[House Report 118-87]
[From the U.S. Government Publishing Office]


118th Congress   }                                      {       Report
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                      {       118-87

======================================================================



 
       FAIR INVESTMENT OPPORTUNITIES FOR PROFESSIONAL EXPERTS ACT

                                _______
                                

  June 5, 2023.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. McHenry, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 835]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 835) to amend the Securities Act of 1933 to 
codify certain qualifications of individuals as accredited 
investors for purposes of the securities laws, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Fair Investment Opportunities for 
Professional Experts Act''.

SEC. 2. DEFINITION OF ACCREDITED INVESTOR.

  (a) In General.--Section 2(a)(15) of the Securities Act of 1933 (15 
U.S.C. 77b(a)(15)) is amended--
          (1) by redesignating subparagraphs (i) and (ii) as 
        subparagraphs (A) and (F), respectively; and
          (2) in subparagraph (A) (as so redesignated), by striking ``; 
        or'' and inserting a semicolon, and inserting after such 
        subparagraph the following:
                  ``(B) any natural person whose individual net worth, 
                or joint net worth with that person's spouse or spousal 
                equivalent, 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 2 most recent 
                years or joint income with that person's spouse or 
                spousal equivalent in excess of $300,000 in each of 
                those years and has a reasonable expectation of 
                reaching the same income level in the current year;
                  ``(D) any natural person who is 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, the District of Columbia, or a 
                territory of the United States or the equivalent 
                division responsible for licensing or registration of 
                individuals in connection with securities activities;
                  ``(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''.
  (b) Rulemaking.--The Commission shall revise the definition of 
accredited investor under Regulation D (17 CFR 230.501 et seq.) to 
conform with the amendments made by subsection (a).

                          Purpose and Summary

    Introduced on February 6, 2023, by Representative French 
Hill, H.R. 835, the Fair Investment Opportunities for 
Professional Experts Act, would expand the ``accredited 
investor'' definition to include individuals with certain 
licenses, qualifying education, or job experience. The 
qualifying licenses, education, and job experience would be 
determined by the Securities and Exchange Commission (EGC) 
through rulemaking and verified by FINRA or an equivalent self-
regulatory organization (SRO).

                  Background and Need for Legislation

    Companies have two ways of accessing capital in the 
securities markets to fund their operations: an initial public 
offering (IPO) where they sell securities publicly through a 
registered offering with the SEC; or a private offering under 
an exemption from registration. Investments in private markets 
are largely reserved for accredited investors who are mostly 
institutional investors or individuals who meet specific income 
or net worth requirements. To qualify as an accredited 
investor, an individual must have an annual income of at least 
$200,000 (of $300,000 with a spouse) for each of the previous 
two years or a net worth of over $1 million (either alone or 
with a spouse). In August 2020, the SEC adopted amendments to 
expand the accredited investor definition to include 
individuals with certain professional certifications or 
credentials from accredited educational institutions.
    According to SEC estimates, only 13 percent of U.S. 
households qualified as accredited investors in 2016. 
Additionally, a small percentage of accredited investors are 
Black and Latino (1.3 percent and 2.8 percent, respectively). 
Since starting a successful company depends in large part on 
the founder's network in the early stages, the fact that few 
minorities qualify as accredited investors makes it harder for 
minority entrepreneurs to secure funding for their businesses. 
Expanding and diversifying the number of individuals that 
qualify as accredited investors will open up more funding 
opportunities for minority entrepreneurs.
    The accredited investor definition is intended to limit 
private market investments to only those investors who are 
considered ``sophisticated.'' However, using wealth as a proxy 
for determining sophistication excludes a large pool of 
investors who may have other types of expertise or experience. 
By amending the definition of accredited investor to account 
for education and professional expertise, H.R. 835 expands the 
pool of eligible investors who can participate in private 
placements beyond. Under this bill, sophisticated-but-not-
wealthy investors will now be able to invest in the most high-
growth investment opportunities previously reserved for elite, 
wealthy investors.
    This bill passed on suspension by voice vote in the 115th 
Congress.

                                Hearing

    The Subcommittee on Capital Markets of the Committee on 
Financial Services held a hearing examining matters relating to 
H.R. 835 on February 8, 2023.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
April 26, 2023, and ordered H.R. 835 to be reported favorably 
to the House as amended by voice vote, a quorum being present. 
Before the question was called to order the bill favorably 
reported, the Committee adopted an amendment in the nature of a 
substitute offered by Mr. Hill by voice vote.

                            Committee Votes

    Clause 2(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the order to report legislation and amendments thereto. H.R. 
835 was ordered reported favorably to the House as amended by 
voice vote, a quorum being present.

                      Committee Overisght Findings

    Pursuant to clause 3(c) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the goal of H.R. 835 is to broaden 
the pool of investors by expanding the ``accredited investor'' 
definition to include individuals with certain licenses, 
education, and job experience.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1973.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    H.R. 835 would codify current rules that include 
individuals with a net worth exceeding $1 million or an annual 
income exceeding $200,000 in the definition of accredited 
investors. In addition, the bill would expand that definition 
to include individuals with education or experience related to 
a particular investment. Accredited investors may participate 
in investment opportunities not available to nonaccredited 
investors, such as purchasing securities that are exempt from 
registration with the Securities and Exchange Commission (SEC).
    Using information from the SEC, CBO estimates that 
implementing H.R. 835 would cost less than $500,000 to amend 
current rules. Because the SEC is authorized to collect fees 
each year to offset its annual appropriation, CBO expects that 
the net effect on discretionary spending over the 2023-2028 
period would be negligible, assuming appropriation actions 
consistent with that authority.
    If the SEC increases fees to offset the costs associated 
with implementing the bill, H.R. 835 would increase the cost of 
an existing mandate on private entities required to pay those 
assessments. CBO estimates that the incremental cost of the 
mandate would be small and would fall well below the annual 
threshold established in the Unfunded Mandates Reform Act 
(UMRA) for private-sector mandates ($198 million in 2023, 
adjusted annually for inflation).
    H.R. 835 contains no intergovernmental mandates as defined 
in UMRA.
    The CBO staff contacts for this estimate are David Hughes 
(for federal costs) and Rachel Austin (for mandates). The 
estimate was reviewed by Emily Stern, Senior Adviser for Budget 
Analysis.

                                         Phillip L. Swagel,
                             Director, Congressional Budget Office.

                       Federal Mandates Statement

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995.
    Per the estimate from CBO, H.R. 835 could increase the cost 
of an existing mandate on private entities if the SEC increased 
costs to implement the bill. However, this increase would still 
fall below the annual threshold for private-sector mandates as 
defined in the Unfunded Mandates Reform Act.
    The Committee has determined that the bill does not impose 
a Federal intergovernmental mandate on State, local, or tribal 
governments.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
Federal program, including any program that was included in a 
report to Congress pursuant to section 21 of the Public Law 
111-139 or the most recent Catalog of Federal Domestic 
Assistance.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section cites H.R. 835 as the ``Fair Investment 
Opportunities for Professional Experts Act''.

Section 2. Definition of accredited investor

    This section amends the definition of an accredited 
investor to include (1) persons whose individual net worth, 
including their spouse's, exceeds $1,000,000, excluding the 
value of their primary residence; (2) persons with an 
individual income greater than $200,000 or joint income with 
one's spouse greater than $300,000; (3) persons with a current 
securities-related license; and (4) persons whom the SEC 
determines have demonstrable education or job experience to 
qualify as having professional subject-matter knowledge related 
to a particular investment, as verified by the Financial 
Industry Regulatory Authority (FINRA) or an equivalent SRO. 
With respect to this last category (4), the SEC is responsible 
for establishing what education or job experience is sufficient 
to qualify, and FINRA or an equivalent SRO is responsible for 
verifying that the potential investor's education or job 
experience satisfies the SEC's regulation.
    This section also directs the SEC to revise the definition 
of accredited investor under Regulation D to include the 
categories of investors set forth in this bill.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown below, as prepared by the 
Office of Legislative Counsel.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                         SECURITIES ACT OF 1933




           *       *       *       *       *       *       *
                              definitions

  Sec. 2. (a) Definitions.--When used in this title, unless the 
context otherwise requires--
          (1) The term ``security'' means any note, stock, 
        treasury stock, security future, security-based swap, 
        bond, debenture, evidence of indebtedness, certificate 
        of interest or participation in any profit-sharing 
        agreement, collateral-trust certificate, 
        preorganization certificate or subscription, 
        transferable share, investment contract, voting-trust 
        certificate, certificate of deposit for a security, 
        fractional undivided interest in oil, gas, or other 
        mineral rights, any put, call, straddle, option, or 
        privilege on any security, certificate of deposit, or 
        group or index of securities (including any interest 
        therein or based on the value thereof), or any put, 
        call, straddle, option, or privilege entered into on a 
        national securities exchange relating to foreign 
        currency, or, in general, any interest or instrument 
        commonly known as a ``security'', or any certificate of 
        interest or participation in, temporary or interim 
        certificate for, receipt for, guarantee of, or warrant 
        or right to subscribe to or purchase, any of the 
        foregoing.
          (2) The term ``person'' means an individual, a 
        corporation, a partnership, an association, a joint-
        stock company, a trust, any unincorporated 
        organization, or a government or political subdivision 
        thereof. As used in this paragraph the term ``trust'' 
        shall include only a trust where the interest or 
        interests of the beneficiary or beneficiaries are 
        evidenced by a security.
          (3) The term ``sale'' or ``sell'' shall include every 
        contract of sale or disposition of a security or 
        interest in a security, for value. The term ``offer to 
        sell'', ``offer for sale'', or ``offer'' shall include 
        every attempt or offer to dispose of, or solicitation 
        of an offer to buy, a security or interest in a 
        security, for value. The terms defined in this 
        paragraph and the term ``offer to buy'' as used in 
        subsection (c) of section 5 shall not include 
        preliminary negotiations or agreements between an 
        issuer (or any person directly or indirectly 
        controlling or controlled by an issuer, or under direct 
        or indirect common control with an issuer) and any 
        underwriter or among underwriters who are or are to be 
        in privity of contract with an issuer (or any person 
        directly or indirectly controlling or controlled by an 
        issuer, or under direct or indirect common control with 
        an issuer). Any security given or delivered with, or as 
        a bonus on account of, any purchase of securities or 
        any other thing, shall be conclusively presumed to 
        constitute a part of the subject of such purchase and 
        to have been offered and sold for value. The issue or 
        transfer of a right or privilege, when originally 
        issued or transferred with a security, giving the 
        holder of such security the right to convert such 
        security into another security of the same issuer or of 
        another person, or giving a right to subscribe to 
        another security of the same issuer or of another 
        person, which right cannot be exercised until some 
        future date, shall not be deemed to be an offer or sale 
        of such other security; but the issue or transfer of 
        such other security upon the exercise of such right of 
        conversion or subscription shall be deemed a sale of 
        such other security. Any offer or sale of a security 
        futures product by or on behalf of the issuer of the 
        securities underlying the security futures product, an 
        affiliate of the issuer, or an underwriter, shall 
        constitute a contract for sale of, sale of, offer for 
        sale, or offer to sell the underlying securities. Any 
        offer or sale of a security-based swap by or on behalf 
        of the issuer of the securities upon which such 
        security-based swap is based or is referenced, an 
        affiliate of the issuer, or an underwriter, shall 
        constitute a contract for sale of, sale of, offer for 
        sale, or offer to sell such securities. The publication 
        or distribution by a broker or dealer of a research 
        report about an emerging growth company that is the 
        subject of a proposed public offering of the common 
        equity securities of such emerging growth company 
        pursuant to a registration statement that the issuer 
        proposes to file, or has filed, or that is effective 
        shall be deemed for purposes of paragraph (10) of this 
        subsection and section 5(c) not to constitute an offer 
        for sale or offer to sell a security, even if the 
        broker or dealer is participating or will participate 
        in the registered offering of the securities of the 
        issuer. As used in this paragraph, the term ``research 
        report'' means a written, electronic, or oral 
        communication that includes information, opinions, or 
        recommendations with respect to securities of an issuer 
        or an analysis of a security or an issuer, whether or 
        not it provides information reasonably sufficient upon 
        which to base an investment decision.
          (4) The term ``issuer'' means every person who issues 
        or proposes to issue any security; except that with 
        respect to certificates of deposit, voting-trust 
        certificates, or collateral-trust certificates, or with 
        respect to certificates of interest or shares in an 
        unincorporated investment trust not having a board of 
        directors (or persons performing similar functions) or 
        of the fixed, restricted management, or unit type, the 
        term ``issuer'' means the person or persons performing 
        the acts and assuming the duties of depositor or 
        manager pursuant to the provisions of the trust or 
        other agreement or instrument under which such 
        securities are issued; except that in the case of an 
        unincorporated association which provides by its 
        articles for limited liability of any or all of its 
        members, or in the case of a trust, committee, or other 
        legal entity, the trustees or members thereof shall not 
        be individually liable as issuers of any security 
        issued by the association, trust, committee, or other 
        legal entity; except that with respect to equipment-
        trust certificates or like securities, the term 
        ``issuer'' means the person by whom the equipment or 
        property is or is to be used; and except that with 
        respect to fractional undivided interests in oil, gas, 
        or other mineral rights, the term ``issuer'' means the 
        owner of any such right or of any interest in such 
        right (whether whole or fractional) who creates 
        fractional interests therein for the purpose of public 
        offering.
          (5) The term ``Commission'' means the Securities and 
        Exchange Commission.
          (6) The term ``Territory'' means Puerto Rico, the 
        Virgin Islands, and the insular possessions of the 
        United States.
          (7) The term ``interstate commerce'' means trade or 
        commerce in securities or any transportation or 
        communication relating thereto among the several States 
        or between the District of Columbia or any Territory of 
        the United States and any State or other Territory, or 
        between any foreign country and any State, Territory, 
        or the District of Columbia, or within the District of 
        Columbia.
          (8) The term ``registration statement'' means the 
        statement provided for in section 6, and includes any 
        amendment thereto and any report, document, or 
        memorandum filed as part of such statement or 
        incorporated therein by reference.
          (9) The term ``write'' or ``written'' shall include 
        printed, lithographed, or any means of graphic 
        communication.
          (10) The term ``prospectus'' means any prospectus, 
        notice, circular, advertisement, letter, or 
        communication, written or by radio or television, which 
        offers any security for sale or confirms the sale of 
        any security; except that (a) a communication sent or 
        given after the effective date of the registration 
        statement (other than a prospectus permitted under 
        subsection (b) of section 10) shall not be deemed a 
        prospectus if it is proved that prior to or at the same 
        time with such communication a written prospectus 
        meeting the requirements of subsection (a) of section 
        10 at the time of such communication was sent or given 
        to the person to whom the communication was made, and 
        (b) a notice, circular, advertisement, letter, or 
        communication in respect of a security shall not be 
        deemed to be a prospectus if it states from whom a 
        written prospectus meeting the requirements of section 
        10 may be obtained and, in addition, does no more than 
        identify the security, state the price thereof, state 
        by whom orders will be executed, and contain such other 
        information as the Commission, by rules or regulations 
        deemed necessary or appropriate in the public interest 
        and for the protection of investors, and subject to 
        such terms and conditions as may be prescribed therein, 
        may permit.
          (11) The term ``underwriter'' means any person who 
        has purchased from an issuer with a view to, or offers 
        or sells for an issuer in connection with, the 
        distribution of any security, or participates or has a 
        direct or indirect participation in any such 
        undertaking, or participates or has a participation in 
        the direct or indirect underwriting of any such 
        undertaking; but such term shall not include a person 
        whose interest is limited to a commission from an 
        underwriter or dealer not in excess of the usual and 
        customary distributors' or sellers' commission. As used 
        in this paragraph the term ``issuer'' shall include, in 
        addition to an issuer, any person directly or 
        indirectly controlling or controlled by the issuer, or 
        any person under direct or indirect common control with 
        the issuer.
          (12) The term ``dealer'' means any person who engages 
        either for all or part of his time, directly or 
        indirectly, as agent, broker, or principal, in the 
        business of offering, buying, selling, or otherwise 
        dealing or trading in securities issued by another 
        person.
          (13) The term ``insurance company'' means a company 
        which is organized as an insurance company, whose 
        primary and predominant business activity is the 
        writing of insurance or the reinsuring of risks 
        underwritten by insurance companies, and which is 
        subject to supervision by the insurance commissioner, 
        or a similar official or agency, of a State or 
        territory or the District of Columbia; or any receiver 
        or similar official or any liquidating agent for such 
        company, in his capacity as such.
          (14) The term ``separate account'' means an account 
        established and maintained by an insurance company 
        pursuant to the laws of any State or territory of the 
        United States, the District of Columbia, or of Canada 
        or any province thereof, under which income, gains and 
        losses, whether or not realized, from assets allocated 
        to such account, are, in accordance with the applicable 
        contract, credited to or charged against such account 
        without regard to other income, gains, or losses of the 
        insurance company.
          (15) The term ``accredited investor'' shall mean--
                  [(i)] (A) a bank as defined in section 
                3(a)(2) whether acting in its individual or 
                fiduciary capacity; an insurance company as 
                defined in paragraph (13) of this subsection; 
                an investment company registered under the 
                Investment Company Act of 1940 or a business 
                development company as defined in section 
                2(a)(48) of that Act; a Small Business 
                Investment Company licensed by the Small 
                Business Administration; or an employee benefit 
                plan, including an individual retirement 
                account, which is subject to the provisions of 
                the Employee Retirement Income Security Act of 
                1974, if the investment decision is made by a 
                plan fiduciary, as defined in section 3(21) of 
                such Act, which is either a bank, insurance 
                company, or registered investment adviser; [or]
                  (B) any natural person whose individual net 
                worth, or joint net worth with that person's 
                spouse or spousal equivalent, 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 2 
                most recent years or joint income with that 
                person's spouse or spousal equivalent in excess 
                of $300,000 in each of those years and has a 
                reasonable expectation of reaching the same 
                income level in the current year;
                  (D) any natural person who is 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, the District of Columbia, 
                or a territory of the United States or the 
                equivalent division responsible for licensing 
                or registration of individuals in connection 
                with securities activities;
                  (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
                  [(ii)] (F) any person who, on the basis of 
                such factors as financial sophistication, net 
                worth, knowledge, and experience in financial 
                matters, or amount of assets under management 
                qualifies as an accredited investor under rules 
                and regulations which the Commission shall 
                prescribe.
          (16) The terms ``security future'', ``narrow-based 
        security index'', and ``security futures product'' have 
        the same meanings as provided in section 3(a)(55) of 
        the Securities Exchange Act of 1934.
          (17) The terms ``swap'' and ``security-based swap'' 
        have the same meanings as in section 1a of the 
        Commodity Exchange Act (7 U.S.C. 1a).
          (18) The terms ``purchase'' or ``sale'' of a 
        security-based swap shall be deemed to mean the 
        execution, termination (prior to its scheduled maturity 
        date), assignment, exchange, or similar transfer or 
        conveyance of, or extinguishing of rights or 
        obligations under, a security-based swap, as the 
        context may require.
          (19) The term ``emerging growth company'' means an 
        issuer that had total annual gross revenues of less 
        than $1,000,000,000 (as such amount is indexed for 
        inflation every 5 years by the Commission to reflect 
        the change in the Consumer Price Index for All Urban 
        Consumers published by the Bureau of Labor Statistics, 
        setting the threshold to the nearest 1,000,000) during 
        its most recently completed fiscal year. An issuer that 
        is an emerging growth company as of the first day of 
        that fiscal year shall continue to be deemed an 
        emerging growth company until the earliest of--
                  (A) the last day of the fiscal year of the 
                issuer during which it had total annual gross 
                revenues of $1,000,000,000 (as such amount is 
                indexed for inflation every 5 years by the 
                Commission to reflect the change in the 
                Consumer Price Index for All Urban Consumers 
                published by the Bureau of Labor Statistics, 
                setting the threshold to the nearest 1,000,000) 
                or more;
                  (B) the last day of the fiscal year of the 
                issuer following the fifth anniversary of the 
                date of the first sale of common equity 
                securities of the issuer pursuant to an 
                effective registration statement under this 
                title;
                  (C) the date on which such issuer has, during 
                the previous 3-year period, issued more than 
                $1,000,000,000 in non-convertible debt; or
                  (D) the date on which such issuer is deemed 
                to be a ``large accelerated filer'', as defined 
                in section 240.12b-2 of title 17, Code of 
                Federal Regulations, or any successor thereto.
  (b) Consideration of Promotion of Efficiency, Competition, 
and Capital Formation.--Whenever pursuant to this title the 
Commission is engaged in rulemaking and is required to consider 
or determine whether an action is necessary or appropriate in 
the public interest, the Commission shall also consider, in 
addition to the protection of investors, whether the action 
will promote efficiency, competition, and capital formation.

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