Date: 2016-07-05
Speaker: MAXINE WATERS (democrat)
Chamber: H
State: California

Mr. Speaker. I yield myself such time as I may consume. Mr. Speaker. I would like to thank my colleague from North Carolina for his efforts to work with me to craft this bipartisan legislation. H.R. 4855 is an example of how Congress can assist startups to finance their operations while still protecting the investors who entrust their hardearned funds to those companies. Equity crowdfunding. through which startup companies sell stock to hundreds or even thousands of everyday people. has been and will always be a highrisk. highreward investment. The sad reality is that most new businesses fail. As a result. Congress and the Securities and Exchange Commission have put in place guardrails to prevent lesssophisticated investors from suffering financial ruin. In 2012. Congress cautiously approached equity crowdfunding by creating a number of investor protections in the Jumpstart Our Business Startups Act. or JOBS Act. The SEC followed our directions and finalized a crowdfunding rule that protects investors by setting reasonable investment limits based on income and provides helpful disclosures for investors to weigh the risk. Last month. those rules went live. with hundreds of businesses successfully raising capital that. in turn. funds American jobs. H.R. 4855. as amended in committee. seeks to enhance the investor and company experience in crowdfunding. The bill would authorize crowdfunding portals to pool investors together in order to make a joint investment in a business. These vehicles would only make investments in one company and would be advised by a registered investment adviser with a fiduciary duty to the fund. Importantly. the investors would have the same rights to sue the company as if they had directly invested in the company itself. This provision will also aid companies as they will be able to more efficiently make financial decisions. provided that the investment adviser agrees that they are in the best interest of the funds investors. H.R. 4855 also clarifies that as long as a crowdfunding company continues to make ongoing disclosures to investors required under the SECs rules. it would not have to make the more detailed public reports until it had either a $75 million value or $50 million in revenue. This change is consistent with the levels set under Regulation A. another exempt offering sold to retail investors. I am pleased that the amended bill no longer includes problematic provisions that were opposed by advocates like the Consumer Federation of America. Instead. the bill is now crafted to make target improvements to crowdfunding for all investors and startups. Now. although crowdfunding should be viewed as a highly risky investment. especially for retail investors. both of the changes in H.R. 4855 will ensure a longer choice of highquality crowdfunding companies and a higher degree of finance savvy for investors. Mr. Speaker and Members. I had reservations about crowdfunding. I had real concerns. but I am very pleased that I was able to work with Mr. MCHENRY. and he was so very cooperative in dealing with those concerns that made me feel even better about crowdfunding than I had been feeling. So I am just so hopeful that this works and it works well. and that even though there is some risk involved in this. that we have the opportunity for people who want to take a little risk to go out there and to be able to organize the kind of funding that perhaps can make them reap substantial profits in a real credible way. So I want to thank. again. Mr. MCHENRY for his cooperation and for the work and the time that he has put into this. Mr. Speaker. I reserve the balance of my time.