What This Bill Does
This bill amends federal securities laws to expand crowdfunding opportunities. It prevents state governments from requiring registration for certain secondary transactions (the buying and selling of already-issued securities). The bill also modifies rules around who can invest in crowdfunded offerings and what financial information companies must provide.
Who It Affects
Companies using crowdfunding to raise money, investors who want to buy crowdfunded securities, funding portals (websites that facilitate crowdfunding investments), state securities regulators and the Securities and Exchange Commission.
Key Provisions
* State securities laws cannot require registration for secondary transactions if the original offering followed federal crowdfunding rules (Sec. 2(a))
* Funding portals are not responsible for false statements or misleading information unless they knowingly made those false statements or engaged in fraud themselves (Sec. 2(b))
* Funding portals are not considered "financial institutions" subject to certain federal recordkeeping and reporting requirements about money (Sec. 2(c))
* Companies can provide impersonal investment advice through written materials or oral statements that are not tailored to any specific person's needs without triggering additional regulations (Sec. 2(d))
* The maximum amount non-accredited investors (people who do not meet certain income or wealth requirements) can invest in crowdfunded offerings changes to 10 percent of their annual income or net worth (Sec. 2(g))
What Changes
If this bill becomes law, companies raising money through crowdfunding would face fewer state-level registration requirements. Funding portals would have less liability for misleading statements unless they knowingly caused the false information. Individual investors could invest a higher percentage of their wealth in crowdfunded companies. The Securities and Exchange Commission must update its regulations regarding financial statement requirements for certain offerings.
Important Definitions
Funding portal: A website or platform that allows people to invest in securities offerings. Accredited investor: Not defined in this bill text. Material fact: A fact that would be important to an investor's decision. Secondary transactions: The buying and selling of securities that have already been issued.
Effective Date
Not specified in bill text
I
118TH CONGRESS
1ST SESSION H. R. 2607
To amend the Securities Act of 1933 to preempt State securities law requiring
registration for secondary transactions, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL 13, 2023
Mr. MCHENRY introduced the following bill; which was referred to the
Committee on Financial Services
A BILL
To amend the Securities Act of 1933 to preempt State
securities law requiring registration for secondary trans-
actions, 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 ‘‘Improving
4
Crowdfunding Opportunities Act’’.
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SEC. 2. CROWDFUNDING REVISIONS.
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(a) EXEMPTION FROM STATE REGULATION.—Sec-
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tion 18(b)(4)(A) of the Securities Act of 1933 (15 U.S.C.
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77r(b)(4)(A)) is amended by striking ‘‘pursuant to sec-
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•HR 2607 IH
tion’’ and all that follows through the semicolon at the
1
end and inserting the following: ‘‘pursuant to—
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‘‘(i) section 13 or 15(d) of the Securi-
3
ties Exchange Act of 1934 (15 U.S.C.
4
78m, 78o(d)); or
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‘‘(ii) section 4A(b) or any regulation
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issued under that section;’’.
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(b) LIABILITY FOR MATERIAL MISSTATEMENTS AND
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OMISSIONS.—Section 4A(c) of the Securities Act of 1933
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(15 U.S.C. 77d–1(c)) is amended—
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(1) by redesignating paragraph (3) as para-
11
graph (4); and
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(2) by inserting after paragraph (2) the fol-
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lowing:
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‘‘(3) LIABILITY
OF
FUNDING
PORTALS.—For
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the purposes of this subsection, a funding portal, as
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that term is defined in section 3(a) of the Securities
17
Exchange Act of 1934 (15 U.S.C. 78c(a)), shall not
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be considered to be an issuer unless, in connection
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with the offer or sale of a security, the funding por-
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tal knowingly—
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‘‘(A) makes any untrue statement of a ma-
22
terial fact or omits to state a material fact in
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order to make the statements made, in light of
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•HR 2607 IH
the circumstances under which they are made,
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not misleading; or
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‘‘(B) engages in any act, practice, or
3
course of business which operates or would op-
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erate as a fraud or deceit upon any person.’’.
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(c) APPLICABILITY
OF BANK SECRECY ACT RE-
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QUIREMENTS.—
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(1) SECURITIES ACT OF 1933.—Section 4A(a) of
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the Securities Act of 1933 (15 U.S.C. 77d–1(a)) is
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amended—
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(A) in paragraph (11), by striking ‘‘and’’
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at the end;
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(B) in paragraph (12), by striking the pe-
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riod at the end and inserting ‘‘; and’’; and
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(C) by adding at the end the following:
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‘‘(13) not be subject to the recordkeeping and
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reporting requirements relating to monetary instru-
17
ments under subchapter II of chapter 53 of title 31,
18
United States Code.’’.
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(2) TITLE 31, UNITED STATES CODE.—Section
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5312 of title 31, United States Code, is amended by
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striking subsection (c) and inserting the following:
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‘‘(c) ADDITIONAL CLARIFICATION.—The term ‘finan-
23
cial institution’ (as defined in subsection (a))—
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‘‘(1) includes any futures commission merchant,
1
commodity trading advisor, or commodity pool oper-
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ator registered, or required to register, under the
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Commodity Exchange Act (7 U.S.C. 1 et seq.); and
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‘‘(2) does not include a funding portal, as that
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term is defined in section 3(a) of the Securities Ex-
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change Act of 1934 (15 U.S.C. 78c(a)).’’.
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(d) PROVISION OF IMPERSONAL INVESTMENT AD-
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VICE AND RECOMMENDATIONS.—Section 3(a) of the Secu-
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rities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amend-
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ed—
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(1) by redesignating the second paragraph (80)
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(relating to funding portals) as paragraph (81); and
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(2) in paragraph (81)(A), as so redesignated,
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by inserting after ‘‘recommendations’’ the following:
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‘‘(other than by providing impersonal investment ad-
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vice by means of written material, or an oral state-
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ment, that does not purport to meet the objectives
18
or needs of a specific individual or account)’’.
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(e) TARGET AMOUNTS OF CERTAIN EXEMPTED OF-
20
FERINGS.—The Securities and Exchange Commission
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shall amend paragraph (t)(1) of section 227.201 of title
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17, Code of Federal Regulations so that such paragraph
23
applies with respect to an issuer offering or selling securi-
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ties in reliance on section 4(a)(6) of the Securities Act
1
of 1933 (15 U.S.C. 77d(a)(6)) if—
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(1) the offerings of such issuer, together with
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all other amounts sold under such section 4(a)(6)
4
within the preceding 12-month period, have, in the
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aggregate, a target amount of more than $124,000
6
but not more than $250,000;
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(2) the financial statements of such issuer that
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have either been reviewed or audited by a public ac-
9
countant that is independent of the issuer are un-
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available at the time of filing; and
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(3) such issuer provides a statement that finan-
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cial information certified by the principal executive
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officer of the issuer has been provided instead of fi-
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nancial statements reviewed by a public accountant
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that is independent of the issuer.
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(f) EXEMPTION AVAILABLE TO INVESTMENT COMPA-
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NIES.—Section 4A(f) of the Securities Act of 1933 (15
18
U.S.C. 77d–1(f)) is amended—
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(1) in paragraph (2), by inserting ‘‘or’’ after
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the semicolon;
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(2) by striking paragraph (3); and
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(3) by redesignating paragraph (4) as para-
23
graph (3).
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(g) NON-ACCREDITED INVESTOR REQUIREMENTS.—
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Section 4(a)(6) of the Securities Act of 1933 (15 U.S.C.
2
77d(a)(6)) is amended—
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(1)
in
subparagraph
(A),
by
striking
4
‘‘$1,000,000’’ and inserting ‘‘$10,000,000’’; and
5
(2) in subparagraph (B), by striking ‘‘does not
6
exceed’’ and all that follows through ‘‘more than
7
$100,000’’ and inserting ‘‘does not exceed 10 per-
8
cent of the annual income or net worth of such in-
9
vestor’’.
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(h) TECHNICAL CORRECTION.—The Securities Act of
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1933 (15 U.S.C. 77a et seq.) is amended—
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(1) by striking the term ‘‘section 4(6)’’ each
13
place such term appears and inserting ‘‘section
14
4(a)(6)’’; and
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(2) by striking the term ‘‘section 4(6)(B)’’ each
16
place such term appears and inserting ‘‘section
17
4(a)(6)(B)’’.
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Æ
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