II 

114TH CONGRESS 

2D SESSION H. R. 6427 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 6, 2016 

Received 

AN ACT 

To improve the operation of United States capital markets, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 


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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

2 (a) SHORT TITLE.—This Act may be cited as the 

3 ‘‘Creating Financial Prosperity for Businesses and Inves4 tors Act’’. 

5 (b) TABLE OF CONTENTS.—The table of contents for 

6 this Act is as follows: 

Sec. 1. Short title; table of contents. 

TITLE I—SMALL BUSINESS CAPITAL FORMATION ENHANCEMENT 

Sec. 101. Annual review of government-business forum on capital formation. 

TITLE II—SEC SMALL BUSINESS ADVOCATE 

Sec. 201. Establishment of Office of the Advocate for Small Business Capital 

Formation and Small Business Capital Formation Advisory 

Committee. 

TITLE III—SUPPORTING AMERICA’S INNOVATORS 

Sec. 301. Investor limitation for qualifying venture capital funds. 

TITLE IV—FIX CROWDFUNDING 

Sec. 401. Crowdfunding vehicles. 

Sec. 402. Crowdfunding exemption from registration. 

TITLE V—FAIR INVESTMENT OPPORTUNITIES FOR 

PROFESSIONAL EXPERTS 

Sec. 501. Definition of accredited investor. 

TITLE VI—U.S. TERRITORIES INVESTOR PROTECTION 

Sec. 601. Termination of exemption. 


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1 TITLE I—SMALL BUSINESS CAP2 ITAL FORMATION ENHANCE3 MENT 

4 SEC. 101. ANNUAL REVIEW OF GOVERNMENT-BUSINESS 

5 FORUM ON CAPITAL FORMATION. 

6 Section 503 of the Small Business Investment Incen7 tive Act of 1980 (15 U.S.C. 80c–1) is amended by adding 

8 at the end the following: 

9 ‘‘(e) The Commission shall— 

10 ‘‘(1) review the findings and recommendations 

11 of the forum; and 

12 ‘‘(2) each time the forum submits a finding or 

13 recommendation to the Commission, promptly issue 

14 a public statement— 

15 ‘‘(A) assessing the finding or recommenda16 tion of the forum; and 

17 ‘‘(B) disclosing the action, if any, the Com18 mission intends to take with respect to the find19 ing or recommendation.’’. 


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1 TITLE II—SEC SMALL BUSINESS 

2 ADVOCATE 

3 SEC. 201. ESTABLISHMENT OF OFFICE OF THE ADVOCATE 

4 FOR SMALL BUSINESS CAPITAL FORMATION 

5 AND SMALL BUSINESS CAPITAL FORMATION 

6 ADVISORY COMMITTEE. 

7 (a) OFFICE OF THE ADVOCATE FOR SMALL BUSI8 NESS CAPITAL FORMATION.—Section 4 of the Securities 

9 Exchange Act of 1934 (15 U.S.C. 78d) is amended by 

10 adding at the end the following: 

11 ‘‘(j) OFFICE OF THE ADVOCATE FOR SMALL BUSI12 NESS CAPITAL FORMATION.— 

13 ‘‘(1) OFFICE ESTABLISHED.—There is estab14 lished within the Commission the Office of the Advo15 cate for Small Business Capital Formation (here16 after in this subsection referred to as the ‘Office’). 

17 ‘‘(2) ADVOCATE FOR SMALL BUSINESS CAPITAL

18 FORMATION.— 

19 ‘‘(A) IN GENERAL.—The head of the Of20 fice shall be the Advocate for Small Business 

21 Capital Formation, who shall— 

22 ‘‘(i) report directly to the Commission; 

23 and 

24 ‘‘(ii) be appointed by the Commission, 

25 from among individuals having experience 


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1 in advocating for the interests of small 

2 businesses and encouraging small business 

3 capital formation. 

4 ‘‘(B) COMPENSATION.—The annual rate of 

5 pay for the Advocate for Small Business Cap6 ital Formation shall be equal to the highest rate 

7 of annual pay for other senior executives who 

8 report directly to the Commission. 

9 ‘‘(C) NO CURRENT EMPLOYEE OF THE

10 COMMISSION.—An individual may not be ap11 pointed as the Advocate for Small Business 

12 Capital Formation if the individual is currently 

13 employed by the Commission. 

14 ‘‘(3) STAFF OF OFFICE.—The Advocate for 

15 Small Business Capital Formation, after consulta16 tion with the Commission, may retain or employ 

17 independent counsel, research staff, and service 

18 staff, as the Advocate for Small Business Capital 

19 Formation determines to be necessary to carry out 

20 the functions of the Office. 

21 ‘‘(4) FUNCTIONS OF THE ADVOCATE FOR

22 SMALL BUSINESS CAPITAL FORMATION.—The Advo23 cate for Small Business Capital Formation shall— 

24 ‘‘(A) assist small businesses and small 

25 business investors in resolving significant probVerDate Sep 11 2014 02:02 Dec 11, 2016 Jkt 069200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H6427.RDS H6427

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1 lems such businesses and investors may have 

2 with the Commission or with self-regulatory or3 ganizations; 

4 ‘‘(B) identify areas in which small busi5 nesses and small business investors would ben6 efit from changes in the regulations of the 

7 Commission or the rules of self-regulatory orga8 nizations; 

9 ‘‘(C) identify problems that small busi10 nesses have with securing access to capital, in11 cluding any unique challenges to minority12 owned and women-owned small businesses; 

13 ‘‘(D) analyze the potential impact on small 

14 businesses and small business investors of— 

15 ‘‘(i) proposed regulations of the Com16 mission that are likely to have a significant 

17 economic impact on small businesses and 

18 small business capital formation; and 

19 ‘‘(ii) proposed rules that are likely to 

20 have a significant economic impact on 

21 small businesses and small business capital 

22 formation of self-regulatory organizations 

23 registered under this title; 

24 ‘‘(E) conduct outreach to small businesses 

25 and small business investors, including through 


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1 regional roundtables, in order to solicit views on 

2 relevant capital formation issues; 

3 ‘‘(F) to the extent practicable, propose to 

4 the Commission changes in the regulations or 

5 orders of the Commission and to Congress any 

6 legislative, administrative, or personnel changes 

7 that may be appropriate to mitigate problems 

8 identified under this paragraph and to promote 

9 the interests of small businesses and small busi10 ness investors; 

11 ‘‘(G) consult with the Investor Advocate on 

12 proposed recommendations made under sub13 paragraph (F); and 

14 ‘‘(H) advise the Investor Advocate on 

15 issues related to small businesses and small 

16 business investors. 

17 ‘‘(5) ACCESS TO DOCUMENTS.—The Commis18 sion shall ensure that the Advocate for Small Busi19 ness Capital Formation has full access to the docu20 ments and information of the Commission and any 

21 self-regulatory organization, as necessary to carry 

22 out the functions of the Office. 

23 ‘‘(6) ANNUAL REPORT ON ACTIVITIES.— 

24 ‘‘(A) IN GENERAL.—Not later than De25 cember 31 of each year after 2016, the AdvoVerDate Sep 11 2014 02:02 Dec 11, 2016 Jkt 069200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H6427.RDS H6427

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1 cate for Small Business Capital Formation shall 

2 submit to the Committee on Banking, Housing, 

3 and Urban Affairs of the Senate and the Com4 mittee on Financial Services of the House of 

5 Representatives a report on the activities of the 

6 Advocate for Small Business Capital Formation 

7 during the immediately preceding fiscal year. 

8 ‘‘(B) CONTENTS.—Each report required 

9 under subparagraph (A) shall include— 

10 ‘‘(i) appropriate statistical information 

11 and full and substantive analysis; 

12 ‘‘(ii) information on steps that the 

13 Advocate for Small Business Capital For14 mation has taken during the reporting pe15 riod to improve small business services and 

16 the responsiveness of the Commission and 

17 self-regulatory organizations to small busi18 ness and small business investor concerns; 

19 ‘‘(iii) a summary of the most serious 

20 issues encountered by small businesses and 

21 small business investors, including any 

22 unique issues encountered by minority23 owned and women-owned small businesses 

24 and their investors, during the reporting 

25 period; 


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1 ‘‘(iv) an inventory of the items sum2 marized under clause (iii) (including items 

3 summarized under such clause for any 

4 prior reporting period on which no action 

5 has been taken or that have not been re6 solved to the satisfaction of the Advocate 

7 for Small Business Capital Formation as 

8 of the beginning of the reporting period 

9 covered by the report) that includes— 

10 ‘‘(I) identification of any action 

11 taken by the Commission or the self12 regulatory organization and the result 

13 of such action; 

14 ‘‘(II) the length of time that each 

15 item has remained on such inventory; 

16 and 

17 ‘‘(III) for items on which no ac18 tion has been taken, the reasons for 

19 inaction, and an identification of any 

20 official who is responsible for such ac21 tion; 

22 ‘‘(v) recommendations for such 

23 changes to the regulations, guidance and 

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1 solve problems with the Commission and 

2 self-regulatory organizations encountered 

3 by small businesses and small business in4 vestors and to encourage small business 

5 capital formation; and 

6 ‘‘(vi) any other information, as deter7 mined appropriate by the Advocate for 

8 Small Business Capital Formation. 

9 ‘‘(C) CONFIDENTIALITY.—No report re10 quired by subparagraph (A) may contain con11 fidential information. 

12 ‘‘(D) INDEPENDENCE.—Each report re13 quired under subparagraph (A) shall be pro14 vided directly to the committees of Congress 

15 listed in such subparagraph without any prior 

16 review or comment from the Commission, any 

17 commissioner, any other officer or employee of 

18 the Commission, or the Office of Management 

19 and Budget. 

20 ‘‘(7) REGULATIONS.—The Commission shall es21 tablish procedures requiring a formal response to all 

22 recommendations submitted to the Commission by 

23 the Advocate for Small Business Capital Formation, 

24 not later than 3 months after the date of such sub25 mission. 


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1 ‘‘(8) GOVERNMENT-BUSINESS FORUM ON SMALL

2 BUSINESS CAPITAL FORMATION.—The Advocate for 

3 Small Business Capital Formation shall be respon4 sible for planning, organizing, and executing the an5 nual Government-Business Forum on Small Busi6 ness Capital Formation described in section 503 of 

7 the Small Business Investment Incentive Act of 

8 1980 (15 U.S.C. 80c–1). 

9 ‘‘(9) RULE OF CONSTRUCTION.—Nothing in 

10 this subsection may be construed as replacing or re11 ducing the responsibilities of the Investor Advocate 

12 with respect to small business investors.’’. 

13 (b) SMALL BUSINESS CAPITAL FORMATION ADVI14 SORY COMMITTEE.—Title I of the Securities Exchange 

15 Act of 1934 (15 U.S.C. 78a et seq.) is amended by adding 

16 at the end the following: 

17 ‘‘SEC. 40. SMALL BUSINESS CAPITAL FORMATION ADVISORY 

18 COMMITTEE. 

19 ‘‘(a) ESTABLISHMENT AND PURPOSE.— 

20 ‘‘(1) ESTABLISHMENT.—There is established 

21 within the Commission the Small Business Capital 

22 Formation Advisory Committee (hereafter in this 

23 section referred to as the ‘Committee’). 

24 ‘‘(2) FUNCTIONS.— 


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1 ‘‘(A) IN GENERAL.—The Committee shall 

2 provide the Commission with advice on the 

3 Commission’s rules, regulations, and policies 

4 with regard to the Commission’s mission of pro5 tecting investors, maintaining fair, orderly, and 

6 efficient markets, and facilitating capital forma7 tion, as such rules, regulations, and policies re8 late to— 

9 ‘‘(i) capital raising by emerging, pri10 vately held small businesses (‘emerging 

11 companies’) and publicly traded companies 

12 with less than $250,000,000 in public mar13 ket capitalization (‘smaller public compa14 nies’) through securities offerings, includ15 ing private and limited offerings and initial 

16 and other public offerings; 

17 ‘‘(ii) trading in the securities of 

18 emerging companies and smaller public 

19 companies; and 

20 ‘‘(iii) public reporting and corporate 

21 governance requirements of emerging com22 panies and smaller public companies. 

23 ‘‘(B) LIMITATION.—The Committee shall 

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1 cies, practices, actions, or decisions concerning 

2 the Commission’s enforcement program. 

3 ‘‘(b) MEMBERSHIP.— 

4 ‘‘(1) IN GENERAL.—The members of the Com5 mittee shall be— 

6 ‘‘(A) the Advocate for Small Business Cap7 ital Formation; 

8 ‘‘(B) not fewer than 10, and not more than 

9 20, members appointed by the Commission, 

10 from among individuals— 

11 ‘‘(i) who represent— 

12 ‘‘(I) emerging companies engag13 ing in private and limited securities 

14 offerings or considering initial public 

15 offerings (‘IPO’) (including the com16 panies’ officers and directors); 

17 ‘‘(II) the professional advisors of 

18 such companies (including attorneys, 

19 accountants, investment bankers, and 

20 financial advisors); and 

21 ‘‘(III) the investors in such com22 panies (including angel investors, ven23 ture capital funds, and family offices); 


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1 ‘‘(ii) who are officers or directors of 

2 minority-owned small businesses or 

3 women-owned small businesses; 

4 ‘‘(iii) who represent— 

5 ‘‘(I) smaller public companies 

6 (including the companies’ officers and 

7 directors); 

8 ‘‘(II) the professional advisors of 

9 such companies (including attorneys, 

10 auditors, underwriters, and financial 

11 advisors); and 

12 ‘‘(III) the pre-IPO and post-IPO 

13 investors in such companies (both in14 stitutional, such as venture capital 

15 funds, and individual, such as angel 

16 investors); and 

17 ‘‘(iv) who represent participants in the 

18 marketplace for the securities of emerging 

19 companies and smaller public companies, 

20 such as securities exchanges, alternative 

21 trading systems, analysts, information 

22 processors, and transfer agents; and 

23 ‘‘(C) three non-voting members— 

24 ‘‘(i) one of whom shall be appointed 

25 by the Investor Advocate; 


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1 ‘‘(ii) one of whom shall be appointed 

2 by the North American Securities Adminis3 trators Association; and 

4 ‘‘(iii) one of whom shall be appointed 

5 by the Administrator of the Small Busi6 ness Administration. 

7 ‘‘(2) TERM.—Each member of the Committee 

8 appointed under subparagraph (B), (C)(ii), or 

9 (C)(iii) of paragraph (1) shall serve for a term of 4 

10 years. 

11 ‘‘(3) MEMBERS NOT COMMISSION EMPLOY12 EES.—Members appointed under subparagraph (B), 

13 (C)(ii), or (C)(iii) of paragraph (1) shall not be 

14 treated as employees or agents of the Commission 

15 solely because of membership on the Committee. 

16 ‘‘(c) CHAIRMAN; VICE CHAIRMAN; SECRETARY; AS17 SISTANT SECRETARY.— 

18 ‘‘(1) IN GENERAL.—The members of the Com19 mittee shall elect, from among the members of the 

20 Committee— 

21 ‘‘(A) a chairman; 

22 ‘‘(B) a vice chairman; 

23 ‘‘(C) a secretary; and 

24 ‘‘(D) an assistant secretary. 


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1 ‘‘(2) TERM.—Each member elected under para2 graph (1) shall serve for a term of 3 years in the 

3 capacity for which the member was elected under 

4 paragraph (1). 

5 ‘‘(d) MEETINGS.— 

6 ‘‘(1) FREQUENCY OF MEETINGS.—The Com7 mittee shall meet— 

8 ‘‘(A) not less frequently than four times 

9 annually, at the call of the chairman of the 

10 Committee; and 

11 ‘‘(B) from time to time, at the call of the 

12 Commission. 

13 ‘‘(2) NOTICE.—The chairman of the Committee 

14 shall give the members of the Committee written no15 tice of each meeting, not later than 2 weeks before 

16 the date of the meeting. 

17 ‘‘(e) COMPENSATION AND TRAVEL EXPENSES.— 

18 Each member of the Committee who is not a full-time em19 ployee of the United States shall— 

20 ‘‘(1) be entitled to receive compensation at a 

21 rate not to exceed the daily equivalent of the annual 

22 rate of basic pay in effect for a position at level V 

23 of the Executive Schedule under section 5316 of title 

24 5, United States Code, for each day during which 


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1 the member is engaged in the actual performance of 

2 the duties of the Committee; and 

3 ‘‘(2) while away from the home or regular place 

4 of business of the member in the performance of 

5 services for the Committee, be allowed travel ex6 penses, including per diem in lieu of subsistence, in 

7 the same manner as persons employed intermittently 

8 in the Government service are allowed expenses 

9 under section 5703 of title 5, United States Code. 

10 ‘‘(f) STAFF.—The Commission shall make available 

11 to the Committee such staff as the chairman of the Com12 mittee determines are necessary to carry out this section. 

13 ‘‘(g) REVIEW BY COMMISSION.—The Commission 

14 shall— 

15 ‘‘(1) review the findings and recommendations 

16 of the Committee; and 

17 ‘‘(2) each time the Committee submits a finding 

18 or recommendation to the Commission, promptly 

19 issue a public statement— 

20 ‘‘(A) assessing the finding or recommenda21 tion of the Committee; and 

22 ‘‘(B) disclosing the action, if any, the Com23 mission intends to take with respect to the find24 ing or recommendation. 


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1 ‘‘(h) FEDERAL ADVISORY COMMITTEE ACT.—The 

2 Federal Advisory Committee Act (5 U.S.C. App.) shall not 

3 apply with respect to the Committee and its activities.’’. 

4 (c) ANNUAL GOVERNMENT-BUSINESS FORUM ON

5 SMALL BUSINESS CAPITAL FORMATION.—Section 503(a) 

6 of the Small Business Investment Incentive Act of 1980 

7 (15 U.S.C. 80c–1(a)) is amended by inserting ‘‘(acting 

8 through the Office of the Advocate for Small Business 

9 Capital Formation and in consultation with the Small 

10 Business Capital Formation Advisory Committee)’’ after 

11 ‘‘Securities and Exchange Commission’’. 

12 TITLE III—SUPPORTING 

13 AMERICA’S INNOVATORS 

14 SEC. 301. INVESTOR LIMITATION FOR QUALIFYING VEN15 TURE CAPITAL FUNDS. 

16 Section 3(c)(1) of the Investment Company Act of 

17 1940 (15 U.S.C. 80a–3(c)(1)) is amended— 

18 (1) by inserting after ‘‘one hundred persons’’ 

19 the following: ‘‘(or, with respect to a qualifying ven20 ture capital fund, 250 persons)’’; and 

21 (2) by adding at the end the following: 

22 ‘‘(C) The term ‘qualifying venture capital 

23 fund’ means any venture capital fund (as de24 fined pursuant to section 203(l)(1) of the In25 vestment Advisers Act of 1940 (15 U.S.C. 80b– 


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1 3(l)(1)) with no more than $10,000,000 in in2 vested capital, as such dollar amount is annu3 ally adjusted by the Commission to reflect the 

4 change in the Consumer Price Index for All 

5 Urban Consumers published by the Bureau of 

6 Labor Statistics of the Department of Labor.’’. 

7 TITLE IV—FIX CROWDFUNDING 

8 SEC. 401. CROWDFUNDING VEHICLES. 

9 (a) AMENDMENTS TO THE SECURITIES ACT OF

10 1933.—The Securities Act of 1933 (15 U.S.C. 77a et 

11 seq.) is amended— 

12 (1) in section 4A(f)(3), by inserting ‘‘by any of 

13 paragraphs (1) through (14) of’’ before ‘‘section 

14 3(c)’’; and 

15 (2) in section 4(a)(6)(B), by inserting after 

16 ‘‘any investor’’ the following: ‘‘, other than a 

17 crowdfunding vehicle (as defined in section 2(a) of 

18 the Investment Company Act of 1940),’’. 

19 (b) AMENDMENTS TO THE INVESTMENT COMPANY

20 ACT OF 1940.—The Investment Company Act of 1940 (15 

21 U.S.C. 80a–1 et seq.) is amended— 

22 (1) in section 2(a), by adding at the end the 

23 following: 

24 ‘‘(55) The term ‘crowdfunding vehicle’ means a 

25 company— 


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1 ‘‘(A) whose purpose (as set forth in its or2 ganizational documents) is limited to acquiring, 

3 holding, and disposing securities issued by a 

4 single company in one or more transactions and 

5 made pursuant to section 4(a)(6) of the Securi6 ties Act of 1933; 

7 ‘‘(B) which issues only one class of securi8 ties; 

9 ‘‘(C) which receives no compensation in 

10 connection with such acquisition, holding, or 

11 disposition of securities; 

12 ‘‘(D) no associated person of which re13 ceives any compensation in connection with 

14 such acquisition, holding or disposition of secu15 rities unless such person is acting as or on be16 half of an investment adviser registered under 

17 the Investment Advisers Act of 1940 or reg18 istered as an investment adviser in the State in 

19 which the investment adviser maintains its prin20 cipal office and place of business; 

21 ‘‘(E) the securities of which have been 

22 issued in a transaction made pursuant to sec23 tion 4(a)(6) of the Securities Act of 1933, 

24 where both the crowdfunding vehicle and the 


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1 company whose securities it holds are co2 issuers; 

3 ‘‘(F) which is current in its ongoing disclo4 sure obligations under Rule 202 of Regulation 

5 Crowdfunding (17 CFR 227.202); 

6 ‘‘(G) the company whose securities it holds 

7 is current in its ongoing disclosure obligations 

8 under Rule 202 of Regulation Crowdfunding 

9 (17 CFR 227.202); and 

10 ‘‘(H) is advised by an investment adviser 

11 registered under the Investment Advisers Act of 

12 1940 or registered as an investment adviser in 

13 the State in which the investment adviser main14 tains its principal office and place of business.’’; 

15 and 

16 (2) in section 3(c), by adding at the end the fol17 lowing: 

18 ‘‘(15) Any crowdfunding vehicle.’’. 

19 SEC. 402. CROWDFUNDING EXEMPTION FROM REGISTRA20 TION. 

21 Section 12(g)(6) of the Securities Exchange Act of 

22 1934 (15 U.S.C. 78l(g)(6)) is amended— 

23 (1) by striking ‘‘The Commission’’ and insert24 ing the following: 

25 ‘‘(A) IN GENERAL.—The Commission’’; 


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1 (2) by striking ‘‘section 4(6)’’ and inserting 

2 ‘‘section 4(a)(6)’’; and 

3 (3) by adding at the end the following: 

4 ‘‘(B) TREATMENT OF SECURITIES ISSUED

5 BY CERTAIN ISSUERS.—An exemption under 

6 subparagraph (A) shall be unconditional for se7 curities offered by an issuer that had a public 

8 float of less than $75,000,000 as of the last 

9 business day of the issuer’s most recently com10 pleted semiannual period, computed by multi11 plying the aggregate worldwide number of 

12 shares of the issuer’s common equity securities 

13 held by non-affiliates by the price at which such 

14 securities were last sold (or the average bid and 

15 asked prices of such securities) in the principal 

16 market for such securities or, in the event the 

17 result of such public float calculation is zero, 

18 had annual revenues of less than $50,000,000 

19 as of the issuer’s most recently completed fiscal 

20 year.’’. 


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1 TITLE V—FAIR INVESTMENT OP2 PORTUNITIES FOR PROFES3 SIONAL EXPERTS 

4 SEC. 501. DEFINITION OF ACCREDITED INVESTOR. 

5 Section 2(a)(15) of the Securities Act of 1933 (15 

6 U.S.C. 77b(a)(15)) is amended— 

7 (1) by redesignating clauses (i) and (ii) as sub8 paragraphs (A) and (F), respectively; and 

9 (2) in subparagraph (A) (as so redesignated), 

10 by striking ‘‘; or’’ and inserting a semicolon, and in11 serting after such subparagraph the following: 

12 ‘‘(B) any natural person whose individual 

13 net worth, or joint net worth with that person’s 

14 spouse, exceeds $1,000,000 (which amount, 

15 along with the amounts set forth in subpara16 graph (C), shall be adjusted for inflation by the 

17 Commission every 5 years to the nearest 

18 $10,000 to reflect the change in the Consumer 

19 Price Index for All Urban Consumers published 

20 by the Bureau of Labor Statistics) where, for 

21 purposes of calculating net worth under this 

22 subparagraph— 

23 ‘‘(i) the person’s primary residence 

24 shall not be included as an asset; 


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1 ‘‘(ii) indebtedness that is secured by 

2 the person’s primary residence, up to the 

3 estimated fair market value of the primary 

4 residence at the time of the sale of securi5 ties, shall not be included as a liability (ex6 cept that if the amount of such indebted7 ness outstanding at the time of sale of se8 curities exceeds the amount outstanding 60 

9 days before such time, other than as a re10 sult of the acquisition of the primary resi11 dence, the amount of such excess shall be 

12 included as a liability); and 

13 ‘‘(iii) indebtedness that is secured by 

14 the person’s primary residence in excess of 

15 the estimated fair market value of the pri16 mary residence at the time of the sale of 

17 securities shall be included as a liability; 

18 ‘‘(C) any natural person who had an indi19 vidual income in excess of $200,000 in each of 

20 the two most recent years or joint income with 

21 that person’s spouse in excess of $300,000 in 

22 each of those years and has a reasonable expec23 tation of reaching the same income level in the 

24 current year; 


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1 ‘‘(D) any natural person who is currently 

2 licensed or registered as a broker or investment 

3 adviser by the Commission, the Financial In4 dustry Regulatory Authority, or an equivalent 

5 self-regulatory organization (as defined in sec6 tion 3(a)(26) of the Securities Exchange Act of 

7 1934), or the securities division of a State or 

8 the equivalent State division responsible for li9 censing or registration of individuals in connec10 tion with securities activities; 

11 ‘‘(E) any natural person the Commission 

12 determines, by regulation, to have demonstrable 

13 education or job experience to qualify such per14 son as having professional knowledge of a sub15 ject related to a particular investment, and 

16 whose education or job experience is verified by 

17 the Financial Industry Regulatory Authority or 

18 an equivalent self-regulatory organization (as 

19 defined in section 3(a)(26) of the Securities Ex20 change Act of 1934); or’’. 


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1 TITLE VI—U.S. TERRITORIES 

2 INVESTOR PROTECTION 

3 SEC. 601. TERMINATION OF EXEMPTION. 

4 (a) IN GENERAL.—Section 6(a) of the Investment 

5 Company Act of 1940 (15 U.S.C. 80a–6(a)) is amended 

6 by striking paragraph (1). 

7 (b) EFFECTIVE DATE AND SAFE HARBOR.— 

8 (1) EFFECTIVE DATE.—Except as provided in 

9 paragraph (2), the amendment made by subsection 

10 (a) shall take effect on the date of the enactment of 

11 this Act. 

12 (2) SAFE HARBOR.—With respect to a company 

13 that is exempt under section 6(a)(1) of the Invest14 ment Company Act of 1940 (15 U.S.C. 80a–6(a)(1)) 

15 on the day before the date of the enactment of this 

16 Act, the amendment made by subsection (a) shall 

17 take effect on the date that is 3 years after the date 

18 of the enactment of this Act. 

19 (3) EXTENSION OF SAFE HARBOR.—The Secu20 rities and Exchange Commission, by rule and regula21 tion upon its own motion, or by order upon applica22 tion, may conditionally or unconditionally, under sec23 tion 6(c) of the Investment Company Act of 1940 

24 (15 U.S.C. 80a–6(c)), further delay the effective 

25 date for a company described in paragraph (2) for 


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27 

HR 6427 RDS

1 a maximum of 3 years following the initial 3-year 

2 period if, before the end of the initial 3-year period, 

3 the Commission determines that such a rule, regula4 tion, motion, or order is necessary or appropriate in 

5 the public interest and for the protection of inves6 tors. 

Passed the House of Representatives December 5, 

2016. 

Attest: KAREN L. HAAS, 

Clerk. 


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