I 

114TH CONGRESS 

2D SESSION H. R. 6427 

To improve the operation of United States capital markets, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 2, 2016 

Mr. GARRETT (for himself, Mr. NEUGEBAUER, Mr. DUFFY, Mr. CARNEY, Ms. 

VELA ́ZQUEZ, Mr. MCHENRY, Mr. HUIZENGA of Michigan, Mr. POLIQUIN, 

Mr. SCHWEIKERT, Mr. HURT of Virginia, and Mr. LUETKEMEYER) introduced the following bill; which was referred to the Committee on Financial Services 

A BILL 

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, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Creating Financial Prosperity for Businesses and Inves6 tors Act’’. 

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

8 this Act is as follows: 

Sec. 1. Short title; table of contents. 


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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. 

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— 


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1 ‘‘(A) assessing the finding or recommenda2 tion of the forum; and 

3 ‘‘(B) disclosing the action, if any, the Com4 mission intends to take with respect to the find5 ing or recommendation.’’. 

6 TITLE II—SEC SMALL BUSINESS 

7 ADVOCATE 

8 SEC. 201. ESTABLISHMENT OF OFFICE OF THE ADVOCATE 

9 FOR SMALL BUSINESS CAPITAL FORMATION 

10 AND SMALL BUSINESS CAPITAL FORMATION 

11 ADVISORY COMMITTEE. 

12 (a) OFFICE OF THE ADVOCATE FOR SMALL BUSI13 NESS CAPITAL FORMATION.—Section 4 of the Securities 

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

15 adding at the end the following: 

16 ‘‘(j) OFFICE OF THE ADVOCATE FOR SMALL BUSI17 NESS CAPITAL FORMATION.— 

18 ‘‘(1) OFFICE ESTABLISHED.—There is estab19 lished within the Commission the Office of the Advo20 cate for Small Business Capital Formation (here21 after in this subsection referred to as the ‘Office’). 

22 ‘‘(2) ADVOCATE FOR SMALL BUSINESS CAPITAL

23 FORMATION.— 


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1 ‘‘(A) IN GENERAL.—The head of the Of2 fice shall be the Advocate for Small Business 

3 Capital Formation, who shall— 

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

5 and 

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

7 from among individuals having experience 

8 in advocating for the interests of small 

9 businesses and encouraging small business 

10 capital formation. 

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

12 pay for the Advocate for Small Business Cap13 ital Formation shall be equal to the highest rate 

14 of annual pay for other senior executives who 

15 report directly to the Commission. 

16 ‘‘(C) NO CURRENT EMPLOYEE OF THE

17 COMMISSION.—An individual may not be ap18 pointed as the Advocate for Small Business 

19 Capital Formation if the individual is currently 

20 employed by the Commission. 

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

22 Small Business Capital Formation, after consulta23 tion with the Commission, may retain or employ 

24 independent counsel, research staff, and service 

25 staff, as the Advocate for Small Business Capital 


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1 Formation determines to be necessary to carry out 

2 the functions of the Office. 

3 ‘‘(4) FUNCTIONS OF THE ADVOCATE FOR

4 SMALL BUSINESS CAPITAL FORMATION.—The Advo5 cate for Small Business Capital Formation shall— 

6 ‘‘(A) assist small businesses and small 

7 business investors in resolving significant prob8 lems such businesses and investors may have 

9 with the Commission or with self-regulatory or10 ganizations; 

11 ‘‘(B) identify areas in which small busi12 nesses and small business investors would ben13 efit from changes in the regulations of the 

14 Commission or the rules of self-regulatory orga15 nizations; 

16 ‘‘(C) identify problems that small busi17 nesses have with securing access to capital, in18 cluding any unique challenges to minority19 owned and women-owned small businesses; 

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

21 businesses and small business investors of— 

22 ‘‘(i) proposed regulations of the Com23 mission that are likely to have a significant 

24 economic impact on small businesses and 

25 small business capital formation; and 


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

2 have a significant economic impact on 

3 small businesses and small business capital 

4 formation of self-regulatory organizations 

5 registered under this title; 

6 ‘‘(E) conduct outreach to small businesses 

7 and small business investors, including through 

8 regional roundtables, in order to solicit views on 

9 relevant capital formation issues; 

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

11 the Commission changes in the regulations or 

12 orders of the Commission and to Congress any 

13 legislative, administrative, or personnel changes 

14 that may be appropriate to mitigate problems 

15 identified under this paragraph and to promote 

16 the interests of small businesses and small busi17 ness investors; 

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

19 proposed recommendations made under sub20 paragraph (F); and 

21 ‘‘(H) advise the Investor Advocate on 

22 issues related to small businesses and small 

23 business investors. 

24 ‘‘(5) ACCESS TO DOCUMENTS.—The Commis25 sion shall ensure that the Advocate for Small BusiVerDate Sep 11 2014 22:47 Dec 02, 2016 Jkt 069200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H6427.IH H6427

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1 ness Capital Formation has full access to the docu2 ments and information of the Commission and any 

3 self-regulatory organization, as necessary to carry 

4 out the functions of the Office. 

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

6 ‘‘(A) IN GENERAL.—Not later than De7 cember 31 of each year after 2016, the Advo8 cate for Small Business Capital Formation shall 

9 submit to the Committee on Banking, Housing, 

10 and Urban Affairs of the Senate and the Com11 mittee on Financial Services of the House of 

12 Representatives a report on the activities of the 

13 Advocate for Small Business Capital Formation 

14 during the immediately preceding fiscal year. 

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

16 under subparagraph (A) shall include— 

17 ‘‘(i) appropriate statistical information 

18 and full and substantive analysis; 

19 ‘‘(ii) information on steps that the 

20 Advocate for Small Business Capital For21 mation has taken during the reporting pe22 riod to improve small business services and 

23 the responsiveness of the Commission and 

24 self-regulatory organizations to small busi25 ness and small business investor concerns; 


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

2 issues encountered by small businesses and 

3 small business investors, including any 

4 unique issues encountered by minority5 owned and women-owned small businesses 

6 and their investors, during the reporting 

7 period; 

8 ‘‘(iv) an inventory of the items sum9 marized under clause (iii) (including items 

10 summarized under such clause for any 

11 prior reporting period on which no action 

12 has been taken or that have not been re13 solved to the satisfaction of the Advocate 

14 for Small Business Capital Formation as 

15 of the beginning of the reporting period 

16 covered by the report) that includes— 

17 ‘‘(I) identification of any action 

18 taken by the Commission or the self19 regulatory organization and the result 

20 of such action; 

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

22 item has remained on such inventory; 

23 and 

24 ‘‘(III) for items on which no ac25 tion has been taken, the reasons for 


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1 inaction, and an identification of any 

2 official who is responsible for such ac3 tion; 

4 ‘‘(v) recommendations for such 

5 changes to the regulations, guidance and 

6 orders of the Commission and such legisla7 tive actions as may be appropriate to re8 solve problems with the Commission and 

9 self-regulatory organizations encountered 

10 by small businesses and small business in11 vestors and to encourage small business 

12 capital formation; and 

13 ‘‘(vi) any other information, as deter14 mined appropriate by the Advocate for 

15 Small Business Capital Formation. 

16 ‘‘(C) CONFIDENTIALITY.—No report re17 quired by subparagraph (A) may contain con18 fidential information. 

19 ‘‘(D) INDEPENDENCE.—Each report re20 quired under subparagraph (A) shall be pro21 vided directly to the committees of Congress 

22 listed in such subparagraph without any prior 

23 review or comment from the Commission, any 

24 commissioner, any other officer or employee of 


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1 the Commission, or the Office of Management 

2 and Budget. 

3 ‘‘(7) REGULATIONS.—The Commission shall es4 tablish procedures requiring a formal response to all 

5 recommendations submitted to the Commission by 

6 the Advocate for Small Business Capital Formation, 

7 not later than 3 months after the date of such sub8 mission. 

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

10 BUSINESS CAPITAL FORMATION.—The Advocate for 

11 Small Business Capital Formation shall be respon12 sible for planning, organizing, and executing the an13 nual Government-Business Forum on Small Busi14 ness Capital Formation described in section 503 of 

15 the Small Business Investment Incentive Act of 

16 1980 (15 U.S.C. 80c–1). 

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

18 this subsection may be construed as replacing or re19 ducing the responsibilities of the Investor Advocate 

20 with respect to small business investors.’’. 

21 (b) SMALL BUSINESS CAPITAL FORMATION ADVI22 SORY COMMITTEE.—Title I of the Securities Exchange 

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

24 at the end the following: 


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

2 COMMITTEE. 

3 ‘‘(a) ESTABLISHMENT AND PURPOSE.— 

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

5 within the Commission the Small Business Capital 

6 Formation Advisory Committee (hereafter in this 

7 section referred to as the ‘Committee’). 

8 ‘‘(2) FUNCTIONS.— 

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

10 provide the Commission with advice on the 

11 Commission’s rules, regulations, and policies 

12 with regard to the Commission’s mission of pro13 tecting investors, maintaining fair, orderly, and 

14 efficient markets, and facilitating capital forma15 tion, as such rules, regulations, and policies re16 late to— 

17 ‘‘(i) capital raising by emerging, pri18 vately held small businesses (‘emerging 

19 companies’) and publicly traded companies 

20 with less than $250,000,000 in public mar21 ket capitalization (‘smaller public compa22 nies’) through securities offerings, includ23 ing private and limited offerings and initial 

24 and other public offerings; 


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1 ‘‘(ii) trading in the securities of 

2 emerging companies and smaller public 

3 companies; and 

4 ‘‘(iii) public reporting and corporate 

5 governance requirements of emerging com6 panies and smaller public companies. 

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

8 not provide any advice with respect to any poli9 cies, practices, actions, or decisions concerning 

10 the Commission’s enforcement program. 

11 ‘‘(b) MEMBERSHIP.— 

12 ‘‘(1) IN GENERAL.—The members of the Com13 mittee shall be— 

14 ‘‘(A) the Advocate for Small Business Cap15 ital Formation; 

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

17 20, members appointed by the Commission, 

18 from among individuals— 

19 ‘‘(i) who represent— 

20 ‘‘(I) emerging companies engag21 ing in private and limited securities 

22 offerings or considering initial public 

23 offerings (‘IPO’) (including the com24 panies’ officers and directors); 


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1 ‘‘(II) the professional advisors of 

2 such companies (including attorneys, 

3 accountants, investment bankers, and 

4 financial advisors); and 

5 ‘‘(III) the investors in such com6 panies (including angel investors, ven7 ture capital funds, and family offices); 

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

9 minority-owned small businesses or 

10 women-owned small businesses; 

11 ‘‘(iii) who represent— 

12 ‘‘(I) smaller public companies 

13 (including the companies’ officers and 

14 directors); 

15 ‘‘(II) the professional advisors of 

16 such companies (including attorneys, 

17 auditors, underwriters, and financial 

18 advisors); and 

19 ‘‘(III) the pre-IPO and post-IPO 

20 investors in such companies (both in21 stitutional, such as venture capital 

22 funds, and individual, such as angel 

23 investors); and 

24 ‘‘(iv) who represent participants in the 

25 marketplace for the securities of emerging 


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1 companies and smaller public companies, 

2 such as securities exchanges, alternative 

3 trading systems, analysts, information 

4 processors, and transfer agents; and 

5 ‘‘(C) three non-voting members— 

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

7 by the Investor Advocate; 

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

9 by the North American Securities Adminis10 trators Association; and 

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

12 by the Administrator of the Small Busi13 ness Administration. 

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

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

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

17 years. 

18 ‘‘(3) MEMBERS NOT COMMISSION EMPLOY19 EES.—Members appointed under subparagraph (B), 

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

21 treated as employees or agents of the Commission 

22 solely because of membership on the Committee. 

23 ‘‘(c) CHAIRMAN; VICE CHAIRMAN; SECRETARY; AS24 SISTANT SECRETARY.— 


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1 ‘‘(1) IN GENERAL.—The members of the Com2 mittee shall elect, from among the members of the 

3 Committee— 

4 ‘‘(A) a chairman; 

5 ‘‘(B) a vice chairman; 

6 ‘‘(C) a secretary; and 

7 ‘‘(D) an assistant secretary. 

8 ‘‘(2) TERM.—Each member elected under para9 graph (1) shall serve for a term of 3 years in the 

10 capacity for which the member was elected under 

11 paragraph (1). 

12 ‘‘(d) MEETINGS.— 

13 ‘‘(1) FREQUENCY OF MEETINGS.—The Com14 mittee shall meet— 

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

16 annually, at the call of the chairman of the 

17 Committee; and 

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

19 Commission. 

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

21 shall give the members of the Committee written no22 tice of each meeting, not later than 2 weeks before 

23 the date of the meeting. 


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

2 Each member of the Committee who is not a full-time em3 ployee of the United States shall— 

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

5 rate not to exceed the daily equivalent of the annual 

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

7 of the Executive Schedule under section 5316 of title 

8 5, United States Code, for each day during which 

9 the member is engaged in the actual performance of 

10 the duties of the Committee; and 

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

12 of business of the member in the performance of 

13 services for the Committee, be allowed travel ex14 penses, including per diem in lieu of subsistence, in 

15 the same manner as persons employed intermittently 

16 in the Government service are allowed expenses 

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

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

19 to the Committee such staff as the chairman of the Com20 mittee determines are necessary to carry out this section. 

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

22 shall— 

23 ‘‘(1) review the findings and recommendations 

24 of the Committee; and 


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

2 or recommendation to the Commission, promptly 

3 issue a public statement— 

4 ‘‘(A) assessing the finding or recommenda5 tion of the Committee; and 

6 ‘‘(B) disclosing the action, if any, the Com7 mission intends to take with respect to the find8 ing or recommendation. 

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

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

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

12 (c) ANNUAL GOVERNMENT-BUSINESS FORUM ON

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

14 of the Small Business Investment Incentive Act of 1980 

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

16 through the Office of the Advocate for Small Business 

17 Capital Formation and in consultation with the Small 

18 Business Capital Formation Advisory Committee)’’ after 

19 ‘‘Securities and Exchange Commission’’. 

20 TITLE III—SUPPORTING 

21 AMERICA’S INNOVATORS 

22 SEC. 301. INVESTOR LIMITATION FOR QUALIFYING VEN23 TURE CAPITAL FUNDS. 

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

25 1940 (15 U.S.C. 80a–3(c)(1)) is amended— 


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

2 the following: ‘‘(or, with respect to a qualifying ven3 ture capital fund, 250 persons)’’; and 

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

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

6 fund’ means any venture capital fund (as de7 fined pursuant to section 203(l)(1) of the In8 vestment Advisers Act of 1940 (15 U.S.C. 80b– 

9 3(l)(1)) with no more than $10,000,000 in in10 vested capital, as such dollar amount is annu11 ally adjusted by the Commission to reflect the 

12 change in the Consumer Price Index for All 

13 Urban Consumers published by the Bureau of 

14 Labor Statistics of the Department of Labor.’’. 

15 TITLE IV—FIX CROWDFUNDING 

16 SEC. 401. CROWDFUNDING VEHICLES. 

17 (a) AMENDMENTS TO THE SECURITIES ACT OF

18 1933.—The Securities Act of 1933 (15 U.S.C. 77a et 

19 seq.) is amended— 

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

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

22 3(c)’’; and 

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

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


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

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

3 (b) AMENDMENTS TO THE INVESTMENT COMPANY

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

5 U.S.C. 80a–1 et seq.) is amended— 

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

7 following: 

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

9 company— 

10 ‘‘(A) whose purpose (as set forth in its or11 ganizational documents) is limited to acquiring, 

12 holding, and disposing securities issued by a 

13 single company in one or more transactions and 

14 made pursuant to section 4(a)(6) of the Securi15 ties Act of 1933; 

16 ‘‘(B) which issues only one class of securi17 ties; 

18 ‘‘(C) which receives no compensation in 

19 connection with such acquisition, holding, or 

20 disposition of securities; 

21 ‘‘(D) no associated person of which re22 ceives any compensation in connection with 

23 such acquisition, holding or disposition of secu24 rities unless such person is acting as or on be25 half of an investment adviser registered under 


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1 the Investment Advisers Act of 1940 or reg2 istered as an investment adviser in the State in 

3 which the investment adviser maintains its prin4 cipal office and place of business; 

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

6 issued in a transaction made pursuant to sec7 tion 4(a)(6) of the Securities Act of 1933, 

8 where both the crowdfunding vehicle and the 

9 company whose securities it holds are co10 issuers; 

11 ‘‘(F) which is current in its ongoing disclo12 sure obligations under Rule 202 of Regulation 

13 Crowdfunding (17 C.F.R. 227.202); 

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

15 is current in its ongoing disclosure obligations 

16 under Rule 202 of Regulation Crowdfunding 

17 (17 C.F.R. 227.202); and 

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

19 registered under the Investment Advisers Act of 

20 1940 or registered as an investment adviser in 

21 the State in which the investment adviser main22 tains its principal office and place of business.’’; 

23 and 

24 (2) in section 3(c), by adding at the end the fol25 lowing: 


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

2 SEC. 402. CROWDFUNDING EXEMPTION FROM REGISTRA3 TION. 

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

5 1934 (15 U.S.C. 78l(g)(6)) is amended— 

6 (1) by striking ‘‘The Commission’’ and insert7 ing the following: 

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

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

10 ‘‘section 4(a)(6)’’; and 

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

12 ‘‘(B) TREATMENT OF SECURITIES ISSUED

13 BY CERTAIN ISSUERS.—An exemption under 

14 subparagraph (A) shall be unconditional for se15 curities offered by an issuer that had a public 

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

17 business day of the issuer’s most recently com18 pleted semiannual period, computed by multi19 plying the aggregate worldwide number of 

20 shares of the issuer’s common equity securities 

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

22 securities were last sold (or the average bid and 

23 asked prices of such securities) in the principal 

24 market for such securities or, in the event the 

25 result of such public float calculation is zero, 


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

2 as of the issuer’s most recently completed fiscal 

3 year.’’. 

4 TITLE V—FAIR INVESTMENT OP5 PORTUNITIES FOR PROFES6 SIONAL EXPERTS 

7 SEC. 501. DEFINITION OF ACCREDITED INVESTOR. 

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

9 U.S.C. 77b(a)(15)) is amended— 

10 (1) by redesignating clauses (i) and (ii) as sub11 paragraphs (A) and (F), respectively; and 

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

13 by striking ‘‘; or’’ and inserting a semicolon, and in14 serting after such subparagraph the following: 

15 ‘‘(B) any natural person whose individual 

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

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

18 along with the amounts set forth in subpara19 graph (C), shall be adjusted for inflation by the 

20 Commission every 5 years to the nearest 

21 $10,000 to reflect the change in the Consumer 

22 Price Index for All Urban Consumers published 

23 by the Bureau of Labor Statistics) where, for 

24 purposes of calculating net worth under this 

25 subparagraph— 


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

2 shall not be included as an asset; 

3 ‘‘(ii) indebtedness that is secured by 

4 the person’s primary residence, up to the 

5 estimated fair market value of the primary 

6 residence at the time of the sale of securi7 ties, shall not be included as a liability (ex8 cept that if the amount of such indebted9 ness outstanding at the time of sale of se10 curities exceeds the amount outstanding 60 

11 days before such time, other than as a re12 sult of the acquisition of the primary resi13 dence, the amount of such excess shall be 

14 included as a liability); and 

15 ‘‘(iii) indebtedness that is secured by 

16 the person’s primary residence in excess of 

17 the estimated fair market value of the pri18 mary residence at the time of the sale of 

19 securities shall be included as a liability; 

20 ‘‘(C) any natural person who had an indi21 vidual income in excess of $200,000 in each of 

22 the two most recent years or joint income with 

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

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1 tation of reaching the same income level in the 

2 current year; 

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

4 licensed or registered as a broker or investment 

5 adviser by the Commission, the Financial In6 dustry Regulatory Authority, or an equivalent 

7 self-regulatory organization (as defined in sec8 tion 3(a)(26) of the Securities Exchange Act of 

9 1934), or the securities division of a State or 

10 the equivalent State division responsible for li11 censing or registration of individuals in connec12 tion with securities activities; 

13 ‘‘(E) any natural person the Commission 

14 determines, by regulation, to have demonstrable 

15 education or job experience to qualify such per16 son as having professional knowledge of a sub17 ject related to a particular investment, and 

18 whose education or job experience is verified by 

19 the Financial Industry Regulatory Authority or 

20 an equivalent self-regulatory organization (as 

21 defined in section 3(a)(26) of the Securities Ex22 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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26 

•HR 6427 IH

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. 

Æ 


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