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House Passes Three Bipartisan Financial Services Bills

Washington, Jul 6 -

WASHINGTON – The House on Tuesday passed three bipartisan financial services bills, including legislation to help startup businesses gain access to investment capital and to help law enforcement prevent financial fraud against senior citizens.

When the Financial Services Committee approved the bills last month, Chairman Jeb Hensarling (R-TX) praised the measures as “solutions that will more appropriately balance rules with the urgent need to provide small business entrepreneurs with access to capital” and “help stop the financial abuse of senior citizens.”

H.R. 4854, the “Supporting America’s Innovators Act of 2016”

Sponsor: Rep. Patrick McHenry (R-NC)

H.R. 4854, the “Supporting America’s Innovators Act of 2016,” enhances angel investors’ ability to provide critical funding to small businesses and entrepreneurs in need of investment capital.  Under current law, the number of investors in an investment company fund must be limited to 100 in order for the fund to be exempt from the costly Securities and Exchange Commission (SEC) registration process.  H.R. 4854 raises the limit on the number of individuals from 100 to 250 who can invest in certain venture capital funds before those funds must register with the SEC as investment companies. 

H.R. 4854 passed the Financial Services Committee on June 15, 2016 by a vote of 57-2. The bill passed the House on July 5, 2016 by a vote of 388-9.

H.R. 4855, the “Fix Crowdfunding Act”

Sponsor: Rep. Patrick McHenry (R-NC)

H.R. 4855, the “Fix Crowdfunding Act,” would amend provisions in the securities laws governing crowdfunding to raise the dollar amount limit and to clarify certain requirements and exclusions for funding portals. This bill fixes some of the problematic requirements and limitations included in the final crowdfunding rule promulgated by the SEC pursuant to Title III of the Jumpstart Our Business Startups (JOBS) Act. 

H.R. 4855 will increase retail investor participation in crowdfunding by allowing them to pool their resources alongside sophisticated investors to create a special purpose vehicle (SPV).  H.R. 4855 authorizes specific purpose vehicles to invest in startups through crowdfunding.   

The bill also mends Title III of the JOBS Act by raising the dollar amount limit of what a company can raise before triggering onerous registration and reporting obligations with the SEC.  Specifically, H.R. 4855 raises the cap from $25 million to $75 million for entities that have reported revenues, and from $25 million to $50 million for companies that do not yet have revenue.

H.R. 4855 passed the Financial Services Committee on June 15, 2016 by a vote of 57-2. The bill passed the House on July 5, 2016 by a vote of 394-4.

H.R. 4538, the “Senior$afe Act of 2016”

Sponsors: Reps. Kyrsten Sinema (D-AZ), Brue Poliquin (R-ME), and Mick Mulvaney (R-SC)

This bill helps to identify and stop financial abuse of senior citizens.  Specifically, it provides that banks, credit unions, investment advisers, broker-dealers, and insurance companies and certain  supervisory, compliance and legal employees of these  entities would be protected from civil or administrative liability as long as these employees received training in how to spot and report predatory activity and disclose any possible exploitation of senior citizens with reasonable care to state or Federal regulatory and law enforcement entities. 

H.R. 4538 passed the Financial Services Committee on June 15, 2016 by a vote of 59-0. The bill passed the House on July 5, 2016 by voice vote.