II 
Calendar No. 224 
112TH CONGRESS 
1ST SESSION H. R. 2930 
IN THE SENATE OF THE UNITED STATES 
NOVEMBER 7, 2011 
Received; read the first time 
NOVEMBER 8, 2011 
Read the second time and placed on the calendar 
AN ACT 
To amend the securities laws to provide for registration 
exemptions for certain crowdfunded securities, and for 
other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Entrepreneur Access 
to Capital Act’’. 
SEC. 2. CROWDFUNDING EXEMPTION. 
(a) SECURITIES ACT OF 1933.—Section 4 of the Se-
curities Act of 1933 (15 U.S.C. 77d) is amended by add-
ing at the end the following: 
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‘‘(6) transactions involving the offer or sale of 
securities by an issuer, provided that— 
‘‘(A) the aggregate amount sold within the 
previous 12-month period in reliance upon this 
exemption is— 
‘‘(i) $1,000,000, as such amount is 
adjusted by the Commission to reflect the 
annual change in the Consumer Price 
Index for All Urban Consumers published 
by the Bureau of Labor Statistics, or less; 
or 
‘‘(ii) if the issuer provides potential 
investors with audited financial statements, 
$2,000,000, as such amount is adjusted by 
the Commission to reflect the annual 
change in the Consumer Price Index for 
All Urban Consumers published by the Bu-
reau of Labor Statistics, or less; 
‘‘(B) the aggregate amount sold to any in-
vestor in reliance on this exemption within the 
previous 12-month period does not exceed the 
lesser of— 
‘‘(i) $10,000, as such amount is ad-
justed by the Commission to reflect the an-
nual change in the Consumer Price Index 
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for All Urban Consumers published by the 
Bureau of Labor Statistics; and 
‘‘(ii) 10 percent of such investor’s an-
nual income; 
‘‘(C) in the case of a transaction involving 
an intermediary between the issuer and the in-
vestor, such intermediary complies with the re-
quirements under section 4A(a); and 
‘‘(D) in the case of a transaction not in-
volving an intermediary between the issuer and 
the investor, the issuer complies with the re-
quirements under section 4A(b).’’. 
(b) 
REQUIREMENTS
TO
QUALIFY
FOR 
CROWDFUNDING EXEMPTION.—The Securities Act of 
1933 is amended by inserting after section 4 the following: 
‘‘SEC. 4A. REQUIREMENTS WITH RESPECT TO CERTAIN 
SMALL TRANSACTIONS. 
‘‘(a) REQUIREMENTS
ON
INTERMEDIARIES.—For 
purposes of section 4(6), a person acting as an inter-
mediary in a transaction involving the offer or sale of secu-
rities shall comply with the requirements of this subsection 
if the intermediary— 
‘‘(1) 
warns 
investors, 
including 
on 
the 
intermediary’s website used for the offer and sale of 
such securities, of the speculative nature generally 
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applicable to investments in startups, emerging busi-
nesses, and small issuers, including risks in the sec-
ondary market related to illiquidity; 
‘‘(2) warns investors that they are subject to 
the restriction on sales requirement described under 
subsection (e); 
‘‘(3) takes reasonable measures to reduce the 
risk of fraud with respect to such transaction; 
‘‘(4) 
provides 
the 
Commission 
with 
the 
intermediary’s physical address, website address, 
and the names of the intermediary and employees of 
the intermediary, and keep such information up-to- 
date; 
‘‘(5) provides the Commission with continuous 
investor-level access to the intermediary’s website; 
‘‘(6) requires each potential investor to answer 
questions demonstrating— 
‘‘(A) an understanding of the level of risk 
generally applicable to investments in startups, 
emerging businesses, and small issuers; 
‘‘(B) an understanding of the risk of 
illiquidity; and 
‘‘(C) such other areas as the Commission 
may determine appropriate by rule or regula-
tion; 
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‘‘(7) requires the issuer to state a target offer-
ing amount and a deadline to reach the target offer-
ing amount and ensure the third party custodian de-
scribed under paragraph (10) withholds offering pro-
ceeds until aggregate capital raised from investors 
other than the issuer is no less than 60 percent of 
the target offering amount; 
‘‘(8) carries out a background check on the 
issuer’s principals; 
‘‘(9) provides the Commission and potential in-
vestors with notice of the offering, not later than the 
first day securities are offered to potential investors, 
including— 
‘‘(A) the issuer’s name, legal status, phys-
ical address, and website address; 
‘‘(B) the names of the issuer’s principals; 
‘‘(C) the stated purpose and intended use 
of the proceeds of the offering sought by the 
issuer; and 
‘‘(D) the target offering amount and the 
deadline to reach the target offering amount; 
‘‘(10) outsources cash-management functions to 
a qualified third party custodian, such as a broker 
or dealer registered under section 15(b)(1) of the 
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Securities Exchange Act of 1934 or an insured de-
pository institution; 
‘‘(11) maintains such books and records as the 
Commission determines appropriate; 
‘‘(12) makes available on the intermediary’s 
website a method of communication that permits the 
issuer and investors to communicate with one an-
other; 
‘‘(13) provides the Commission with a notice 
upon completion of the offering, which shall include 
the aggregate offering amount and the number of 
purchasers; and 
‘‘(14) does not offer investment advice. 
‘‘(b) REQUIREMENTS
ON ISSUERS
IF NO INTER-
MEDIARY.—For purposes of section 4(6), an issuer who 
offers or sells securities without an intermediary shall 
comply with the requirements of this subsection if the 
issuer— 
‘‘(1) warns investors, including on the issuer’s 
website, of the speculative nature generally applica-
ble to investments in startups, emerging businesses, 
and small issuers, including risks in the secondary 
market related to illiquidity; 
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‘‘(2) warns investors that they are subject to 
the restriction on sales requirement described under 
subsection (e); 
‘‘(3) takes reasonable measures to reduce the 
risk of fraud with respect to such transaction; 
‘‘(4) provides the Commission with the issuer’s 
physical address, website address, and the names of 
the principals and employees of the issuers, and 
keeps such information up-to-date; 
‘‘(5) provides the Commission with continuous 
investor-level access to the issuer’s website; 
‘‘(6) requires each potential investor to answer 
questions demonstrating— 
‘‘(A) an understanding of the level of risk 
generally applicable to investments in startups, 
emerging businesses, and small issuers; 
‘‘(B) an understanding of the risk of 
illiquidity; and 
‘‘(C) such other areas as the Commission 
may determine appropriate by rule or regula-
tion; 
‘‘(7) states a target offering amount and en-
sures that the third party custodian described under 
paragraph (9) withholds offering proceeds until the 
aggregate capital raised from investors other than 
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the issuer is no less than 60 percent of the target 
offering amount; 
‘‘(8) provides the Commission with notice of the 
offering, not later than the first day securities are 
offered to potential investors, including— 
‘‘(A) the stated purpose and intended use 
of the proceeds of the offering sought by the 
issuer; and 
‘‘(B) the target offering amount and the 
deadline to reach the target offering amount; 
‘‘(9) outsources cash-management functions to 
a qualified third party custodian, such as a broker 
or dealer registered under section 15(b)(1) of the 
Securities Exchange Act of 1934 or an insured de-
pository institution; 
‘‘(10) maintains such books and records as the 
Commission determines appropriate; 
‘‘(11) makes available on the issuer’s website a 
method of communication that permits the issuer 
and investors to communicate with one another; 
‘‘(12) does not offer investment advice; 
‘‘(13) provides the Commission with a notice 
upon completion of the offering, which shall include 
the aggregate offering amount and the number of 
purchasers; and 
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‘‘(14) discloses to potential investors, on the 
issuer’s website, that the issuer has an interest in 
the issuance. 
‘‘(c) VERIFICATION OF INCOME.—For purposes of 
section 4(6), an issuer or intermediary may rely on certifi-
cations as to annual income provided by the person to 
whom the securities are sold to verify the investor’s in-
come. 
‘‘(d) INFORMATION AVAILABLE
TO STATES.—The 
Commission shall make the notices described under sub-
sections (a)(9), (a)(13), (b)(8), and (b)(13) and the infor-
mation described under subsections (a)(4) and (b)(4) 
available to the States. 
‘‘(e) RESTRICTION ON SALES.—With respect to a 
transaction involving the issuance of securities described 
under section 4(6), a purchaser may not transfer such se-
curities during the 1-year period beginning on the date 
of purchase, unless such securities are sold to— 
‘‘(1) the issuer of such securities; or 
‘‘(2) an accredited investor. 
‘‘(f) CONSTRUCTION.— 
‘‘(1) NO REGISTRATION AS BROKER.—With re-
spect to a transaction described under section 4(6) 
involving an intermediary, such intermediary shall 
not be required to register as a broker under section 
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15(a)(1) of the Securities Exchange Act of 1934 
solely by reason of participation in such transaction. 
‘‘(2) NO PRECLUSION OF OTHER CAPITAL RAIS-
ING.—Nothing in this section or section 4(6) shall 
be construed as preventing an issuer from raising 
capital through methods not described under section 
4(6).’’. 
(c) RULEMAKING.—Not later than 180 days after the 
date of the enactment of this Act, the Securities and Ex-
change Commission shall issue such rules as may be nec-
essary to carry out section 4A of the Securities Act of 
1933. In issuing such rules, the Commission shall consider 
the costs and benefits of the action. 
(d) DISQUALIFICATION.—Not later than 180 days 
after the date of the enactment of this Act, the Securities 
and Exchange Commission shall by rule or regulation es-
tablish disqualification provisions under which an issuer 
shall not be eligible to utilize the exemption under section 
4(6) of the Securities Act of 1933 based on the discipli-
nary history of the issuer or its predecessors, affiliates, 
officers, directors, or persons fulfilling similar roles. The 
Commission shall also establish disqualification provisions 
under which an intermediary shall not be eligible to act 
as an intermediary in connection with an offering utilizing 
the exemption under section 4(6) of the Securities Act of 
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1933 based on the disciplinary history of the intermediary 
or its predecessors, affiliates, officers, directors, or persons 
fulfilling similar roles. Such provisions shall be substan-
tially similar to the disqualification provisions contained 
in the regulations adopted in accordance with section 926 
of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (15 U.S.C. 77d note). 
SEC. 3. EXCLUSION OF CROWDFUNDING INVESTORS FROM 
SHAREHOLDER CAP. 
Section 12(g)(5) of the Securities Exchange Act of 
1934 (15 U.S.C. 78l(g)(5)) is amended— 
(1) by striking ‘‘(5) For the purposes’’ and in-
serting: 
‘‘(5) DEFINITIONS.— 
‘‘(A) IN
GENERAL.—For the purposes’’; 
and 
(2) by adding at the end the following: 
‘‘(B) EXCLUSION FOR PERSONS HOLDING 
CERTAIN
SECURITIES.—For purposes of this 
subsection, securities held by persons who pur-
chase such securities in transactions described 
under section 4(6) of the Securities Act of 1933 
shall not be deemed to be ‘held of record’.’’. 
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SEC. 4. PREEMPTION OF STATE LAW. 
(a) IN GENERAL.—Section 18(b)(4) of the Securities 
Act of 1933 (15 U.S.C. 77r(b)(4)) is amended— 
(1) by redesignating subparagraphs (C) and 
(D) as subparagraphs (D) and (E), respectively; and 
(2) by inserting after subparagraph (B) the fol-
lowing: 
‘‘(C) section 4(6);’’. 
(b) CLARIFICATION
OF
THE
PRESERVATION
OF 
STATE ENFORCEMENT AUTHORITY.— 
(1) IN GENERAL.—The amendments made by 
subsection (a) relate solely to State registration, doc-
umentation, and offering requirements, as described 
under section 18(a) of Securities Act of 1933 (15 
U.S.C. 77r(a)), and shall have no impact or limita-
tion on other State authority to take enforcement 
action with regard to an issuer, intermediary, or any 
other person or entity using the exemption from reg-
istration provided by section 4(6) of such Act. 
(2) CLARIFICATION
OF
STATE
JURISDICTION 
OVER
UNLAWFUL
CONDUCT
OF
INTERMEDIARIES, 
ISSUERS, AND CUSTODIANS.—Section 18(c)(1) of the 
Securities Act of 1933 is amended by striking ‘‘with 
respect to fraud or deceit, or unlawful conduct by a 
broker or dealer, in connection with securities or se-
curities transactions.’’ and inserting the following: ‘‘, 
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in connection with securities or securities trans-
actions, with respect to— 
‘‘(A) fraud or deceit; 
‘‘(B) unlawful conduct by a broker or deal-
er; and 
‘‘(C) with respect to a transaction de-
scribed under section 4(6), unlawful conduct by 
an intermediary, issuer, or custodian.’’. 
Passed the House of Representatives November 3, 
2011. 
Attest: 
KAREN L. HAAS, 
Clerk. 
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Calendar No. 224 
112TH CONGRESS 
1ST SESSION 
H. R. 2930 
AN ACT 
To amend the securities laws to provide for reg-
istration exemptions for certain crowdfunded se-
curities, and for other purposes. 
NOVEMBER 8, 2011 
Read the second time and placed on the calendar 
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