I 

114TH CONGRESS 

2D SESSION H. R. 4855 

To amend provisions in the securities laws relating to regulation crowdfunding 

to raise the dollar amount limit and to clarify certain requirements 

and exclusions for funding portals established by such Act. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 23, 2016 

Mr. MCHENRY introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To amend provisions in the securities laws relating to regulation crowdfunding to raise the dollar amount limit and 

to clarify certain requirements and exclusions for funding 

portals established by such Act. 

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. 

4 This Act may be cited as the ‘‘Fix Crowdfunding 

5 Act’’. 

6 SEC. 2. QUALIFICATION FOR CROWDFUNDING EXEMPTION. 

7 (1) INCREASE IN LIMIT OF AMOUNT SOLD IN

8 RELIANCE ON THE CROWDFUNDING EXEMPTION.— 


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1 Section 4(a)(6)(A) of the Securities Act of 1933 (15 

2 U.S.C. 77d(6)(A)) is amended by striking 

3 ‘‘$1,000,000’’ and inserting ‘‘$5,000,000’’. 

4 (2) CLARIFICATION OF TRANSACTION CAPS.— 

5 Section 4(a)(6)(B) of such Act is amended— 

6 (A) in clause (i), by inserting ‘‘the greater 

7 of’’ after ‘‘5 percent of’’; and 

8 (B) in clause (ii), by inserting ‘‘the greater 

9 of’’ after ‘‘10 percent of’’. 

10 SEC. 3. CLARIFICATION OF CERTAIN FUNDING PORTAL RE11 QUIREMENTS AND EXCLUSIONS FOR REGU12 LATION CROWDFUNDING. 

13 (a) EXCLUSION OF ISSUERS FROM FUNDING POR14 TALS.— 

15 (1) CLARIFICATION OF CERTAIN EXCLUSION

16 REQUIREMENTS.—Section 302 of the Jumpstart Our 

17 Business Startups Act is amended by adding at the 

18 end the following: 

19 ‘‘(e) CLARIFICATION OF CERTAIN EXCLUSION RE20 QUIREMENTS FOR FUNDING PORTALS.—Under the rules 

21 issued pursuant to subsection (d), a funding portal shall 

22 have a reasonable basis for disqualifying an issuer from 

23 offering securities through such funding portal pursuant 

24 to section 4(a)(6) of the Securities Act of 1933 if the fund25 ing portal, through a background check of the issuer or 


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1 other means, has found that such issuer, in connection 

2 with the offer, purchase, or sale of securities, has know3 ingly— 

4 ‘‘(1) made any untrue statement of a material 

5 fact or to omit to state a material fact necessary in 

6 order to make the statements made, in the light of 

7 the circumstances under which they were made, not 

8 misleading; or 

9 ‘‘(2) engaged in any act, practice, or course of 

10 business which operates or would operate as a fraud 

11 or deceit upon any person.’’. 

12 (2) CLARIFICATION OF OTHER OBLIGATIONS TO

13 REDUCE THE RISK OF FRAUD.—Section 4A(a)(5) of 

14 the Securities Act of 1933 (15 U.S.C. 77d–1(a)(5)) 

15 is amended to read as follows: 

16 ‘‘(5) as a minimum to reduce the risk of fraud 

17 with respect to such transactions obtain a back18 ground and securities enforcement regulatory history 

19 check on each officer, director, and person holding 

20 more than 20 percent of the outstanding equity of 

21 every issuer whose securities are offered by such per22 son;’’. 

23 (3) CLARIFICATION OF LIABILITY OF FUNDING

24 PORTALS FOR MATERIAL MISSTATEMENTS AND

25 OMISSIONS.—Section 4A(c) of such Act (15 U.S.C. 


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1 77d–1(c)) is amended by adding the end the fol2 lowing: 

3 ‘‘(4) LIABILITY OF FUNDING PORTALS.—For 

4 purposes of this subsection, an intermediary shall 

5 not be considered an issuer unless, in connection 

6 with the offer or sale of a security, it knowingly— 

7 ‘‘(A) made any untrue statement of a ma8 terial fact or omitted to state a material fact 

9 necessary in order to make the statements 

10 made, in the light of the circumstances under 

11 which they were made, not misleading; or 

12 ‘‘(B) engaged in any act, practice, or 

13 course of business which operates or would op14 erate as a fraud or deceit upon any person.’’. 

15 (b) EXEMPTION FROM REGISTRATION.—Section 

16 12(g)(6) of the Securities Exchange Act of 1934 (15 

17 U.S.C. 78l(g)(6)) is amended— 

18 (1) by striking ‘‘The Commission’’ and all that 

19 follows through ‘‘securities’’ and inserting ‘‘Securi20 ties’’; and 

21 (2) by inserting ‘‘shall be exempt’’ after ‘‘Secu22 rities Act of 1933’’. 

23 (c) ALLOWING SINGLE-PURPOSE FUNDS.— 


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1 (1) AMENDMENT TO THE SECURITIES ACT OF

2 1933.—Section 4A(f) of the Securities Act of 1933 

3 (15 U.S.C. 77d–1(f)) is amended— 

4 (A) by striking paragraph (2); and 

5 (B) by redesignating paragraph (3) as 

6 paragraph (2) and in such paragraph, by in7 serting ‘‘paragraphs (1) to (14) of’’ after ‘‘sec8 tion 3(b) or’’. 

9 (2) AMENDMENT TO THE INVESTMENT COM10 PANY ACT OF 1940.—Section 3(c) of the Investment 

11 Company Act of 1940 (15 U.S.C. 80a–3(c)) is 

12 amended by adding at the end the following: 

13 ‘‘(15) any issuer that holds, for the purpose of 

14 making an offering pursuant to section 4(a)(6) of 

15 the Securities Act of 1933 and the rules issued pur16 suant to such section, the securities of not more 

17 than one issuer eligible to offer securities pursuant 

18 to such section and such rules.’’. 

19 (3) APPLICATION OF RULES.—Single-purpose 

20 funds that are excluded from the definition of invest21 ment company under paragraph (15) of section 3(c) 

22 of the Investment Company Act (15 U.S.C. 80a– 

23 3(c))— 

24 (A) shall be allowed to sell and offer for 

25 sale securities under section 4(a)(6) of the SeVerDate Sep 11 2014 01:34 Mar 25, 2016 Jkt 059200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4855.IH H4855

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1 curities Act of 1933 (15 U.S.C. 77d(a)(6)) 

2 under the rules adopted on October 30, 2015, 

3 pursuant to title III of the JOBS Act (Public 

4 Law 112–106); and 

5 (B) shall be considered venture capital 

6 funds for purposes of section 275.203(l)–1 of 

7 title 17, Code of Federal Regulations. 

8 (d) SOLICITATION OF INTEREST.—Section 4A of the 

9 Securities Act of 1933 (15 U.S.C. 77d–1) is further 

10 amended— 

11 (1) by redesignating subsections (f) (as amend12 ed by subsection (c)(1)), (g), and (h) as subsections 

13 (g), (h), and (i), respectively; and 

14 (2) by inserting after subsection (e) the fol15 lowing: 

16 ‘‘(f) SOLICITATION OF INTEREST.— 

17 ‘‘(1) IN GENERAL.—At any time prior to the 

18 filing of information with the Commission and the 

19 commencement of an offering made in reliance on 

20 section 4(a)(6), an issuer may solicit non-binding in21 dications of interest from potential investors in a 

22 prospective offering using the same means and pur23 suant to the same regulations (other than the filing 

24 of information with the Commission) as if con25 ducting an offering pursuant to such section if— 


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1 ‘‘(A) no investor funds are accepted by 

2 such issuer; and 

3 ‘‘(B) any material change in the informa4 tion provided to potential investors during the 

5 actual offering pursuant to such section from 

6 the information provided to potential investors 

7 during such solicitation of interest are high8 lighted to potential investors in the information 

9 filed with the Commission. 

10 ‘‘(2) STATUS.—Such solicitation of interest 

11 shall not be considered an offer or sale of securities 

12 under this Act or the Securities Exchange Act of 

13 1934, regardless of whether or not the issuer actu14 ally conducts an offering pursuant to such section 

15 4(a)(6).’’. 

16 (e) GRACE PERIOD.—Consistent with the effective 

17 date of the final rules on regulation crowdfunding adopted 

18 by the Securities and Exchange Commission on October 

19 30, 2015, pursuant to title III of the JOBS Act (Public 

20 Law 112–106), funding portals established under such 

21 Act shall make a good faith effort to comply with all such 

22 rules. Notwithstanding such effective date, no enforcement 

23 action may be brought against a funding portal before 

24 May 16, 2021. 

Æ 


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