HALOS Act

I 116TH CONGRESS 1ST SESSION H. R. 1909 To require the Securities and Exchange Commission to revise rules relating to general solicitation or general advertising to allow for presentations or other communication made by or on behalf of an issuer at certain events, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MARCH 27, 2019 Mr. CHABOT (for himself and Mr. SCHNEIDER) introduced the following bill; which was referred to the Committee on Financial Services A BILL To require the Securities and Exchange Commission to revise rules relating to general solicitation or general adver- tising to allow for presentations or other communication made by or on behalf of an issuer at certain events, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Helping Angels Lead 4 Our Startups Act of 2019’’ or the ‘‘HALOS Act’’. 5 VerDate Sep 11 2014 18:32 Apr 09, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1909.IH H1909 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 1909 IH SEC. 2. CLARIFICATION OF GENERAL SOLICITATION. 1 (a) DEFINITIONS.—For purposes of this Act and the 2 revision of rules required under this Act: 3 (1) ANGEL INVESTOR GROUP.—The term 4 ‘‘angel investor group’’ means any group that— 5 (A) is composed of accredited investors in- 6 terested in investing personal capital in early- 7 stage companies; 8 (B) holds regular meetings and has defined 9 processes and procedures for making invest- 10 ment decisions, either individually or among the 11 membership of the group as a whole; and 12 (C) is neither associated nor affiliated with 13 brokers, dealers, or investment advisers. 14 (2) ISSUER.—The term ‘‘issuer’’ means an 15 issuer that is a business, is not in bankruptcy or re- 16 ceivership, is not an investment company, and is not 17 a blank check, blind pool, or shell company. 18 (b) IN GENERAL.—Not later than 6 months after the 19 date of enactment of this Act, the Securities and Ex- 20 change Commission shall revise Regulation D of its rules 21 (17 CFR 230.500 et seq.) to require that in carrying out 22 the prohibition against general solicitation or general ad- 23 vertising contained in section 230.502(c) of title 17, Code 24 of Federal Regulations, the prohibition shall not apply to 25 VerDate Sep 11 2014 18:32 Apr 09, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1909.IH H1909 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 1909 IH a presentation or other communication made by or on be- 1 half of an issuer which is made at an event— 2 (1) sponsored by— 3 (A) the United States or any territory 4 thereof, by the District of Columbia, by any 5 State, by a political subdivision of any State or 6 territory, or by any agency or public instrumen- 7 tality of any of the foregoing; 8 (B) a college, university, or other institu- 9 tion of higher education; 10 (C) a nonprofit organization; 11 (D) an angel investor group; 12 (E) a venture forum, venture capital asso- 13 ciation, or trade association; or 14 (F) any other group, person or entity as 15 the Securities and Exchange Commission may 16 determine by rule; 17 (2) where any advertising for the event does not 18 reference any specific offering of securities by the 19 issuer; 20 (3) the sponsor of which— 21 (A) does not make investment rec- 22 ommendations or provide investment advice to 23 event attendees; 24 VerDate Sep 11 2014 18:32 Apr 09, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1909.IH H1909 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 1909 IH (B) does not engage in an active role in 1 any investment negotiations between the issuer 2 and investors attending the event; 3 (C) does not charge event attendees any 4 fees other than reasonable administrative fees; 5 (D) does not receive any compensation for 6 making introductions between investors attend- 7 ing the event and issuers, or for investment ne- 8 gotiations between such parties; 9 (E) makes readily available to attendees a 10 disclosure not longer than one page in length, 11 as prescribed by the Securities and Exchange 12 Commission, describing the nature of the event 13 and the risks of investing in the issuers pre- 14 senting at the event; and 15 (F) does not receive any compensation 16 with respect to such event that would require 17 registration of the sponsor as a broker or a 18 dealer under the Securities Exchange Act of 19 1934, or as an investment advisor under the In- 20 vestment Advisers Act of 1940; and 21 (4) where no specific information regarding an 22 offering of securities by the issuer is communicated 23 or distributed by or on behalf of the issuer, other 24 than— 25 VerDate Sep 11 2014 18:32 Apr 09, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1909.IH H1909 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 1909 IH (A) that the issuer is in the process of of- 1 fering securities or planning to offer securities; 2 (B) the type and amount of securities 3 being offered; 4 (C) the amount of securities being offered 5 that have already been subscribed for; and 6 (D) the intended use of proceeds of the of- 7 fering. 8 (c) RULE OF CONSTRUCTION.—Subsection (b) may 9 only be construed as requiring the Securities and Ex- 10 change Commission to amend the requirements of Regula- 11 tion D with respect to presentations and communications, 12 and not with respect to purchases or sales. 13 (d) NO PRE-EXISTING SUBSTANTIVE RELATIONSHIP 14 BY REASON OF EVENT.—Attendance at an event de- 15 scribed under subsection (b) shall not qualify, by itself, 16 as establishing a pre-existing substantive relationship be- 17 tween an issuer and a purchaser, for purposes of Rule 18 506(b). 19 Æ VerDate Sep 11 2014 18:32 Apr 09, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\H1909.IH H1909 pamtmann on DSKBFK8HB2PROD with BILLS