Main Street Growth Act

I 116TH CONGRESS 1ST SESSION H. R. 2899 To amend the Securities Exchange Act of 1934 to allow for the registration of venture exchanges, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 22, 2019 Mr. EMMER (for himself and Mr. GONZALEZ of Texas) introduced the following bill; which was referred to the Committee on Financial Services A BILL To amend the Securities Exchange Act of 1934 to allow for the registration of venture exchanges, 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 ‘‘Main Street Growth 4 Act’’. 5 SEC. 2. VENTURE EXCHANGES. 6 (a) SECURITIES EXCHANGE ACT OF 1934.—Section 7 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) 8 is amended by adding at the end the following: 9 ‘‘(m) VENTURE EXCHANGE.— 10 VerDate Sep 11 2014 21:03 Jun 06, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2899.IH H2899 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 2899 IH ‘‘(1) REGISTRATION.— 1 ‘‘(A) IN GENERAL.—A person may register 2 themself (and a national securities exchange 3 may register a listing tier of such exchange) as 4 a national securities exchange solely for the 5 purposes of trading venture securities by filing 6 an application with the Commission pursuant to 7 subsection (a) and the rules and regulations 8 thereunder. 9 ‘‘(B) PUBLICATION OF NOTICE.—The 10 Commission shall, upon the filing of an applica- 11 tion under subparagraph (A), publish notice of 12 such filing and afford interested persons an op- 13 portunity to submit written data, views, and ar- 14 guments concerning such application. 15 ‘‘(C) APPROVAL OR DENIAL.— 16 ‘‘(i) IN GENERAL.—Within 90 days of 17 the date of publication of a notice under 18 subparagraph (B) (or within such longer 19 period as to which the applicant consents), 20 the Commission shall— 21 ‘‘(I) by order grant such registra- 22 tion; or 23 VerDate Sep 11 2014 21:03 Jun 06, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2899.IH H2899 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 2899 IH ‘‘(II) institute a denial pro- 1 ceeding under clause (ii) to determine 2 whether registration should be denied. 3 ‘‘(ii) DENIAL PROCEEDING.—A pro- 4 ceeding under clause (i)(II) shall include 5 notice of the grounds for denial under con- 6 sideration and opportunity for hearing and 7 shall be concluded within 180 days of the 8 date of the publication of a notice under 9 subparagraph (B). At the conclusion of 10 such proceeding the Commission, by order, 11 shall grant or deny such registration. The 12 Commission may extend the time for con- 13 clusion of such proceeding for up to 90 14 days if the Commission finds good cause 15 for such extension and publishes the Com- 16 mission’s reasons for so finding or for such 17 longer period as to which the applicant 18 consents. 19 ‘‘(iii) CRITERIA FOR APPROVAL OR 20 DENIAL.—The Commission shall grant a 21 registration under this paragraph if the 22 Commission finds that the requirements of 23 this title and the rules and regulations 24 thereunder with respect to the applicant 25 VerDate Sep 11 2014 21:03 Jun 06, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2899.IH H2899 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 2899 IH are satisfied. The Commission shall deny 1 such registration if it does not make such 2 finding. 3 ‘‘(2) POWERS AND RESTRICTIONS.—In addition 4 to the powers and restrictions otherwise applicable 5 to a national securities exchange, a venture ex- 6 change— 7 ‘‘(A) may only constitute, maintain, or pro- 8 vide a market place or facilities for bringing to- 9 gether purchasers and sellers of venture securi- 10 ties; 11 ‘‘(B) may not extend unlisted trading 12 privileges to any venture security; 13 ‘‘(C) may only, if the venture exchange is 14 a listing tier of another national securities ex- 15 change, allow trading in securities that are reg- 16 istered under section 12(b) on a national securi- 17 ties exchange other than a venture exchange; 18 and 19 ‘‘(D) may, subject to the rule filing process 20 under section 19(b)— 21 ‘‘(i) determine the increment to be 22 used for quoting and trading venture secu- 23 rities on the exchange; and 24 VerDate Sep 11 2014 21:03 Jun 06, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2899.IH H2899 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 2899 IH ‘‘(ii) choose to carry out periodic auc- 1 tions for the sale of a venture security in- 2 stead of providing continuous trading of 3 the venture security. 4 ‘‘(3) TREATMENT OF CERTAIN EXEMPTED SE- 5 CURITIES.—A security that is exempt from registra- 6 tion pursuant to section 3(b) of the Securities Act 7 of 1933 shall be exempt from section 12(a) of this 8 title to the extent such securities are traded on a 9 venture exchange, if the issuer of such security is in 10 compliance with— 11 ‘‘(A) all disclosure obligations of such sec- 12 tion 3(b) and the regulations issued under such 13 section; and 14 ‘‘(B) ongoing disclosure obligations of the 15 applicable venture exchange that are similar to 16 those provided by an issuer under tier 2 of Reg- 17 ulation A (17 CFR 230.251 et seq.). 18 ‘‘(4) VENTURE SECURITIES TRADED ON VEN- 19 TURE EXCHANGES MAY NOT TRADE ON NON-VEN- 20 TURE EXCHANGES.—A venture security may not be 21 traded on a national securities exchange that is not 22 a venture exchange during any period in which the 23 venture security is being traded on a venture ex- 24 change. 25 VerDate Sep 11 2014 21:03 Jun 06, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2899.IH H2899 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 2899 IH ‘‘(5) RULE OF CONSTRUCTION.—Nothing in 1 this subsection may be construed as requiring trans- 2 actions in venture securities to be effected on a na- 3 tional securities exchange. 4 ‘‘(6) COMMISSION AUTHORITY TO LIMIT CER- 5 TAIN TRADING.—The Commission may limit trans- 6 actions in venture securities that are not effected on 7 a national securities exchange as appropriate to pro- 8 mote efficiency, competition, capital formation, and 9 to protect investors. 10 ‘‘(7) DISCLOSURES TO INVESTORS.—The Com- 11 mission shall issue regulations to ensure that per- 12 sons selling or purchasing venture securities on a 13 venture exchange are provided disclosures sufficient 14 to understand— 15 ‘‘(A) the characteristics unique to venture 16 securities; and 17 ‘‘(B) in the case of a venture exchange 18 that is a listing tier of another national securi- 19 ties exchange, that the venture exchange is dis- 20 tinct from the other national securities ex- 21 change. 22 ‘‘(8) DEFINITIONS.—For purposes of this sub- 23 section: 24 ‘‘(A) EARLY-STAGE, GROWTH COMPANY.— 25 VerDate Sep 11 2014 21:03 Jun 06, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2899.IH H2899 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 2899 IH ‘‘(i) IN GENERAL.—The term ‘early- 1 stage, growth company’ means an issuer— 2 ‘‘(I) that has not made any reg- 3 istered initial public offering of any 4 securities of the issuer; and 5 ‘‘(II) with a public float of less 6 than or equal to the value of public 7 float required to qualify as a large ac- 8 celerated filer under section 240.12b– 9 2 of title 17, Code of Federal Regula- 10 tions. 11 ‘‘(ii) TREATMENT WHEN PUBLIC 12 FLOAT EXCEEDS THRESHOLD.—An issuer 13 shall not cease to be an early-stage, growth 14 company by reason of the public float of 15 such issuer exceeding the threshold speci- 16 fied in clause (i)(II) until the later of the 17 following: 18 ‘‘(I) The end of the period of 24 19 consecutive months during which the 20 public float of the issuer exceeds 21 $2,000,000,000 (as such amount is 22 indexed for inflation every 5 years by 23 the Commission to reflect the change 24 in the Consumer Price Index for All 25 VerDate Sep 11 2014 21:03 Jun 06, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2899.IH H2899 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 2899 IH Urban Consumers published by the 1 Bureau of Labor Statistics, setting 2 the threshold to the nearest 3 $1,000,000). 4 ‘‘(II) The end of the 1-year pe- 5 riod following the end of the 24- 6 month period described under sub- 7 clause (I), if the issuer requests such 8 1-year extension from a venture ex- 9 change and the venture exchange 10 elects to provide such extension. 11 ‘‘(B) PUBLIC FLOAT.—With respect to an 12 issuer, the term ‘public float’ means the aggre- 13 gate worldwide market value of the voting and 14 non-voting common equity of the issuer held by 15 non-affiliates. 16 ‘‘(C) VENTURE SECURITY.— 17 ‘‘(i) IN GENERAL.—The term ‘venture 18 security’ means— 19 ‘‘(I) securities of an early-stage, 20 growth company that are exempt from 21 registration pursuant to section 3(b) 22 of the Securities Act of 1933; 23 ‘‘(II) securities of an emerging 24 growth company; or 25 VerDate Sep 11 2014 21:03 Jun 06, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2899.IH H2899 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 2899 IH ‘‘(III) securities registered under 1 section 12(b) and listed on a venture 2 exchange (or, prior to listing on a ven- 3 ture exchange, listed on a national se- 4 curities exchange) where— 5 ‘‘(aa) the issuer of such se- 6 curities has a public float less 7 than or equal to the value of pub- 8 lic float required to qualify as a 9 large accelerated filer under sec- 10 tion 240.12b–2 of title 17, Code 11 of Federal Regulations; or 12 ‘‘(bb) the average daily 13 trade volume is 75,000 shares or 14 less during a continuous 60-day 15 period. 16 ‘‘(ii) TREATMENT WHEN PUBLIC 17 FLOAT EXCEEDS THRESHOLD.—Securities 18 shall not cease to be venture securities by 19 reason of the public float of the issuer of 20 such securities exceeding the threshold 21 specified in clause (i)(III)(aa) until the 22 later of the following: 23 VerDate Sep 11 2014 21:03 Jun 06, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2899.IH H2899 pamtmann on DSKBFK8HB2PROD with BILLS 10 •HR 2899 IH ‘‘(I) The end of the period of 24 1 consecutive months beginning on the 2 date— 3 ‘‘(aa) the public float of 4 such issuer exceeds 5 $2,000,000,000; and 6 ‘‘(bb) the average daily 7 trade volume of such securities is 8 100,000 shares or more during a 9 continuous 60-day period. 10 ‘‘(II) The end of the 1-year pe- 11 riod following the end of the 24- 12 month period described under sub- 13 clause (I), if the issuer of such securi- 14 ties requests such 1-year extension 15 from a venture exchange and the ven- 16 ture exchange elects to provide such 17 extension.’’. 18 (b) SECURITIES ACT OF 1933.—Section 18 of the Se- 19 curities Act of 1933 (15 U.S.C. 77r) is amended— 20 (1) by redesignating subsection (d) as sub- 21 section (e); and 22 (2) by inserting after subsection (c) the fol- 23 lowing: 24 VerDate Sep 11 2014 21:03 Jun 06, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2899.IH H2899 pamtmann on DSKBFK8HB2PROD with BILLS 11 •HR 2899 IH ‘‘(d) TREATMENT OF SECURITIES LISTED ON A VEN- 1 TURE EXCHANGE.—Notwithstanding subsection (b), a se- 2 curity is not a covered security pursuant to subsection 3 (b)(1)(A) if the security is only listed, or authorized for 4 listing, on a venture exchange (as defined under section 5 6(m) of the Securities Exchange Act of 1934).’’. 6 (c) SENSE OF CONGRESS.—It is the sense of the Con- 7 gress that the Securities and Exchange Commission 8 should— 9 (1) when necessary or appropriate in the public 10 interest and consistent with the protection of inves- 11 tors, make use of the Commission’s general exemp- 12 tive authority under section 36 of the Securities Ex- 13 change Act of 1934 (15 U.S.C. 78mm) with respect 14 to the provisions added by this section; and 15 (2) if the Commission determines appropriate, 16 create an Office of Venture Exchanges within the 17 Commission’s Division of Trading and Markets. 18 (d) RULE OF CONSTRUCTION.—Nothing in this sec- 19 tion or the amendments made by this section shall be con- 20 strued to impair or limit the construction of the antifraud 21 provisions of the securities laws (as defined in section 3(a) 22 of the Securities Exchange Act of 1934 (15 U.S.C. 23 78c(a))) or the authority of the Securities and Exchange 24 Commission under those provisions. 25 VerDate Sep 11 2014 21:03 Jun 06, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2899.IH H2899 pamtmann on DSKBFK8HB2PROD with BILLS 12 •HR 2899 IH (e) EFFECTIVE DATE FOR TIERS OF EXISTING NA- 1 TIONAL SECURITIES EXCHANGES.—In the case of a secu- 2 rities exchange that is registered as a national securities 3 exchange under section 6 of the Securities Exchange Act 4 of 1934 (15 U.S.C. 78f) on the date of the enactment of 5 this Act, any election for a listing tier of such exchange 6 to be treated as a venture exchange under subsection (m) 7 of such section shall not take effect before the date that 8 is 180 days after such date of enactment. 9 Æ VerDate Sep 11 2014 21:03 Jun 06, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6301 E:\BILLS\H2899.IH H2899 pamtmann on DSKBFK8HB2PROD with BILLS