House Passes Package of Pro-Growth Financial Services Bills

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Cmte Financial Services (R)
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House Passes Package of Pro-Growth Financial Services Bills

Washington, Dec 5 -

WASHINGTON – The House on Monday passed the Creating Financial Prosperity for Businesses and Investors Act (H.R. 6427) by a vote of 391-2. The bill, sponsored by Rep. Scott Garrett (R-NJ) would increase investment opportunities for more Americans and help grow the economy.

“The Creating Financial Prosperity for Businesses and Investors Act can make a positive difference in people’s lives and help build a healthier economy with more opportunities for all. I am proud to see another important piece of bipartisan Financial Services Committee legislation pass the House,” said Chairman Jeb Hensarling (R-TX).

H.R. 6427 is a compilation of six Financial Services Committee measures that have also previously passed the House with bipartisan support:

Title I: the Small Business Capital Formation Enhancement Act (H.R. 4168) – introduced by Reps. Bruce Poliquin (R-ME) and Juan Vargas (D-CA), H.R. 4168 requires the SEC to respond to any findings and recommendations put forth by the Securities and Exchange Commission’s (SEC) annual Government-Business Forum on Small Business Capital Formation. This statutory requirement is consistent with the current obligations related to findings and recommendations submitted by the Investor Advisory Committee. H.R. 4168 passed the Financial Services Committee on December 9, 2015, with bipartisan support (55-1). It passed the House by a vote of 390-1 on February 1, 2016.

Title II: the SEC Small Business Advocate Act (H.R. 3784) – introduced by Reps. John Carney (D-DE) and Sean Duffy (R-WI), H.R. 3784 establishes the Office for Small Business Capital Formation within the (SEC) to assist small businesses and their investors to resolve significant problems with the SEC or self-regulatory organizations and identify issues and propose changes to statutes, regulations, and rules to benefit small businesses and their investors and facilitate capital formation. The SEC is required to issue a formal response to all recommendations submitted by the Office. H.R. 3784 also establishes the SEC Small Business Advisory Committee (Committee), which will provide the SEC with advice on capital formation, securities trading, public reporting, and corporate governance for emerging, privately held businesses and smaller public companies. The SEC is required to review the Committee’s recommendations and promptly issue a public statement assessing them and disclosing the action, if any, the SEC intends to take. H.R. 3784 passed the Financial Services Committee on December 9, 2015, with bipartisan support (56-0). It passed the House unanimously on February 1, 2016.

Title III: the Supporting America's Innovators Act (H.R. 4854) – introduced by Rep. Patrick McHenry (R-NC), H.R. 4854 amends an exemption from registration under the Investment Company Act of 1940 by increasing the investor limitation from 100 to 250 persons for a qualifying venture capital fund. A qualifying venture capital fund may not purchase more than $10 million in securities in any one issuer, adjusted for inflation. H.R. 4854 passed the Financial Services Committee on June 16, 2016, with bipartisan support (57-2). It passed the House by a vote of 388-9 on July 5, 2016.

Title IV: the Fix Crowdfunding Act (H.R. 4855) – introduced by Rep. Patrick McHenry (R-NC), H.R. 4855 updates rules for crowdfunding under Title III of the Jumpstart Our Business Startups (JOBS) Act. Among other things, H.R. 4855 raises the dollar amount limit on funds that can be invested by special crowdfunding vehicles and clarifies certain requirements and exemptions for issuing companies.H.R. 4855 passed the Financial Services Committee on June 16, 2016, with bipartisan support (57-2). It passed the House by a vote of 394-4 on July 5, 2016.

Title V: the Fair Investment Opportunities for Professional Experts Act (H.R. 2187) – introduced by Rep. David Schweikert (R-AZ), H.R 2187 amends the definition of accredited investor under the Securities Act of 1933 to include: (1) persons whose individual net worth, including their spouse’s, exceeds $1,000,000, adjusted for inflation, excluding the value of their primary residence; (2) persons with an individual income greater than $200,000, or $300,000 for joint income, both adjusted for inflation; (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. For the latter category, the Financial Industry Regulatory Authority (FINRA) or an equivalent self-regulatory organization must verify the person’s education or job experience. The Financial Services Committee reported H.R. 2187 on December 9, 2015, with bipartisan support (54-2) and it passed the House by a vote of 347-8 on February 1, 2016.

Title VI: the U.S. Territories Investor Protection Act (H.R. 5322) – introduced by Rep. Nydia Velasquez (D-NY), H.R 5322 amends the Investment Company Act to terminate an exemption for investment companies located in Puerto Rico, the Virgin Islands, and any other possession of the United States. Under current law, such entities are exempt so long as they sell their shares only to the residents of the territory or possession in which they operate. The bill provides a three-year safe harbor for investment companies that currently enjoy this exemption. Additionally, the bill authorizes the SEC to further delay the effective date for a maximum of three years following the initial three year safe harbor. H.R. 5322 passed the Financial Services Committee on June 16, 2016, with bipartisan support (59-0). It passed the House unanimously on July 11, 2016.

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