.
  Earlier this year Charlottesville, Virginia, was recognized as one of 
the Nation's fastest growing markets for venture capital investment. 
Over the past 5 years, the amount of capital invested in 
Charlottesville has grown over 150 percent.
  This type of investment can have a profound impact on a community, 
making it more attractive to other startup companies and ultimately 
producing more job growth. Indeed, Senator Chris Murphy of Connecticut 
said it best when he introduced the Senate version of the HALOS Act:

       I have heard from local entrepreneurs and interested 
     backers alike that the most important thing we can do to help 
     these businesses is make it easier for angel investors to put 
     capital behind them, and that is exactly what our bipartisan 
     HALOS Act will do.

  In 2014 alone, angel investors deployed over $24 billion to over 
70,000 startups. Many of these investments go into companies in their 
own communities and States.
  Beyond capital, angel investors often provide advice and guidance to 
help these companies succeed and create jobs. It is for these reasons 
that I ask my colleagues to support this bill.
  If enacted, the HALOS Act would amend the Securities Act to define an 
angel investor group and would clarify the definition of general 
solicitation so that startup enterprises would be able to continue to 
promote their businesses at certain events called demo days where there 
is no direct investment offering.
  The HALOS Act would alleviate the burden placed on startups with 
regard to privacy and compliance concerns, which often require 
entrepreneurs and startups to take on burdens that they do not have the 
means to handle.
  These burdens have a significant impact on an entrepreneur's ability 
to interface with investors because of the risk of violating Federal 
securities laws by having their interactions with investors being 
viewed as a general solicitation.
  HALOS would lift this burden and is an important step to continuing 
the success that this committee has achieved with the bipartisan JOBS 
Act.
  The JOBS Act made it easier for startup enterprises to market their 
securities to a larger pool of investors. Unfortunately, while 
implementing the JOBS Act, the SEC has classified events held by angel 
investors as general solicitations, requiring entrepreneurs and 
startups to verify accredited investor status.
  This jeopardizes the future of events like demo days where startups 
can interact with these investors and venture capitalists.
  The HALOS Act would simply ensure that angel funding remains 
available to startups by defining the term ``angel investor group'' and 
exempting an angel investor event from being considered general 
solicitation.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. HENSARLING. Mr. Speaker, I yield the gentleman from Virginia an 
additional 30 seconds.
  Mr. HURT of Virginia. Mr. Speaker, the HALOS Act is a simple, 
bipartisan, bicameral solution that will ensure that investors and 
companies can continue this commonsense interaction.
  Ms. MAXINE WATERS of California. Mr. Speaker, I reserve the balance 
of my time.
  Mr. HENSARLING. Mr. Speaker, may I inquire if the other side has any 
further speakers before we use all our time?
  Ms. MAXINE WATERS of California. Mr. Speaker, we have no further 
speakers.
  Mr. HENSARLING. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman 
from New Jersey (Mr. Garrett), the chairman of our Capital Markets and 
Government Sponsored Enterprises Subcommittee.
  Mr. GARRETT. Mr. Speaker, I want to thank the sponsor of the 
underlying legislation for the underlying bill.
  I rise in support of H.R. 4498, the Helping Angels Lead Our Startups 
Act. I urge all of my colleagues on both sides of the aisle to support 
this very important piece of legislation.
  Mr. Speaker, it was 2 weeks ago at the Capital Markets and Government 
Sponsored Enterprises Subcommittee that we held a hearing that examined 
the positive impact the 2012 JOBS Act is having on our economy. By 
reducing burdens on startup companies and modernizing our security 
laws, the consensus was very clear.
  The JOBS Act was a big win for entrepreneurs, innovation, and, 
ultimately, economic growth and opportunity and job creation in this 
country.
  But that doesn't mean that we shouldn't be doing more besides the 
JOBS Act, and it certainly doesn't mean that the Securities and 
Exchange Commission, the SEC, has done a perfect job, by any means, 
when it comes to implementing the important provisions of the JOBS Act.
  At times, the SEC has taken liberties, if you will, with their 
rulemaking that run contrary to the wishes and purposes of Congress, 
which ultimately could limit the impact this great, new revolutionary 
legislation has for our economy.
  One example of this was the way in which the SEC implemented title II 
of the JOBS Act, which made it easier for companies to use general 
solicitation in order to attract investors for private offering of 
stocks.
  You see, what happened here was, in their final rule, the SEC 
classified events such as demo days held by angel investors as being 
general solicitation. This means that angel groups would have to then 
comply with all the rules and regulations that are designed for issuers 
who are actually engaged in the offering of securities, which this is 
not.
  So events such as demo days are an important economic development 
tool, if you will, used by small startup companies to help educate 
people, educate a pool of potential investors. They are not security 
offerings, and they should really, really not be treated as such.
  Why is this important? Well, in 2014, angel investors put some $24 
billion to work in over 73,000 startups. So, clearly, this is a 
preferred source of capital throughout the economy.
  Any kind of regulation that would hamper the ability of angel 
investors to communicate with startup companies would jeopardize the 
ability of angel investors to fund the next Apple or Google or startup.
  So here we are with H.R. 4498. It would simply make a small technical 
fix to the JOBS Act and would allow such events to continue without 
that heavy hand of government getting in the way. So I want to thank 
the sponsors.
  I urge bipartisan support of this underlying bill.
  Ms. MAXINE WATERS of California. Mr. Speaker, I continue to reserve 
the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentleman from 
Michigan (Mr. Huizenga), chairman of Monetary Policy and Trade 
Subcommittee.
  Mr. HUIZENGA of Michigan. Mr. Speaker, as a small-business owner and 
coming from a family of very entrepreneurial people, I know the 
importance of fostering an environment that promotes economic 
opportunity and especially allows small businesses to grow and create 
jobs.
  West Michigan, which I represent, is a hub of entrepreneurial 
activity. Organizations like the Grand Rapids Inventors Network and a 
very innovative place called Start Garden are the center of that.
  Start Garden does two demo days a year with very sophisticated 
investors. In fact, over the last 3 years of Start Garden's existence, 
they have helped

[[Page 5226]]

and launched 200 various companies and have given them that investment.
  One of those is Boxed Water is Better. Just this past week, my office 
received its first shipment from Holland, Michigan, of Boxed Water is 
Better.
  Founded in 2009, the team at Boxed Water combined west Michigan 
ingenuity with capital from investors through Start Garden, who now 
employ 60 people and have facilities in both Michigan and Utah. They 
sell their product in over 8,000 stores nationwide and are now starting 
to sell around the globe.
  Small businesses across the globe and across the country like Boxed 
Water are looking for real solutions from Congress to help them 
innovate and thrive.
  The JOBS Act, a solution designed to jump-start capital formation for 
small businesses, entrepreneurs, and startups, was signed into law in 
2012. Instead of helping small businesses access capital through the 
JOBS Act, as Congress had intended, the Securities and Exchange 
Commission has choked off avenues of that capital formation.
  In order to participate in a demo day, the SEC requires startups to 
register a securities offering and verify the sophistication level of 
potential funders, something most of them do not have the physical or 
financial means to do, according to Start Garden.
  I thank the gentleman from Ohio for introducing the HALOS Act, an 
important bill that connects fledgling companies to angel investors who 
may provide them with the capital that they need to turn their startup 
into a growing, thriving business.
  By exempting demo days featuring many small businesses like Boxed 
Water and others, these participants are not considered as general 
solicitors under the Securities Act.
  We need more entrepreneurs to expand, hire, and invest, and the HALOS 
Act is an innovative way of doing that.
  Ms. MAXINE WATERS of California. Mr. Speaker, I reserve the balance 
of my time.
  Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentlewoman 
from Missouri (Mrs. Wagner).
  Mrs. WAGNER. Mr. Speaker, I thank Representative Chabot of Ohio for 
introducing this bipartisan piece of legislation as well as my 
colleagues on the Financial Services Committee, Congressman Hurt of 
Virginia and Congresswoman Sinema of Arizona, for sponsoring the 
legislation.
  H.R. 4498, the Helping Angels Lead Our Startups Act, provides an 
important fix to our securities regulations that removes friction 
between entrepreneurs and the potential investors that are looking to 
support startup companies.
  When we think about angel investing or venture capital, we naturally 
think of the Silicon Valley tech scene or the financial powerhouse of 
New York City.
  However, more and more startups all across the country are using 
important changes under the JOBS Act in order to raise financing no 
matter where they are located. In fact, as reported in the St. Louis 
Business Journal, St. Louis has the Nation's fastest growing startup 
scene.
  As more and more investors are drawn to the St. Louis area, these 
early-stage investments are critical for helping keep these companies 
in Missouri and creating more local Missouri jobs.
  Yet, while St. Louis' startups have experienced tremendous growth 
recently, small businesses and startups everywhere are still having 
difficulty in obtaining financing and investment in today's economy at 
a crucial stage when they are trying to grow and expand.
  The HALOS Act will make a small change that makes it easier for small 
businesses to find those vital investments. It would exempt demo days 
from general solicitation requirements that would put a burden on 
entrepreneurs and that would make it more difficult for investors to 
provide financing.
  For those companies that are not yet ready to go public, it is 
important that they are given the opportunity to pitch their business 
ideas to those who are interested in learning more.
  I urge passage of this bipartisan piece of legislation.
  Ms. MAXINE WATERS of California. Mr. Speaker, I continue to reserve 
the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentleman from 
Illinois (Mr. Hultgren).
  Mr. HULTGREN. Mr. Speaker, today I am proud to be able to speak in 
support of the Helping Angels Lead Our Startups, or HALOS, Act.
  I would also like to thank Chairman Chabot, Congressman Hurt, and 
Congresswoman Sinema for putting forward this important bipartisan 
legislation.
  I am fortunate to hear regularly from innovators across Illinois and 
through my work on the House Science, Space, and Technology Committee.
  Chicago is recognized nationally as a hub for angel investors. The 
Illinois Venture Capital Association was one of the first associations 
to represent private equity and venture capital groups.
  The State of Illinois also offers an angel investment credit program 
to attract and encourage investment into early-stage innovative 
companies throughout my State.
  These innovators oftentimes have a simple idea that can be life 
changing, but financing these ideas so that they can become a reality 
is harder than you might think.
  Angel investors play a key role in the earliest stages of these 
startups. They provide the initial round of funding to help get these 
life-changing ideas off the ground. Startups are the job creators that 
drive our economy, make life-changing medical breakthroughs, and 
harness technology to accomplish the impossible.
  These startup companies frequently participate in demo days, as has 
been talked about, to increase the visibility of their company, explain 
their ideas and hope to informally attract investors. These demo days 
are sponsored by a variety of organizations interested in promoting 
innovation and job creation.
  For example, the University of Illinois Research Park told me that 
this bill would address some of the unintended consequences of the JOBS 
Act and crowdfunding, which could make things like Cozad New Venture 
Competition, Urbana-Champaign Angel Network angel presentations, the 
Share the Vision Technology Showcase, pitch practice at 
EnterpriseWorks, and other public forums for startups in Illinois 
problematic.
  They want to encourage showcasing our startups without fear that 
these programs would be constituting a formal fundraising solicitation 
that would require reporting to the SEC.
  This bill simply clarifies SEC regulations to ensure small businesses 
may participate in educational demo days without having to verify that 
attendees are accredited investors. This is a burdensome process meant 
only for security solicitation, not just informal conversations.
  I encourage all my colleagues to support this important bill.

                              {time}  1630

  Ms. MAXINE WATERS of California. Mr. Speaker, I continue to reserve 
the balance of my time.
  Mr. HENSARLING. Mr. Speaker, may I inquire how much time I have 
remaining?
  The SPEAKER pro tempore. The gentleman from Texas has 8\1/2\ minutes 
remaining.
  Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentleman from 
Arizona (Mr. Schweikert).
  Mr. SCHWEIKERT. Mr. Speaker, there is a crisis right now in our 
country, and the fact of the matter is, we have more business concerns 
closing, going out of business, than being started. If you are 
concerned about economic growth, if you are concerned about growing 
payrolls, people being able to survive financially, you should be 
fixated on the fact that we have more businesses closing than opening.
  Being someone who was here and spent a year of his life working on 
the JOBS Act, the individual bills, who was almost giddy that we had a 
bipartisan piece of success that so many of us were incredibly 
optimistic that was going to create some economic growth,

[[Page 5227]]

and to be here today 4 years later dealing with something, I am sorry, 
that is almost absurd in the discussion: that the SEC has made it more 
restrictive today than it was before the JOBS Act.
  Think about this: your university, your community college, your group 
brings together a number of little businesses that are trying to raise 
capital, and now under the interpretation that is coming at us, you are 
going to have to have security at the door to interview people, look at 
their financials. I mean, this is crazy.
  Is the caterer going to have to get certified? How about the security 
person at the door, are they going to have to get secure?
  Think about what this means and the absurdity that little businesses 
that were trying to capitalize can't even tell their story without 
making sure that the people in the room hearing it have met some sort 
of definition that the SEC has imposed after we all thought we did a 
piece of legislation that opened up this type of communication.
  Ms. MAXINE WATERS of California. Mr. Speaker, I continue to reserve 
the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentleman from 
Pennsylvania (Mr. Costello).
  Mr. COSTELLO of Pennsylvania. Mr. Speaker, I rise today in support of 
H.R. 4498, the Helping Angels Lead Our Startups Act.
  I cosponsored this bipartisan legislation because it will assist 
entrepreneurs in accessing angel investors, who provide critical 
financing for startup businesses and local entrepreneurs.
  From construction companies to medical technology producers and 
manufacturing and perhaps even the next iPhone app, there are 
Pennsylvanians in my district who are full of forward-thinking ideas 
who need access to capital.
  By revising an unintended bureaucratic regulation that places an 
encumbrance on startup businesses, this legislation will further enable 
entrepreneurs access to the capital they need to create jobs and be 
successful.
  Let me just say that again, Mr. Speaker. Here we have an example of a 
Washington, D.C., bureaucratic rulemaking interpretation getting in the 
way of enabling entrepreneurs with good ideas from getting access to 
capital and subsequently creating jobs in local communities. There is a 
simple solution to fix that.
  That is why I am supporting this legislation. I am proud of 
Pennsylvania's longstanding history as a leader in innovation, and I 
want to do everything I can to remove barriers and support our local 
job creators. I encourage all my colleagues to support this bipartisan 
legislation.
  Ms. MAXINE WATERS of California. Mr. Speaker, I reserve the balance 
of my time.
  Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentleman from 
Colorado (Mr. Polis), a member of the Committee on Rules.
  Mr. POLIS. Mr. Speaker, I thank the gentleman for yielding me the 
time.
  The United States leads the global economy on innovation. There are a 
lot of pieces of the innovation agenda, some that Republicans and 
Democrats disagree on, some that they agree on. I am pleased to be here 
today on a small but important piece that can help move the innovation 
agenda forward, help America retain and grow its competitive advantage.
  Let me set the scene. This could be a ballroom at a university, it 
could be a theater that is rented out for the night. There might be 5 
or 10 teams of entrepreneurs who worked hard on their business plans. 
Perhaps they were part of some business plan competition to refine what 
they call their pitch deck. The audience fills out.
  Who is in the audience?
  It wouldn't be a worthwhile event if there weren't potential 
investors there. So, of course, the bulk of the audience--it could be 
half, it could be three-quarters, it could be most of it--will be 
accredited investors. They are the only people who can invest in these 
companies.
  Who else should be in the room? Who do we want to make sure that we 
don't seal off the opportunity to learn and gain from that experience?
  Well, it could be university faculty, graduate students, professors. 
They don't happen to be worth $2 million, but they might have technical 
expertise. They might be able to be consultants. They might be 
professionals, lawyers and bankers, who might be able to assist the 
companies develop, patent their ideas, and raise money. It might be 
students and future entrepreneurs who want to learn about the pitch 
process so they, too, can refine their ideas and be on the stage the 
next time around.
  That is what this bill allows, for us to make sure that the great 
opportunity that this country offers reaches people from all economic 
backgrounds. We can't lock everybody except for the millionaires and 
billionaires out of the room that helps form the seed capital for 
tomorrow's great company.
  HALOS does not change the existing law about who can and can't buy 
private securities. What it does do is allow folks who are not 
accredited investors, who are not there as a potential investor to be 
in the room, to learn from the experience, to perhaps get a job if they 
are an aspiring programmer, to have to team up with one of the 
companies that presented as a cofounder to complement some of the 
competencies that the other founder has, to make sure that they, too, 
are in that great room of opportunity.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. HENSARLING. Mr. Speaker, I yield the gentleman an additional 30 
seconds.
  Mr. POLIS. I thank the gentleman.
  Mr. Speaker, I believe our startup communities will be strengthened. 
Startup ecosystems like the ones that I am proud to say exist in towns 
like Fort Collins and Boulder in my district can be made more diverse 
through this law and will inevitably make sure that those in the room 
can expand opportunity beyond people who are already millionaires and 
billionaires.
  Mr. Speaker, I urge my colleagues to vote ``yes.''
  Ms. MAXINE WATERS of California. I yield myself such time as I may 
consume.
  Mr. Speaker and Members, we have heard a lot of conversation from the 
opposite side of the aisle about what the SEC has done or has not done. 
As a matter of fact, it was represented that the SEC had misinterpreted 
the bill. That is not true.
  We absolutely need rules of the road. We need to make sure that we 
are protecting investors. We need to make sure that we are not allowing 
folks to be put at great risk who don't understand or know what is 
happening in these rooms. I am concerned about these demo days on 
campuses where students may be encouraged in these presentations to 
invest their parents' money or get their parents involved in schemes 
that they may not be aware of.
  Why is this so important to us?
  It is important to us because we have arrived at a time in the 
Congress of the United States where we recognize the need for consumer 
protection. Prior to the recession that we had that was created in 2008 
because of the subprime meltdown and the faulty products that were 
placed out in the marketplace by banks and financial institutions, 
consumers were really ignored and not protected.
  We have payday loans that target our communities that charge 400 to 
500 percent interest and take advantage of some of the most vulnerable 
people in our society. We have all of these fraudulent mortgages that 
almost brought this country down, that created a recession--almost a 
depression--and we are still finding out about some of the exotic 
products that they put out on the market that tricked people into 
signing on the dotted line who eventually lost their homes.
  We have the fiduciary duty that we have been debating in Congress.
  Do you know why we are debating that?
  We are debating that because we have investment advisers who were in 
conflict with the people they were supposed to be protecting and 
supposed to be advising, and they literally were advising seniors, who 
had savings for their retirement, to invest in plans

[[Page 5228]]

that they would ultimately lose all of their money in.
  So in addition to payday loans and fraudulent mortgages and conflict 
of interest and fiduciary, we have had mandatory arbitration and on and 
on and on. We have arrived at a time when Democrats are implementing 
Dodd-Frank. We are making sure that we have the Consumer Financial 
Protection Bureau that is doing the work that had not been done all of 
these years.
  Yes, we are concerned about this. We supported the JOBS Act. We 
supported it with an amendment that I put in there that said that you 
must take reasonable opportunities to ensure that you know who these 
investors are. We are talking about accredited investors, folks who 
have resources, folks who know how this game is operated, folks who can 
protect themselves. They have lawyers, they have consultants, all of 
that.
  What we don't want is--we don't want these students and we don't want 
people who walk in off the street who may be presented with an 
opportunity that is not a real opportunity.
  For example, what if we had something like Corinthian that is a 
private, postsecondary school that we had to close down, or DeVry 
University, or the University of Phoenix, or the Trump University?
  Any of these could present themselves as credible businesses to be 
invested in, only to find out later that the students have been misled, 
they have not gotten jobs, they don't have anything. They have not made 
any money. We are saying this is another effort to simply protect those 
who oftentimes are the targets of the rip-offs and the fraud.
  I would ask my colleagues to support the amendment that I am going to 
put to the bill to make sure that they know who is in the room. I would 
ask them to support this simple amendment that was made in order in the 
Committee on Rules to make sure that we are protecting those investors 
and keeping them from getting ripped off.
  Now, some of my friends on the opposite side of the aisle would have 
you believe that we are not interested in capital formation, that we 
are not interested in entrepreneurship, that we are not interested in 
joint ventures. That is absolutely not true. As a matter of fact, folks 
on this side of the aisle are fighting to make the financial 
institutions responsible and the banks to make loans where they should 
be making loans. We have to have a CRA to make sure that they are doing 
what they should be doing with the depositors' money and on and on and 
on. We fight for small businesses every day.
  We joined up with our colleagues on the opposite side of the aisle to 
support the JOBS Act even though we had some concerns, and the SEC 
tried to make sure that we had the kind of legislation that would 
protect these investors.
  Now they are saying: We don't like what the SEC is doing. They are 
misinterpreting it. They are messing this all up.
  Well, that is not true. Now, we know they don't like the SEC. As a 
matter of fact, they do everything that they can to limit their funding 
so that they cannot be effective. But these are our cops on the block. 
The SEC is our cop on the block to try and make sure that we limit the 
rip-off and the fraud and the undermining of average citizens in our 
society. We support the JOBS Act. We believe that we should not have 
these operations on the campuses without knowing who is in the room and 
allowing investors to be put at risk.
  Mr. Speaker and Members, I would ask for a ``no'' vote on the bill. I 
am going to ask for an ``aye'' vote on the amendment that is going to 
come up. If my colleagues on the opposite side of the aisle accept this 
very, very reasonable amendment, then I will vote to support the bill. 
But if they don't show any concern or compassion for the interests of 
investors, then I cannot support the bill, and I will ask my caucus not 
to support the bill. It is as simple as that.

                              {time}  1645

  When are we going to stop the fraudulent operations in this country 
that rip off working people every day, rip off students, and don't care 
about our investors who are interested in capital formation and 
investing in real enterprises that can help to grow their business and 
make some money themselves? When are we going to recognize we can do 
both?
  We don't have to just be on the side of those who would take 
advantage of people. We must be on the side of both--our investors who 
are willing to put up money and our businesses who need capital 
formation--but somehow we always end up letting the most vulnerable 
people in our society be the target of fraud by those who take 
advantage of them.
  Mr. Speaker, I yield back the balance of my time.
  Mr. HENSARLING. Mr. Speaker, how much time do I have remaining?
  The SPEAKER pro tempore. The gentleman from Texas has 2\1/2\ minutes 
remaining.
  Mr. HENSARLING. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, again, I am very, very happy that yet another bipartisan 
bill has come out of the Financial Services Committee to try to get 
this economy working for working people. I took note that there were 
more Democrats coming to the floor in favor of the bill than against 
the bill, and that almost 80 percent of the members of the Financial 
Services Committee reported this bill favorably.
  Now, the ranking member spoke passionately about trying to help the 
most vulnerable. She cares about investor protection. But, Mr. Speaker, 
the only people who can buy these securities in a private offering are 
millionaires. So the question is: Who do you care more about, the 
millionaire investors or the working poor who need better jobs?
  You can't have capitalism without capital, and yet the ranking member 
would put one more burden in front of small businesses and 
entrepreneurs trying to create businesses so that people can have 
better jobs and a better future for themselves and their families.
  I am glad we have millionaire investors. I wish we had more of them. 
But they are already protected. You must be an accredited investor in 
order to partake, to actually buy the security. All we are debating now 
is whether you are going to have to prescreen, as the gentleman from 
Arizona said, the caterer or the security guard at the door, to be part 
of the demo day--something, Mr. Speaker, that was perfectly legal and 
had gone on for years and years and years prior to this SEC rule.
  Yet we have an agency, the Securities and Exchange Commission, 
creating law out of thin air, making it more difficult for the working 
poor to find better jobs, to make sure that people have a better career 
path, to make sure that we can find the next Facebook. They are making 
it more difficult.
  I believe this will have strong bipartisan support on the floor. We 
all need to support the HALOS Act, H.R. 4498. At the end of the day, 
who are you going to come down in favor of, the working poor or 
millionaire investors who are already protected? This side of the aisle 
will come down in favor of the working poor who need jobs in an economy 
that has been hurt by Obamanomics.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. All time for debate on the bill has expired.


       Amendment No. 1 Offered by Ms. Maxine Waters of California

  Ms. MAXINE WATERS of California. Mr. Speaker, I have an amendment at 
the desk.
  The SPEAKER pro tempore. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 5, line 5, strike ``and''.
       Page 5, after line 5, insert the following:
       (D) does not receive any compensation for making 
     introductions between investors attending the event and 
     issuers, or for investment negotiations between such parties; 
     and
       Page 5, line 6, strike ``(D)'' and insert ``(E)''.
       Page 5, line 11, strike ``and''.
       Page 5, line 23, strike the period and insert ``; and''.
       Page 5, after line 23, insert the following:
       (5) where attendance to the event is limited to members of 
     an angel investor group or to accredited investors.

[[Page 5229]]

       At the end of the bill, insert the following:
       (c) Definition of Issuer.--For purposes of this section and 
     the revision of rules required under this section, the term 
     ``issuer'' means an issuer that is in day-to-day operations 
     as a business, is not in bankruptcy or receivership, is not 
     an investment company, and is not a blank check, blind pool, 
     or shell company.

  The SPEAKER pro tempore. Pursuant to House Resolution 701, the 
gentlewoman from California (Ms. Maxine Waters), and a Member opposed 
each will control 5 minutes.
  The Chair recognizes the gentlewoman from California.
  Ms. MAXINE WATERS of California. Mr. Speaker, as I mentioned during 
the general debate on H.R. 4498, I am offering this amendment today in 
order to clarify and improve the bill. If this amendment is accepted, I 
am prepared to support this legislation.
  Indeed, I support the goal of connecting angel investor groups with 
companies seeking funding, particularly startups and emerging firms. 
Angel investor groups tend to be comprised of highly sophisticated 
individuals with significant experience investing in higher risk 
offerings. They tend to curate their groups carefully and are good 
gatekeepers for these demo day events.
  As such, my amendment seeks to support the efforts of these angel 
investor associations without creating a harmful loophole in some of 
the protections we put in place when we adopted the JOBS Act of 2012. 
This amendment includes several provisions to advance these goals.
  First, my amendment stipulates that no sponsor of a demo day can 
collect finders' fees for connecting investors to companies. This 
provision ensures that event sponsors--colleges, nonprofits, trade 
associations, or otherwise--don't have perverse incentives to drum up 
securities sales.
  Second, my amendment limits the relief offered under the bill to 
actual operating companies in the ``real economy.'' As such, it 
excludes certain entities like shell companies and investment vehicles 
like hedge funds. I think that my amendment is appropriately calibrated 
to ensure that the benefits provided under the bill go to startups like 
technology firms or manufacturing companies rather than opaque or 
speculative firms.
  Third, my amendment would codify the relief the SEC has already 
provided for angel investor groups as it relates to these demo days. 
This will provide legal certainty to these groups without opening up 
any new loopholes. Let me describe how this would work.
  If the company wants to hold a demo day and also condition the market 
for a securities sale, as H.R. 4498 would allow, they would have to 
curate the group of people that attend the event. To be clear, under 
the bill as currently drafted, companies aren't limited to holding 
science fair-style demonstrations. They can discuss actual securities 
being offered, the types and amounts of those securities, who has 
already subscribed to their offerings, and how they intend to use the 
proceeds of the offering.
  Under the SEC's relief and codified in this provision in my 
amendment, companies can hold these presentations, can talk about their 
securities, and can solicit attendance. They can even avoid the 
accredited investor verification requirement in the JOBS Act. They just 
have to call their existing networks of accredited investors and angel 
investor group members rather than blasting out an invitation to an 
entire college campus. If companies do want to blast out the invitation 
to entire campuses, they still can; they just have to abide by the 
verification provisions in the JOBS Act.
  In summary, this amendment I am offering today ensures that no 
loopholes to the JOBS Act verification requirement are opened up, that 
all manner of conflicted fees are prohibited, and that the benefits of 
the bill go to actual operating companies. And that is very important, 
actual operating companies.
  Mr. Speaker, whether it is through my work to clarify and improve the 
JOBS Act during the 112th Congress or my work with members on the 
committee this Congress to amend the definition of ``accredited 
investors'' or through my amendment today, I have long shown a 
willingness to work in good faith on issues related to capital 
formation. I would urge my colleagues to adopt my amendment so that we 
can all support a strong, bipartisan bill.
  Mr. Hensarling brags about how many Democrats supported this bill. He 
brags about the fact that, in committee and then on the floor, we all 
tried to be very cooperative in the JOBS Act. And I bent over backwards 
to ensure that we could get a JOBS Act to see what could happen with 
creating jobs, but what they have done now is to go a step further 
beyond what we agreed upon.
  Mr. Speaker, I ask for an ``aye'' vote on my amendment.
  I yield back the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I rise in opposition to the amendment.
  The SPEAKER pro tempore. The gentleman from Texas is recognized for 5 
minutes.
  Mr. HENSARLING. Mr. Speaker, the amendment from the ranking member of 
the Financial Services Committee effectively repeals the HALOS Act.
  We are having the same debate that we just had. It would effectively 
outlaw demo days as they are currently practiced. The whole idea of the 
HALOS Act is to ensure that demo days, which existed prior to this SEC 
rule, will continue and that startups can continue to have access to 
capital without the additional burden of having to screen those who 
actually come in to demo days.
  Mr. Speaker, again, a private offering. The security can only be 
purchased by an accredited investor. Those are the existing rules. So 
there is almost a mythical group that the ranking member is attempting 
to protect. At the end of the day, these are millionaire investors who 
are the angel investors, who are the accredited investors whom we need 
to help fund these startups.
  What the gentlewoman from California's amendment does, again, is guts 
the bill. It basically just simply codifies this SEC rule, and that 
absolutely overturns the congressional intent to make sure that we have 
greater access to capital.
  In addition, there is an entire new defined term of ``issuer'' in her 
amendment, notwithstanding the fact that this is already defined in 
section 3(aa) of the Securities and Exchange Act of 1934. So we have 
undefined, vague terms that are being introduced here.
  I would also remind the gentlewoman from California and all that the 
HALOS Act already prohibits a sponsor from engaging in investment 
negotiations between the issuer and investors, charging event attendees 
any fees other than administrative fees, and receiving any compensation 
that would require the sponsor to register with the SEC as a broker-
dealer or investment adviser.
  So these are ill-placed concerns that at the end of the day put up 
yet another hurdle for angel investors funding the next new Facebook, 
the next new Costco, the next new Starbucks, and putting tens of 
thousands of Americans back to work.
  It is time that we affirm the JOBS bill, not gut the JOBS bill, and I 
would urge all Members to reject the amendment of the gentlewoman from 
California.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. Pursuant to the rule, the previous question 
is ordered on the bill, and on the amendment by the gentlewoman from 
California (Ms. Maxine Waters).
  The question is on the amendment by the gentlewoman from California 
(Ms. Maxine Waters).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Ms. MAXINE WATERS of California. Mr. Speaker, on that I demand the 
yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 and clause 9 of rule 
XX, this 15-minute vote on adoption of the amendment will be followed 
by 5-minute votes on:
  A motion to recommit, if ordered;
  Passage of the bill, if ordered; and

[[Page 5230]]

  The motion to suspend the rules and pass S. 1890.
  The vote was taken by electronic device, and there were--yeas 139, 
nays 272, not voting 22, as follows:

                             [Roll No. 170]

                               YEAS--139

     Adams
     Bass
     Beatty
     Becerra
     Bishop (GA)
     Blumenauer
     Bonamici
     Boyle, Brendan F.
     Brady (PA)
     Brown (FL)
     Butterfield
     Capps
     Capuano
     Carson (IN)
     Cartwright
     Castor (FL)
     Castro (TX)
     Chu, Judy
     Cicilline
     Clark (MA)
     Clarke (NY)
     Clay
     Clyburn
     Cohen
     Courtney
     Crowley
     Cuellar
     Cummings
     Davis (CA)
     Davis, Danny
     DeFazio
     DeGette
     DeLauro
     DelBene
     DeSaulnier
     Deutch
     Dingell
     Doggett
     Doyle, Michael F.
     Duckworth
     Edwards
     Engel
     Esty
     Farr
     Frankel (FL)
     Fudge
     Gabbard
     Gallego
     Garamendi
     Graham
     Grayson
     Green, Al
     Green, Gene
     Grijalva
     Hahn
     Hastings
     Heck (WA)
     Higgins
     Hinojosa
     Honda
     Hoyer
     Huffman
     Israel
     Johnson (GA)
     Johnson, E. B.
     Keating
     Kelly (IL)
     Kennedy
     Kildee
     Kilmer
     Kind
     Kirkpatrick
     Langevin
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis
     Lieu, Ted
     Loebsack
     Lofgren
     Lowenthal
     Lowey
     Lujan Grisham (NM)
     Lujan, Ben Ray (NM)
     Maloney, Carolyn
     Matsui
     McCollum
     McDermott
     McGovern
     McNerney
     Meeks
     Meng
     Moore
     Murphy (FL)
     Nadler
     Napolitano
     Neal
     Nolan
     Norcross
     O'Rourke
     Pallone
     Payne
     Pelosi
     Perlmutter
     Pingree
     Pocan
     Price (NC)
     Quigley
     Rangel
     Roybal-Allard
     Ruppersberger
     Rush
     Ryan (OH)
     Sanchez, Linda T.
     Sanchez, Loretta
     Sarbanes
     Schakowsky
     Schiff
     Scott (VA)
     Scott, David
     Serrano
     Sherman
     Sires
     Slaughter
     Smith (WA)
     Speier
     Takano
     Thompson (MS)
     Tonko
     Tsongas
     Vargas
     Veasey
     Velazquez
     Visclosky
     Waters, Maxine
     Watson Coleman
     Welch
     Wilson (FL)

                               NAYS--272

     Abraham
     Aderholt
     Aguilar
     Allen
     Amash
     Ashford
     Babin
     Barletta
     Barr
     Barton
     Benishek
     Bera
     Beyer
     Bilirakis
     Bishop (MI)
     Bishop (UT)
     Black
     Blackburn
     Blum
     Bost
     Boustany
     Brady (TX)
     Brat
     Bridenstine
     Brooks (AL)
     Brooks (IN)
     Brownley (CA)
     Buchanan
     Buck
     Bucshon
     Burgess
     Bustos
     Byrne
     Calvert
     Cardenas
     Carney
     Carter (GA)
     Carter (TX)
     Chabot
     Chaffetz
     Clawson (FL)
     Cleaver
     Coffman
     Cole
     Collins (GA)
     Collins (NY)
     Comstock
     Conaway
     Connolly
     Cook
     Cooper
     Costa
     Costello (PA)
     Cramer
     Crawford
     Crenshaw
     Culberson
     Curbelo (FL)
     Davis, Rodney
     Delaney
     Denham
     Dent
     DeSantis
     DesJarlais
     Diaz-Balart
     Dold
     Donovan
     Duffy
     Duncan (SC)
     Duncan (TN)
     Ellison
     Ellmers (NC)
     Emmer (MN)
     Eshoo
     Farenthold
     Fincher
     Fitzpatrick
     Fleischmann
     Fleming
     Flores
     Forbes
     Fortenberry
     Foster
     Foxx
     Franks (AZ)
     Frelinghuysen
     Garrett
     Gibbs
     Gibson
     Goodlatte
     Gosar
     Gowdy
     Granger
     Graves (GA)
     Graves (LA)
     Graves (MO)
     Griffith
     Grothman
     Guinta
     Guthrie
     Hardy
     Harper
     Harris
     Hartzler
     Heck (NV)
     Hensarling
     Herrera Beutler
     Hice, Jody B.
     Hill
     Himes
     Holding
     Hudson
     Huelskamp
     Huizenga (MI)
     Hultgren
     Hunter
     Hurd (TX)
     Hurt (VA)
     Jenkins (KS)
     Jenkins (WV)
     Johnson (OH)
     Johnson, Sam
     Jolly
     Jones
     Jordan
     Joyce
     Katko
     Kelly (MS)
     Kelly (PA)
     King (IA)
     King (NY)
     Kinzinger (IL)
     Kline
     Knight
     Kuster
     Labrador
     LaHood
     LaMalfa
     Lamborn
     Lance
     Latta
     Lipinski
     LoBiondo
     Long
     Loudermilk
     Love
     Lucas
     Luetkemeyer
     Lummis
     Maloney, Sean
     Marchant
     Marino
     Massie
     McCarthy
     McClintock
     McHenry
     McKinley
     McMorris Rodgers
     McSally
     Meadows
     Meehan
     Messer
     Mica
     Miller (FL)
     Miller (MI)
     Moolenaar
     Mooney (WV)
     Moulton
     Mullin
     Mulvaney
     Murphy (PA)
     Neugebauer
     Newhouse
     Noem
     Nugent
     Nunes
     Olson
     Palazzo
     Palmer
     Paulsen
     Pearce
     Perry
     Peters
     Peterson
     Pitts
     Poe (TX)
     Poliquin
     Polis
     Pompeo
     Posey
     Price, Tom
     Ratcliffe
     Reed
     Reichert
     Renacci
     Ribble
     Rice (NY)
     Rice (SC)
     Rigell
     Roby
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rohrabacher
     Rokita
     Rooney (FL)
     Ros-Lehtinen
     Roskam
     Ross
     Rothfus
     Rouzer
     Royce
     Ruiz
     Russell
     Salmon
     Sanford
     Scalise
     Schrader
     Schweikert
     Scott, Austin
     Sensenbrenner
     Sessions
     Shimkus
     Shuster
     Simpson
     Sinema
     Smith (MO)
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Stefanik
     Stewart
     Stivers
     Stutzman
     Swalwell (CA)
     Takai
     Thompson (CA)
     Thompson (PA)
     Thornberry
     Tiberi
     Tipton
     Titus
     Trott
     Turner
     Upton
     Valadao
     Vela
     Wagner
     Walberg
     Walden
     Walker
     Walorski
     Walters, Mimi
     Walz
     Weber (TX)
     Webster (FL)
     Wenstrup
     Westerman
     Whitfield
     Williams
     Wilson (SC)
     Wittman
     Womack
     Woodall
     Yarmuth
     Yoder
     Yoho
     Young (AK)
     Young (IA)
     Young (IN)
     Zeldin
     Zinke

                             NOT VOTING--22

     Amodei
     Conyers
     Fattah
     Gohmert
     Gutierrez
     Hanna
     Issa
     Jackson Lee
     Jeffries
     Kaptur
     Lawrence
     Lynch
     MacArthur
     McCaul
     Pascrell
     Pittenger
     Richmond
     Sewell (AL)
     Torres
     Van Hollen
     Wasserman Schultz
     Westmoreland

                              {time}  1719

  Messrs. FARENTHOLD, GROTHMAN, RUSSELL, POE of Texas, Ms. HERRERA 
BEUTLER, Mr. HULTGREN, Ms. ESHOO, Messrs. CULBERSON, ROKITA, CALVERT, 
WITTMAN, and SHUSTER changed their vote from ``yea'' to ``nay.''
  Messrs. CARSON of Indiana, KILMER, and SCHIFF changed their vote from 
``nay'' to ``yea.''
  So the amendment was rejected.
  The result of the vote was announced as above recorded.
  Stated for:
  Mr. ELLISON. Mr. Speaker, during rollcall vote No. 170 on H.R. 4998, 
I mistakenly recorded my vote as ``no'' when I should have voted 
``yes.''
  The SPEAKER pro tempore (Mr. Carter of Georgia). The question is on 
the engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. HENSARLING. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--yeas 325, 
nays 89, not voting 19, as follows:

                             [Roll No. 171]

                               YEAS--325

     Abraham
     Aderholt
     Aguilar
     Allen
     Amash
     Ashford
     Babin
     Barletta
     Barr
     Barton
     Beatty
     Benishek
     Bera
     Beyer
     Bilirakis
     Bishop (GA)
     Bishop (MI)
     Bishop (UT)
     Black
     Blackburn
     Blum
     Bost
     Boustany
     Boyle, Brendan F.
     Brady (TX)
     Brat
     Bridenstine
     Brooks (AL)
     Brooks (IN)
     Brownley (CA)
     Buchanan
     Buck
     Bucshon
     Burgess
     Bustos
     Byrne
     Calvert
     Capps
     Cardenas
     Carney
     Carter (GA)
     Carter (TX)
     Castor (FL)
     Castro (TX)
     Chabot
     Chaffetz
     Clawson (FL)
     Coffman
     Cole
     Collins (GA)
     Collins (NY)
     Comstock
     Conaway
     Connolly
     Cook
     Cooper
     Costa
     Costello (PA)
     Courtney
     Cramer
     Crawford
     Crenshaw
     Crowley
     Cuellar
     Culberson
     Curbelo (FL)
     Davis (CA)
     Davis, Rodney
     DeFazio
     DeGette
     Delaney
     DelBene
     Denham
     Dent
     DeSantis
     DesJarlais
     Deutch
     Diaz-Balart
     Dold
     Donovan
     Duckworth
     Duffy
     Duncan (SC)
     Duncan (TN)
     Edwards
     Ellmers (NC)
     Emmer (MN)
     Eshoo
     Esty
     Farenthold
     Farr
     Fincher
     Fitzpatrick
     Fleischmann
     Fleming
     Flores
     Forbes
     Fortenberry
     Foster
     Foxx
     Franks (AZ)
     Frelinghuysen
     Garamendi
     Garrett
     Gibbs
     Gibson
     Goodlatte
     Gosar
     Gowdy
     Graham
     Granger
     Graves (GA)
     Graves (LA)
     Graves (MO)
     Griffith
     Grothman
     Guinta
     Guthrie
     Hahn
     Hardy
     Harper
     Harris
     Hartzler
     Heck (NV)
     Hensarling
     Herrera Beutler
     Hice, Jody B.
     Hill
     Himes
     Hinojosa
     Holding
     Hoyer
     Hudson
     Huelskamp
     Huizenga (MI)
     Hultgren
     Hunter
     Hurd (TX)
     Hurt (VA)
     Jenkins (KS)
     Jenkins (WV)
     Johnson (OH)
     Johnson, Sam
     Jolly
     Jones
     Jordan
     Joyce
     Katko
     Keating
     Kelly (IL)
     Kelly (MS)
     Kelly (PA)
     Kennedy
     Kilmer
     Kind
     King (IA)
     King (NY)
     Kinzinger (IL)
     Kirkpatrick
     Kline
     Knight
     Kuster
     Labrador
     LaHood
     LaMalfa
     Lamborn
     Lance
     Larsen (WA)
     Larson (CT)
     Latta
     Levin
     Lieu, Ted
     Lipinski
     LoBiondo
     Loebsack
     Long
     Loudermilk
     Love
     Lucas
     Luetkemeyer
     Lujan Grisham (NM)
     Lujan, Ben Ray (NM)
     Lummis
     Maloney, Carolyn
     Maloney, Sean
     Marchant
     Marino
     Massie
     Matsui
     McCarthy
     McClintock
     McCollum
     McHenry
     McKinley
     McMorris Rodgers
     McSally
     Meadows
     Meehan
     Meeks
     Meng
     Messer
     Mica
     Miller (FL)
     Miller (MI)
     Moolenaar
     Mooney (WV)
     Moulton
     Mullin
     Mulvaney
     Murphy (FL)
     Murphy (PA)

[[Page 5231]]


     Neal
     Neugebauer
     Newhouse
     Noem
     Nolan
     Nugent
     Nunes
     Olson
     Palazzo
     Palmer
     Paulsen
     Pearce
     Perlmutter
     Perry
     Peters
     Peterson
     Pingree
     Pitts
     Poe (TX)
     Poliquin
     Polis
     Pompeo
     Posey
     Price (NC)
     Price, Tom
     Quigley
     Ratcliffe
     Reed
     Reichert
     Renacci
     Ribble
     Rice (NY)
     Rice (SC)
     Rigell
     Roby
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rohrabacher
     Rokita
     Rooney (FL)
     Ros-Lehtinen
     Roskam
     Ross
     Rothfus
     Rouzer
     Royce
     Ruiz
     Ruppersberger
     Russell
     Salmon
     Sanford
     Scalise
     Schiff
     Schrader
     Schweikert
     Scott, Austin
     Scott, David
     Sensenbrenner
     Sessions
     Shimkus
     Shuster
     Simpson
     Sinema
     Smith (MO)
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Speier
     Stefanik
     Stewart
     Stivers
     Stutzman
     Swalwell (CA)
     Takai
     Thompson (CA)
     Thompson (PA)
     Thornberry
     Tiberi
     Tipton
     Titus
     Trott
     Tsongas
     Turner
     Upton
     Valadao
     Vargas
     Veasey
     Vela
     Wagner
     Walberg
     Walden
     Walker
     Walorski
     Walters, Mimi
     Walz
     Weber (TX)
     Webster (FL)
     Wenstrup
     Westerman
     Whitfield
     Williams
     Wilson (SC)
     Wittman
     Womack
     Woodall
     Yarmuth
     Yoder
     Yoho
     Young (AK)
     Young (IA)
     Young (IN)
     Zeldin
     Zinke

                                NAYS--89

     Adams
     Bass
     Becerra
     Blumenauer
     Bonamici
     Brady (PA)
     Brown (FL)
     Butterfield
     Capuano
     Carson (IN)
     Cartwright
     Chu, Judy
     Cicilline
     Clark (MA)
     Clarke (NY)
     Clay
     Cleaver
     Clyburn
     Cohen
     Cummings
     Davis, Danny
     DeLauro
     DeSaulnier
     Dingell
     Doggett
     Doyle, Michael F.
     Ellison
     Engel
     Frankel (FL)
     Fudge
     Gabbard
     Gallego
     Grayson
     Green, Al
     Green, Gene
     Grijalva
     Hastings
     Heck (WA)
     Higgins
     Honda
     Huffman
     Israel
     Johnson (GA)
     Johnson, E. B.
     Kaptur
     Kildee
     Langevin
     Lee
     Lewis
     Lofgren
     Lowenthal
     Lowey
     Lynch
     McDermott
     McGovern
     McNerney
     Moore
     Nadler
     Napolitano
     Norcross
     O'Rourke
     Pallone
     Pascrell
     Payne
     Pelosi
     Pocan
     Rangel
     Roybal-Allard
     Rush
     Ryan (OH)
     Sanchez, Linda T.
     Sanchez, Loretta
     Sarbanes
     Schakowsky
     Scott (VA)
     Serrano
     Sherman
     Sires
     Slaughter
     Smith (WA)
     Takano
     Thompson (MS)
     Tonko
     Velazquez
     Visclosky
     Waters, Maxine
     Watson Coleman
     Welch
     Wilson (FL)

                             NOT VOTING--19

     Amodei
     Conyers
     Fattah
     Gohmert
     Gutierrez
     Hanna
     Issa
     Jackson Lee
     Jeffries
     Lawrence
     MacArthur
     McCaul
     Pittenger
     Richmond
     Sewell (AL)
     Torres
     Van Hollen
     Wasserman Schultz
     Westmoreland


                Announcement by the Speaker Pro Tempore

  The SPEAKER pro tempore (during the vote). There are 2 minutes 
remaining.

                              {time}  1726

  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________