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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Creating Financial Prosperity for Businesses and Inves-
tors Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
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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TITLE I—SMALL BUSINESS CAP-
ITAL FORMATION ENHANCE-
MENT 
SEC. 101. ANNUAL REVIEW OF GOVERNMENT-BUSINESS 
FORUM ON CAPITAL FORMATION. 
Section 503 of the Small Business Investment Incen-
tive Act of 1980 (15 U.S.C. 80c–1) is amended by adding 
at the end the following: 
‘‘(e) The Commission shall— 
‘‘(1) review the findings and recommendations 
of the forum; and 
‘‘(2) each time the forum submits a finding or 
recommendation to the Commission, promptly issue 
a public statement— 
‘‘(A) assessing the finding or recommenda-
tion of the forum; and 
‘‘(B) disclosing the action, if any, the Com-
mission intends to take with respect to the find-
ing or recommendation.’’. 
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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. 
(a) OFFICE OF THE ADVOCATE FOR SMALL BUSI-
NESS CAPITAL FORMATION.—Section 4 of the Securities 
Exchange Act of 1934 (15 U.S.C. 78d) is amended by 
adding at the end the following: 
‘‘(j) OFFICE OF THE ADVOCATE FOR SMALL BUSI-
NESS CAPITAL FORMATION.— 
‘‘(1) OFFICE
ESTABLISHED.—There is estab-
lished within the Commission the Office of the Advo-
cate for Small Business Capital Formation (here-
after in this subsection referred to as the ‘Office’). 
‘‘(2) ADVOCATE FOR SMALL BUSINESS CAPITAL 
FORMATION.— 
‘‘(A) IN GENERAL.—The head of the Of-
fice shall be the Advocate for Small Business 
Capital Formation, who shall— 
‘‘(i) report directly to the Commission; 
and 
‘‘(ii) be appointed by the Commission, 
from among individuals having experience 
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in advocating for the interests of small 
businesses and encouraging small business 
capital formation. 
‘‘(B) COMPENSATION.—The annual rate of 
pay for the Advocate for Small Business Cap-
ital Formation shall be equal to the highest rate 
of annual pay for other senior executives who 
report directly to the Commission. 
‘‘(C) NO
CURRENT
EMPLOYEE
OF
THE 
COMMISSION.—An individual may not be ap-
pointed as the Advocate for Small Business 
Capital Formation if the individual is currently 
employed by the Commission. 
‘‘(3) STAFF
OF
OFFICE.—The Advocate for 
Small Business Capital Formation, after consulta-
tion with the Commission, may retain or employ 
independent counsel, research staff, and service 
staff, as the Advocate for Small Business Capital 
Formation determines to be necessary to carry out 
the functions of the Office. 
‘‘(4) FUNCTIONS
OF
THE
ADVOCATE
FOR 
SMALL BUSINESS CAPITAL FORMATION.—The Advo-
cate for Small Business Capital Formation shall— 
‘‘(A) assist small businesses and small 
business investors in resolving significant prob-
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lems such businesses and investors may have 
with the Commission or with self-regulatory or-
ganizations; 
‘‘(B) identify areas in which small busi-
nesses and small business investors would ben-
efit from changes in the regulations of the 
Commission or the rules of self-regulatory orga-
nizations; 
‘‘(C) identify problems that small busi-
nesses have with securing access to capital, in-
cluding any unique challenges to minority- 
owned and women-owned small businesses; 
‘‘(D) analyze the potential impact on small 
businesses and small business investors of— 
‘‘(i) proposed regulations of the Com-
mission that are likely to have a significant 
economic impact on small businesses and 
small business capital formation; and 
‘‘(ii) proposed rules that are likely to 
have a significant economic impact on 
small businesses and small business capital 
formation of self-regulatory organizations 
registered under this title; 
‘‘(E) conduct outreach to small businesses 
and small business investors, including through 
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regional roundtables, in order to solicit views on 
relevant capital formation issues; 
‘‘(F) to the extent practicable, propose to 
the Commission changes in the regulations or 
orders of the Commission and to Congress any 
legislative, administrative, or personnel changes 
that may be appropriate to mitigate problems 
identified under this paragraph and to promote 
the interests of small businesses and small busi-
ness investors; 
‘‘(G) consult with the Investor Advocate on 
proposed recommendations made under sub-
paragraph (F); and 
‘‘(H) advise the Investor Advocate on 
issues related to small businesses and small 
business investors. 
‘‘(5) ACCESS TO DOCUMENTS.—The Commis-
sion shall ensure that the Advocate for Small Busi-
ness Capital Formation has full access to the docu-
ments and information of the Commission and any 
self-regulatory organization, as necessary to carry 
out the functions of the Office. 
‘‘(6) ANNUAL REPORT ON ACTIVITIES.— 
‘‘(A) IN
GENERAL.—Not later than De-
cember 31 of each year after 2016, the Advo-
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cate for Small Business Capital Formation shall 
submit to the Committee on Banking, Housing, 
and Urban Affairs of the Senate and the Com-
mittee on Financial Services of the House of 
Representatives a report on the activities of the 
Advocate for Small Business Capital Formation 
during the immediately preceding fiscal year. 
‘‘(B) CONTENTS.—Each report required 
under subparagraph (A) shall include— 
‘‘(i) appropriate statistical information 
and full and substantive analysis; 
‘‘(ii) information on steps that the 
Advocate for Small Business Capital For-
mation has taken during the reporting pe-
riod to improve small business services and 
the responsiveness of the Commission and 
self-regulatory organizations to small busi-
ness and small business investor concerns; 
‘‘(iii) a summary of the most serious 
issues encountered by small businesses and 
small business investors, including any 
unique issues encountered by minority- 
owned and women-owned small businesses 
and their investors, during the reporting 
period; 
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‘‘(iv) an inventory of the items sum-
marized under clause (iii) (including items 
summarized under such clause for any 
prior reporting period on which no action 
has been taken or that have not been re-
solved to the satisfaction of the Advocate 
for Small Business Capital Formation as 
of the beginning of the reporting period 
covered by the report) that includes— 
‘‘(I) identification of any action 
taken by the Commission or the self- 
regulatory organization and the result 
of such action; 
‘‘(II) the length of time that each 
item has remained on such inventory; 
and 
‘‘(III) for items on which no ac-
tion has been taken, the reasons for 
inaction, and an identification of any 
official who is responsible for such ac-
tion; 
‘‘(v) 
recommendations 
for 
such 
changes to the regulations, guidance and 
orders of the Commission and such legisla-
tive actions as may be appropriate to re-
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solve problems with the Commission and 
self-regulatory organizations encountered 
by small businesses and small business in-
vestors and to encourage small business 
capital formation; and 
‘‘(vi) any other information, as deter-
mined appropriate by the Advocate for 
Small Business Capital Formation. 
‘‘(C) CONFIDENTIALITY.—No report re-
quired by subparagraph (A) may contain con-
fidential information. 
‘‘(D) INDEPENDENCE.—Each report re-
quired under subparagraph (A) shall be pro-
vided directly to the committees of Congress 
listed in such subparagraph without any prior 
review or comment from the Commission, any 
commissioner, any other officer or employee of 
the Commission, or the Office of Management 
and Budget. 
‘‘(7) REGULATIONS.—The Commission shall es-
tablish procedures requiring a formal response to all 
recommendations submitted to the Commission by 
the Advocate for Small Business Capital Formation, 
not later than 3 months after the date of such sub-
mission. 
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‘‘(8) GOVERNMENT-BUSINESS FORUM ON SMALL 
BUSINESS CAPITAL FORMATION.—The Advocate for 
Small Business Capital Formation shall be respon-
sible for planning, organizing, and executing the an-
nual Government-Business Forum on Small Busi-
ness Capital Formation described in section 503 of 
the Small Business Investment Incentive Act of 
1980 (15 U.S.C. 80c–1). 
‘‘(9) RULE
OF
CONSTRUCTION.—Nothing in 
this subsection may be construed as replacing or re-
ducing the responsibilities of the Investor Advocate 
with respect to small business investors.’’. 
(b) SMALL BUSINESS CAPITAL FORMATION ADVI-
SORY COMMITTEE.—Title I of the Securities Exchange 
Act of 1934 (15 U.S.C. 78a et seq.) is amended by adding 
at the end the following: 
‘‘SEC. 40. SMALL BUSINESS CAPITAL FORMATION ADVISORY 
COMMITTEE. 
‘‘(a) ESTABLISHMENT AND PURPOSE.— 
‘‘(1) ESTABLISHMENT.—There is established 
within the Commission the Small Business Capital 
Formation Advisory Committee (hereafter in this 
section referred to as the ‘Committee’). 
‘‘(2) FUNCTIONS.— 
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‘‘(A) IN GENERAL.—The Committee shall 
provide the Commission with advice on the 
Commission’s rules, regulations, and policies 
with regard to the Commission’s mission of pro-
tecting investors, maintaining fair, orderly, and 
efficient markets, and facilitating capital forma-
tion, as such rules, regulations, and policies re-
late to— 
‘‘(i) capital raising by emerging, pri-
vately held small businesses (‘emerging 
companies’) and publicly traded companies 
with less than $250,000,000 in public mar-
ket capitalization (‘smaller public compa-
nies’) through securities offerings, includ-
ing private and limited offerings and initial 
and other public offerings; 
‘‘(ii) trading in the securities of 
emerging companies and smaller public 
companies; and 
‘‘(iii) public reporting and corporate 
governance requirements of emerging com-
panies and smaller public companies. 
‘‘(B) LIMITATION.—The Committee shall 
not provide any advice with respect to any poli-
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cies, practices, actions, or decisions concerning 
the Commission’s enforcement program. 
‘‘(b) MEMBERSHIP.— 
‘‘(1) IN GENERAL.—The members of the Com-
mittee shall be— 
‘‘(A) the Advocate for Small Business Cap-
ital Formation; 
‘‘(B) not fewer than 10, and not more than 
20, members appointed by the Commission, 
from among individuals— 
‘‘(i) who represent— 
‘‘(I) emerging companies engag-
ing in private and limited securities 
offerings or considering initial public 
offerings (‘IPO’) (including the com-
panies’ officers and directors); 
‘‘(II) the professional advisors of 
such companies (including attorneys, 
accountants, investment bankers, and 
financial advisors); and 
‘‘(III) the investors in such com-
panies (including angel investors, ven-
ture capital funds, and family offices); 
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‘‘(ii) who are officers or directors of 
minority-owned 
small 
businesses 
or 
women-owned small businesses; 
‘‘(iii) who represent— 
‘‘(I) smaller public companies 
(including the companies’ officers and 
directors); 
‘‘(II) the professional advisors of 
such companies (including attorneys, 
auditors, underwriters, and financial 
advisors); and 
‘‘(III) the pre-IPO and post-IPO 
investors in such companies (both in-
stitutional, such as venture capital 
funds, and individual, such as angel 
investors); and 
‘‘(iv) who represent participants in the 
marketplace for the securities of emerging 
companies and smaller public companies, 
such as securities exchanges, alternative 
trading systems, analysts, information 
processors, and transfer agents; and 
‘‘(C) three non-voting members— 
‘‘(i) one of whom shall be appointed 
by the Investor Advocate; 
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‘‘(ii) one of whom shall be appointed 
by the North American Securities Adminis-
trators Association; and 
‘‘(iii) one of whom shall be appointed 
by the Administrator of the Small Busi-
ness Administration. 
‘‘(2) TERM.—Each member of the Committee 
appointed under subparagraph (B), (C)(ii), or 
(C)(iii) of paragraph (1) shall serve for a term of 4 
years. 
‘‘(3) MEMBERS
NOT
COMMISSION
EMPLOY-
EES.—Members appointed under subparagraph (B), 
(C)(ii), or (C)(iii) of paragraph (1) shall not be 
treated as employees or agents of the Commission 
solely because of membership on the Committee. 
‘‘(c) CHAIRMAN; VICE CHAIRMAN; SECRETARY; AS-
SISTANT SECRETARY.— 
‘‘(1) IN GENERAL.—The members of the Com-
mittee shall elect, from among the members of the 
Committee— 
‘‘(A) a chairman; 
‘‘(B) a vice chairman; 
‘‘(C) a secretary; and 
‘‘(D) an assistant secretary. 
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‘‘(2) TERM.—Each member elected under para-
graph (1) shall serve for a term of 3 years in the 
capacity for which the member was elected under 
paragraph (1). 
‘‘(d) MEETINGS.— 
‘‘(1) FREQUENCY
OF
MEETINGS.—The Com-
mittee shall meet— 
‘‘(A) not less frequently than four times 
annually, at the call of the chairman of the 
Committee; and 
‘‘(B) from time to time, at the call of the 
Commission. 
‘‘(2) NOTICE.—The chairman of the Committee 
shall give the members of the Committee written no-
tice of each meeting, not later than 2 weeks before 
the date of the meeting. 
‘‘(e) COMPENSATION
AND TRAVEL EXPENSES.— 
Each member of the Committee who is not a full-time em-
ployee of the United States shall— 
‘‘(1) be entitled to receive compensation at a 
rate not to exceed the daily equivalent of the annual 
rate of basic pay in effect for a position at level V 
of the Executive Schedule under section 5316 of title 
5, United States Code, for each day during which 
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the member is engaged in the actual performance of 
the duties of the Committee; and 
‘‘(2) while away from the home or regular place 
of business of the member in the performance of 
services for the Committee, be allowed travel ex-
penses, including per diem in lieu of subsistence, in 
the same manner as persons employed intermittently 
in the Government service are allowed expenses 
under section 5703 of title 5, United States Code. 
‘‘(f) STAFF.—The Commission shall make available 
to the Committee such staff as the chairman of the Com-
mittee determines are necessary to carry out this section. 
‘‘(g) REVIEW
BY COMMISSION.—The Commission 
shall— 
‘‘(1) review the findings and recommendations 
of the Committee; and 
‘‘(2) each time the Committee submits a finding 
or recommendation to the Commission, promptly 
issue a public statement— 
‘‘(A) assessing the finding or recommenda-
tion of the Committee; and 
‘‘(B) disclosing the action, if any, the Com-
mission intends to take with respect to the find-
ing or recommendation. 
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‘‘(h) FEDERAL ADVISORY COMMITTEE ACT.—The 
Federal Advisory Committee Act (5 U.S.C. App.) shall not 
apply with respect to the Committee and its activities.’’. 
(c) ANNUAL GOVERNMENT-BUSINESS FORUM
ON 
SMALL BUSINESS CAPITAL FORMATION.—Section 503(a) 
of the Small Business Investment Incentive Act of 1980 
(15 U.S.C. 80c–1(a)) is amended by inserting ‘‘(acting 
through the Office of the Advocate for Small Business 
Capital Formation and in consultation with the Small 
Business Capital Formation Advisory Committee)’’ after 
‘‘Securities and Exchange Commission’’. 
TITLE III—SUPPORTING 
AMERICA’S INNOVATORS 
SEC. 301. INVESTOR LIMITATION FOR QUALIFYING VEN-
TURE CAPITAL FUNDS. 
Section 3(c)(1) of the Investment Company Act of 
1940 (15 U.S.C. 80a–3(c)(1)) is amended— 
(1) by inserting after ‘‘one hundred persons’’ 
the following: ‘‘(or, with respect to a qualifying ven-
ture capital fund, 250 persons)’’; and 
(2) by adding at the end the following: 
‘‘(C) The term ‘qualifying venture capital 
fund’ means any venture capital fund (as de-
fined pursuant to section 203(l)(1) of the In-
vestment Advisers Act of 1940 (15 U.S.C. 80b– 
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3(l)(1)) with no more than $10,000,000 in in-
vested capital, as such dollar amount is annu-
ally adjusted by the Commission to reflect the 
change in the Consumer Price Index for All 
Urban Consumers published by the Bureau of 
Labor Statistics of the Department of Labor.’’. 
TITLE IV—FIX CROWDFUNDING 
SEC. 401. 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 4A(f)(3), by inserting ‘‘by any of 
paragraphs (1) through (14) of’’ before ‘‘section 
3(c)’’; and 
(2) in section 4(a)(6)(B), by inserting after 
‘‘any investor’’ the following: ‘‘, other than a 
crowdfunding vehicle (as defined in section 2(a) of 
the Investment Company Act of 1940),’’. 
(b) AMENDMENTS TO THE INVESTMENT COMPANY 
ACT OF 1940.—The Investment Company Act of 1940 (15 
U.S.C. 80a–1 et seq.) is amended— 
(1) in section 2(a), by adding at the end the 
following: 
‘‘(55) The term ‘crowdfunding vehicle’ means a 
company— 
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‘‘(A) whose purpose (as set forth in its or-
ganizational documents) is limited to acquiring, 
holding, and disposing securities issued by a 
single company in one or more transactions and 
made pursuant to section 4(a)(6) of the Securi-
ties Act of 1933; 
‘‘(B) which issues only one class of securi-
ties; 
‘‘(C) which receives no compensation in 
connection with such acquisition, holding, or 
disposition of securities; 
‘‘(D) no associated person of which re-
ceives any compensation in connection with 
such acquisition, holding or disposition of secu-
rities unless such person is acting as or on be-
half of an investment adviser registered under 
the Investment Advisers Act of 1940 or reg-
istered as an investment adviser in the State in 
which the investment adviser maintains its prin-
cipal office and place of business; 
‘‘(E) the securities of which have been 
issued in a transaction made pursuant to sec-
tion 4(a)(6) of the Securities Act of 1933, 
where both the crowdfunding vehicle and the 
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company whose securities it holds are co- 
issuers; 
‘‘(F) which is current in its ongoing disclo-
sure obligations under Rule 202 of Regulation 
Crowdfunding (17 CFR 227.202); 
‘‘(G) the company whose securities it holds 
is current in its ongoing disclosure obligations 
under Rule 202 of Regulation Crowdfunding 
(17 CFR 227.202); and 
‘‘(H) is advised by an investment adviser 
registered under the Investment Advisers Act of 
1940 or registered as an investment adviser in 
the State in which the investment adviser main-
tains its principal office and place of business.’’; 
and 
(2) in section 3(c), by adding at the end the fol-
lowing: 
‘‘(15) Any crowdfunding vehicle.’’. 
SEC. 402. CROWDFUNDING EXEMPTION FROM REGISTRA-
TION. 
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 insert-
ing the following: 
‘‘(A) IN GENERAL.—The Commission’’; 
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(2) 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.—An exemption under 
subparagraph (A) shall be unconditional for se-
curities offered by an issuer that had a public 
float of less than $75,000,000 as of the last 
business day of the issuer’s most recently com-
pleted semiannual period, computed by multi-
plying the aggregate worldwide number of 
shares of the issuer’s common equity securities 
held by non-affiliates by the price at which such 
securities were last sold (or the average bid and 
asked prices of such securities) in the principal 
market for such securities or, in the event the 
result of such public float calculation is zero, 
had annual revenues of less than $50,000,000 
as of the issuer’s most recently completed fiscal 
year.’’. 
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TITLE V—FAIR INVESTMENT OP-
PORTUNITIES FOR PROFES-
SIONAL EXPERTS 
SEC. 501. DEFINITION OF ACCREDITED INVESTOR. 
Section 2(a)(15) of the Securities Act of 1933 (15 
U.S.C. 77b(a)(15)) is amended— 
(1) by redesignating clauses (i) and (ii) as sub-
paragraphs (A) and (F), respectively; and 
(2) in subparagraph (A) (as so redesignated), 
by striking ‘‘; or’’ and inserting a semicolon, and in-
serting after such subparagraph the following: 
‘‘(B) any natural person whose individual 
net worth, or joint net worth with that person’s 
spouse, exceeds $1,000,000 (which amount, 
along with the amounts set forth in subpara-
graph (C), shall be adjusted for inflation by the 
Commission every 5 years to the nearest 
$10,000 to reflect the change in the Consumer 
Price Index for All Urban Consumers published 
by the Bureau of Labor Statistics) where, for 
purposes of calculating net worth under this 
subparagraph— 
‘‘(i) the person’s primary residence 
shall not be included as an asset; 
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‘‘(ii) indebtedness that is secured by 
the person’s primary residence, up to the 
estimated fair market value of the primary 
residence at the time of the sale of securi-
ties, shall not be included as a liability (ex-
cept that if the amount of such indebted-
ness outstanding at the time of sale of se-
curities exceeds the amount outstanding 60 
days before such time, other than as a re-
sult of the acquisition of the primary resi-
dence, the amount of such excess shall be 
included as a liability); and 
‘‘(iii) indebtedness that is secured by 
the person’s primary residence in excess of 
the estimated fair market value of the pri-
mary residence at the time of the sale of 
securities shall be included as a liability; 
‘‘(C) any natural person who had an indi-
vidual income in excess of $200,000 in each of 
the two most recent years or joint income with 
that person’s spouse in excess of $300,000 in 
each of those years and has a reasonable expec-
tation of reaching the same income level in the 
current year; 
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‘‘(D) any natural person who is currently 
licensed or registered as a broker or investment 
adviser by the Commission, the Financial In-
dustry Regulatory Authority, or an equivalent 
self-regulatory organization (as defined in sec-
tion 3(a)(26) of the Securities Exchange Act of 
1934), or the securities division of a State or 
the equivalent State division responsible for li-
censing or registration of individuals in connec-
tion with securities activities; 
‘‘(E) any natural person the Commission 
determines, by regulation, to have demonstrable 
education or job experience to qualify such per-
son as having professional knowledge of a sub-
ject related to a particular investment, and 
whose education or job experience is verified by 
the Financial Industry Regulatory Authority or 
an equivalent self-regulatory organization (as 
defined in section 3(a)(26) of the Securities Ex-
change Act of 1934); or’’. 
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a maximum of 3 years following the initial 3-year 
period if, before the end of the initial 3-year period, 
the Commission determines that such a rule, regula-
tion, motion, or order is necessary or appropriate in 
the public interest and for the protection of inves-
tors. 
Passed the House of Representatives December 5, 
2016. 
Attest: 
KAREN L. HAAS, 
Clerk. 
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