```

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4860 Referred in Senate (RFS)]

<DOC>
116th CONGRESS
  1st Session
                                H. R. 4860

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            October 29, 2019

     Received; read twice and referred to the Committee on Banking, 
                       Housing, and Urban Affairs

_______________________________________________________________________

                                 AN ACT

 
To amend the Securities Act of 1933 to subject crowdfunding vehicles to 
  the jurisdiction of the Securities and Exchange Commission, and for 
                            other purposes.

    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 ``Crowdfunding Amendments Act''.

SEC. 2. CROWDFUNDING VEHICLES.

    (a) Amendments to the Securities Act of 1933.--The Securities Act 
of 1933 (15 U.S.C. 77a et seq.) is amended--
            (1) in section 2(a) (15 U.S.C. 77b(a)), by adding at the 
        end the following:
            ``(20) The term `crowdfunding vehicle' has the meaning 
        given the term in section 3(c)(15)(B) of the Investment Company 
        Act of 1940 (15 U.S.C. 80a-3(c)(15)(B)).'';
            (2) in section 4(a)(6) (15 U.S.C. 77d(a)(6))--
                    (A) in subparagraph (A)--
                            (i) by inserting ``, other than a 
                        crowdfunding vehicle,'' after ``sold to all 
                        investors''; and
                            (ii) by inserting ``other than a 
                        crowdfunding vehicle,'' after ``the issuer,''; 
                        and
                    (B) in subparagraph (B), in the matter preceding 
                clause (i), by inserting ``, other than a crowdfunding 
                vehicle,'' after ``any investor''; and
            (3) in section 4A(f) (15 U.S.C. 77d-1(f))--
                    (A) in the matter preceding paragraph (1), by 
                striking ``Section 4(6)'' and inserting ``Section 
                4(a)(6)''; and
                    (B) in paragraph (3), by inserting ``by any of 
                paragraphs (1) through (14) of'' before ``section 
                3(c)''.
    (b) Amendments to the Investment Company Act of 1940.--Section 3(c) 
of the Investment Company Act of 1940 (15 U.S.C. 80a-3(c)) is amended 
by adding at the end the following:
            ``(15)(A) Any crowdfunding vehicle.
            ``(B) For purposes of this paragraph, the term 
        `crowdfunding vehicle' means a company--
                    ``(i) the purpose of which (as set forth in the 
                organizational documents of the company) is limited to 
                acquiring, holding, and disposing of securities issued 
                by a single company in one or more transactions made 
                under section 4(a)(6) of the Securities Act of 1933 (15 
                U.S.C. 77d(a)(6));
                    ``(ii) that issues only one class of securities;
                    ``(iii) that receives no compensation in connection 
                with the acquisition, holding, or disposition of 
                securities described in clause (i);
                    ``(iv) no investment adviser or associated person 
                of which receives any compensation on the basis of a 
                share of capital gains upon, or capital appreciation 
                of, any portion of the funds of an investor of the 
                company;
                    ``(v) the securities of which have been issued in a 
                transaction made under section 4(a)(6) of the 
                Securities Act of 1933 (15 U.S.C. 77d(a)(6)), where 
                both the crowdfunding vehicle and the company whose 
                securities the crowdfunding vehicle holds are co-
                issuers;
                    ``(vi) that is current with respect to ongoing 
                reporting requirements under section 227.202 of title 
                17, Code of Federal Regulations, or any successor 
                regulation;
                    ``(vii) that holds securities of a company that is 
                subject to ongoing reporting requirements under section 
                227.202 of title 17, Code of Federal Regulations, or 
                any successor regulation;
                    ``(viii) that is advised by an investment adviser 
                that is--
                            ``(I) registered under the Investment 
                        Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.); 
                        and
                            ``(II) required to--
                                    ``(aa) disclose to the investors of 
                                the company any fees charged by the 
                                investment adviser; and
                                    ``(bb) obtain approval from a 
                                majority of the investors of the 
                                company with respect to any increase in 
                                the fees described in item (aa); and
                    ``(ix) that meets such other requirements as the 
                Commission may, by rule, determine necessary or 
                appropriate in the public interest and for the 
                protection of investors.''.
    (c) Amendments to the Investment Advisers Act of 1940.--The 
Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is amended--
            (1) in section 202(a) (15 U.S.C. 80b-2(a))--
                    (A) by redesignating the second paragraph (29) as 
                paragraph (31); and
                    (B) by adding at the end the following:
            ``(32) The term `crowdfunding vehicle' has the meaning 
        given the term in section 3(c)(15)(B) of the Investment Company 
        Act of 1940 (15 U.S.C. 80a-3(c)(15)(B)).
            ``(33)(A) The term `crowdfunding vehicle adviser' means an 
        investment adviser that acts as an investment adviser solely 
        with respect to crowdfunding vehicles.
            ``(B) A determination, for the purposes of subparagraph 
        (A), regarding whether an investment adviser acts as an 
        investment adviser solely with respect to crowdfunding vehicles 
        shall not include any consideration of the activity of any 
        affiliate of the investment adviser.'';
            (2) in section 203 (15 U.S.C. 80b-3), by adding at the end 
        the following:
    ``(o) Crowdfunding Vehicle Advisers.--
            ``(1) In general.--A crowdfunding vehicle adviser shall be 
        required to register under this section.
            ``(2) Tailored requirements.--As necessary or appropriate 
        in the public interest and for the protection of investors, and 
        to promote efficiency, competition, and capital formation, the 
        Commission shall tailor the requirements under section 
        275.206(4)-2 of title 17, Code of Federal Regulations, with 
        respect to the application of those requirements to a 
        crowdfunding vehicle adviser.''; and
            (3) in section 203A(a) (15 U.S.C. 80b-3a(a))--
                    (A) in paragraph (1)--
                            (i) in subparagraph (A), by striking ``or'' 
                        at the end;
                            (ii) in subparagraph (B), by striking the 
                        period at the end and inserting ``; or''; and
                            (iii) by adding at the end the following:
                    ``(C) is a crowdfunding vehicle adviser.''; and
                    (B) in paragraph (2)--
                            (i) in subparagraph (A), by inserting ``a 
                        crowdfunding vehicle adviser,'' after ``unless 
                        the investment adviser is''; and
                            (ii) in subparagraph (B)(ii), in the matter 
                        preceding subclause (I), by inserting ``except 
                        with respect to a crowdfunding vehicle 
                        adviser,'' before ``has assets''.

SEC. 3. CROWDFUNDING EXEMPTION FROM REGISTRATION.

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

SEC. 4. RULE OF CONSTRUCTION.

    Nothing in this Act or the amendments made by this Act may be 
construed to allow an issuer or a crowdfunding vehicle to offer or sell 
securities in excess of the limitation described under section 4(a)(6) 
of the Securities Act of 1933 (15 U.S.C. 77d(a)(6)).

SEC. 5. DETERMINATION OF BUDGETARY EFFECTS.

    The budgetary effects of this Act, for the purpose of complying 
with the Statutory Pay-As-You-Go Act of 2010, shall be determined by 
reference to the latest statement titled ``Budgetary Effects of PAYGO 
Legislation'' for this Act, submitted for printing in the Congressional 
Record by the Chairman of the House Budget Committee, provided that 
such statement has been submitted prior to the vote on passage.

            Passed the House of Representatives October 28, 2019.

            Attest:

                                             CHERYL L. JOHNSON,

                                                                 Clerk.
```