Providing for Consideration of H.R. Helping Angels Lead Our Startups Act

Floor Speech

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Mr. SESSIONS. Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 701 and ask for its immediate consideration.

The Clerk read the resolution, as follows: H. Res. 701

Resolved, That upon adoption of this resolution it shall be in order to consider in the House the bill (H.R. 4498) to clarify the definition of general solicitation under Federal securities law. All points of order against consideration of the bill are waived. The bill shall be considered as read. All points of order against provisions in the bill are waived. The previous question shall be considered as ordered on the bill and on any amendment thereto to final passage without intervening motion except: (1) one hour of debate equally divided and controlled by the chair and ranking minority member of the Committee on Financial Services; (2) the amendment printed in the report of the Committee on Rules accompanying this resolution, if offered by the Member designated in the report, which shall be in order without intervention of any point of order, shall be considered as read, shall be separately debatable for the time specified in the report equally divided and controlled by the proponent and an opponent, and shall not be subject to a demand for a division of the question; and (3) one motion to recommit with or without instructions.

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Mr. SESSIONS. Mr. Speaker, for the purpose of debate only, I yield the customary 30 minutes to the gentleman from Massachusetts (Mr. McGovern), pending which I yield myself such time as I may consume. During consideration of this resolution, all time yielded is for the purpose of debate only. General Leave
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Mr. SESSIONS. Mr. Speaker, I rise today in support of the rule and the underlying legislation, which will benefit small innovative companies and startups by ensuring that they have access to the necessary capital to succeed, grow, and create jobs in their companies.

But I also stand up today to make sure that we are here for a marketplace that is fair and equitable to all Americans, regardless of whether they work for a small company or a large company, whether they are a big-time investor or whether they are a person who is looking at the marketplace, perhaps, with ideas and opportunities.

Last night, the Rules Committee met and reported a structured rule for H.R. 4498, the Helping Angels Lead Our Startups, or the HALOS, Act. The rule provides 1 hour of debate equally divided between the chair and ranking member of the Financial Services Committee.

I also want to point out that the Rules Committee asked all of our Members of this body to submit their ideas and amendments. As a result, this resolution makes in order all of the amendments that were submitted. That is important because what this Rules Committee is attempting to accomplish is to ask all of the Members for their feedback about how to make bills better; and in this case, when something was germane, it was made in order.

The Securities and Exchange Commission has a three-pronged statutory mission in overseeing U.S. capital markets: to protect investors; to maintain fair, orderly, and efficient markets; and to facilitate capital formation.

Unfortunately, the SEC historically has ignored its mandate to facilitate capital formation in the absence of congressionally mandated rulemakings.

The SEC's inability to fulfill its statutory mandate is ultimately to the detriment of entrepreneurs, smaller companies, and startup ventures, such as Teladoc, the Nation's first and largest telehealth platform, which had it not received startup investment, may not have existed at all.

To remedy the SEC's inaction on capital formation, my colleagues and I passed the bipartisan Jumpstart Our Business Startups, or JOBS Act, which was signed into law on April 5, 2012. The recognition that we had problems in the marketplace for smaller companies and smaller groups of people to bring their ideas to the marketplace was a huge impediment based upon the SEC, and that is why this JOBS Act was created.

Although startups and small businesses are at the forefront of technological innovation and job creation, they often still face significant and unnecessary obstacles in obtaining funding in the capital markets. The JOBS Act lifted the burden of certain securities regulations to help small companies obtain access to these important markets, but we are back at the table again.

Unfortunately, when the SEC promulgated rules to implement the JOBS Act, it classified events held by angel investors as general solicitations, and thus, they were subject to accredited investor mandates, yet another example of the Federal Government's creating unnecessary red tape, stifling innovation, and quite honestly, making it hard for smaller, single entrepreneurs to participate in a worldwide marketplace.

This new classification is burdensome and it jeopardizes educational and economic development for events like demo days. Demo days are held in marketplaces all across our country. It is an opportunity for not just investors, but for general communities to come, primarily in the tech field, and learn about the newest startups as they are occurring. When startups interact with angel investors and venture capitalists, it means that best ideas can then be brought forward to create more jobs, investment, and can move forward so an idea that perhaps was on somebody's blackboard goes directly to the marketplace.

Demo days have been an important part of the entrepreneurial financing process for decades--nothing new--often with lead sponsorships by Federal, State, and local governments, which are bringing these best ideas into play for the marketplace to see not only about the idea, but for it to become a reality in an economic development format.

To be clear, demo days have existed long before the passage of the JOBS Act and have created collaborative and engaging educational environments that have brought together startups, leading-edge thought leaders, young programmers, people who are looking to network, and, I think, an overall more diverse network of individuals that is looking to exchange ideas. These are the kind of educational incubators that our country needs more of, not less of.

We are here today because the SEC developed rules that would change demo days greatly--and other activities like this--to the detriment of the marketplace, yes, but, more importantly, to the detriment of small business and entrepreneurs.

To address the SEC's burdensome rule, Congressman Steve Chabot from Ohio, the chairman of the Committee on Small Business, introduced H.R. 4498, the Helping Angels Lead Our Startups Act. This legislation defines an ``angel investor group'' and clarifies that the Securities Act's general solicitation limitations do not apply to a presentation, communication, or event conducted on behalf of an issuer at an event that is sponsored by certain organizations; where any advertising for the event does not reference any specific offering of securities by the issuer; or where no specific information regarding an offering of securities by the issuer is communicated to or distributed by or on behalf of the issuer.

What does this mean?

This means that these demo days that are regularly held across the country are opportunities whereby a presenter of an idea or a person who represents that idea might bring forward those ideas, many times to hear about a collaborative basis, where there may be someone who recognizes he could add on to that idea or be a part of that idea or work with that idea or be a programmer for that idea or to host or to sponsor something that would enable that idea to get further down the road.

What the SEC did is throw a wet blanket across it and said: You can't do these.

We are trying to segment that out and say: For the purpose of a demo day, when it does not relate to a specific offer or ask for funding, it still can take place.

This is not a narrow interpretation. The intent is to understand that the purpose of a demo day should be to get ideas further down the road so they can gain not only the opportunity for investment, but so they can make their ideas even better.

H.R. 4498 provides essential protections for States, municipalities, trade associations, and other venues that facilitate such meetings between investors and fund managers.

It is important for Congress to act. Just because we are not aware of how marketplaces work does not mean we should wait for the Federal Government to regulate them and then find out, whoops, they made a mistake. Members of Congress need to be active to understand that the SEC should live up to its statutes, that it should live up to its mission statement, and that it should not stifle innovation, but, rather, allow for the creative opportunity and development of these issues and ideas to come forth in order to better not only employment and ideas, but, more specifically, employment within the United States so consumers will then have better options over time. To ensure that angel investors play an active role in startups is why we are here today.

I do appreciate the gentleman from Massachusetts (Mr. McGovern) bringing up these issues. We try and talk about these issues up at the Rules Committee. There is always a wide-ranging list of not only issues and ideas, but I certainly know that, as we talk about these, we are all after action on the floor.

I don't know the exact answer, but I believe, as it relates to the problem with the Zika virus, that we are dealing with some $600 million. I note that Mrs. Lowey, the ranking member of the Appropriations Committee, has come on the floor and I am subject to being corrected by her.

But it is my understanding that right now, in an account that would be allowed to be exchanged, some $600 million is left over in that fund that is unspent from the Ebola crisis and that negotiations between our appropriators, the CDC, and other Federal agencies have said: We do recognize from the House perspective that this is a very, very serious issue. We acknowledge that.

I have acknowledged that up at the Rules Committee. The gentleman from Florida (Mr. Hastings) has several times, in the spirit that I appreciated and that was very complimentary to a proper answer, brought this issue up, that this is what he is looking at, that it is an issue in our country.

The responses that I continue to, I believe, receive back is that our appropriators, on a very professional basis, have allowed use of the funds to be used for that issue.

So I would like to say to the gentleman from Massachusetts that I do understand his concerns and, really, Mr. McGovern, I appreciate it.

I appreciate you, Ms. Slaughter, Mr. Polis, and Judge Hastings bringing these issues up. But we try and go and clarify what I think are proper or sustainable answers to your ideas. The ideas about other pieces of legislation we will get to.

Where there are emergencies, I do agree with the gentleman from Massachusetts (Mr. McGovern). I do not think an AUMF, which is a discussion about military use of force, is necessarily in line right now, but I know that Republicans are preparing that. I know that the gentleman from Massachusetts (Mr. McGovern) could bring his effort forward and will at the appropriate time for his ideas. They will all fit.

Today, however, what we are here for is something that has been in line for some period of time that is a major issue. The gentleman very appropriately said the last time we brought forth legislation that it created $71 billion worth of entrepreneurial funding, funding that helps our country's research and development, new ideas in medicine, new ideas in communication, new ideas that employ people, money to the marketplace.

That is why we are here today. We think this is just as powerful. After we passed the JOBS Act, the SEC got most of it right, not all of it right, and we are trying to politely--this is the way we do things in a democracy. We try and work with government agencies to say: You got some of it right, but congressional intent needs to be done a little bit further.

Will it bring $71 billion to the marketplace? I don't know. Will it mean that a brighter future exists for innovation, job creation, and investment that keeps America's leading edge as opposed to ideas going somewhere else around the world? Yes.

I would argue that Speaker Paul Ryan is aware of all the issues that need to be debated. Today we feel like jobs and job creation and perhaps an opportunity to stimulate, whether it is $71 million or $71 billion worth of new stimulating activity for new ideas, is important.

That is why we are here today. That is why people took a number, got in line, and developed their activity. Steve Chabot measured twice, brought his legislation here, and understands what it is about.

I would also say, as Mr. McGovern I believe politely alluded to, this is a good idea because it does not say we will only form these opportunities in Republican districts, but we will form them in districts all over the country.

It is a good, bipartisan piece of legislation that helps smaller, less sophisticated people. It helps the marketplace. I think it is important.

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Mr. SESSIONS. Will the gentleman yield?

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Mr. SESSIONS. Mr. Speaker, just a polite dialogue. Do you believe in any way, because we have not moved a bill, that the Federal Government is stopping and waiting and doing nothing on this issue?

I am delighted that the gentlewoman from New York, who is a regular visitor to the Rules Committee and who really, I believe, adequately and fairly not only represents the needs of this Nation, but really argues many times on behalf of things that are common sense--I want to thank her for being here today.

Mr. Speaker, this is not an argument at all about the Zika virus, about Ebola. The Ebola circumstance to the United States in the United States actually occurred first in Dallas, Texas, within the congressional district that I am so lucky to represent. It did constitute not only an immediate threat and danger to not only that hospital in Dallas, Texas, but, really, all across our country, and it evoked a scare. It did.

Well, we have that same type of circumstance today. That is why, in retouching base with our Appropriations Committee, I now can speak what I believe is from them directly as opposed to what I thought I heard, and that is that the appropriators have said that immediate funding needs for Zika should be provided from unobligated funds that are already available, which would then be backfilled in 17 appropriations bills as needed, which means that there still is money that the approval, the authorization, has been given.

Instead of us delaying through our process here, we have said that we concur this is of immediate nature. Here is a bucket of money. Here is a bucket of money.

As an example, there are some $400 million that is available that was a part of the Ebola funding that is unobligated and is intended to be spent in future years. There is money available to meet the immediate need.

The gentleman from Kentucky (Mr. Rogers), the chairman of the Appropriations Committee, in working with Speaker Ryan, has made sure that the money is available, can be used for this need, and Republicans agree it is the right thing to do.

I do appreciate Mrs. Lowey coming down. I do appreciate the gentlemen, Judge Hastings and Mr. McGovern, seeking these questions.

Mr. Speaker, we are trying to make sure that this body understands the money is available. It is there to be used properly, as with any other taxpayer money, but that it may be used for this purpose. Quite honestly, I am very proud of what we are doing to match up the needs of this Nation and its great people.

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Mr. SESSIONS. I yield to the gentlewoman from New York.

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Mr. SESSIONS. Mr. Speaker, you are witnessing here a colloquy on the floor between groups of people who can work together. Mrs. Lowey, Mr. McGovern, Judge Hastings, Ms. Slaughter, and Mr. Polis represent not just the Democratic Party, but millions of people across the country.

I want to forthrightly try again to answer, if I can. I do hear them, Chairman Rogers hears them. There is at least $500 million--granted, only one-third of what has been requested--that we believe is available for it to be transferred right now.

I talked to the gentleman from Massachusetts (Mr. McGovern). I said: Mr. McGovern, do you believe in any way that something is being held up?

He said: No, sir. We are working. This government is working feverishly.

As a parent, I understand this. While I have an advantage of having a disabled child as a son, that does not mean that I would want anyone else to have a disabled child. I get this.

I have satisfied myself, and I believe my party has, through our great young Speaker, Paul Ryan, satisfied ourselves that pending the time when we can get at a supplemental--perhaps later in the year there will be wildfires, perhaps later in the year there would be a hurricane. We have the money available. No one disputes that the money right now is usable, it is fungible. The question is: When will it be backfilled?

I have properly said here today that Chairman Hal Rogers has the ear--and we have his ear--of every Member of this body who does understand when we need to get more money and when the new cycle begins, and we will be starting this just in the next few weeks, that that would be available as an option for Chairman Rogers to take Mrs. Lowey's request, to take her detailed analysis of if it is a billion- some, would be able to implant that into a priority for this Conference, for this Congress, for these bodies to understand, and that we would hope to work forth then with the United States Senate, with the President of the United States, and work it well together.

Mr. Speaker, what you have seen here is a prime example of people talking, people getting closer to an answer. I am trying to respond back that I believe our Speaker, Paul Ryan, I believe Hal Rogers, I believe myself as an instrument of a messaging back and forth properly are responding: The money is available. Please go get your work done. As we get further down the line, we will be further down the process.

What a great day to be on the floor for us to really bring forth our ideas. The obligations that we have here as Members of Congress to work with each other, to listen to each other is apparent to me, but I don't think apparent to every single person.

We have allowed, meaning Chairman Rogers has allowed, in consultation with the Speaker, for money to be reprogrammed, which is aplenty right now. We have agreed this is an immediate crisis. We have made sure the administration is not wanting for a penny. We recognize that in the processes that will take place, we will go through in a regular order procedure getting these funds reprogrammed and allocated to fill back up the bucket.

I have satisfied myself that we are trying to do the right thing. I have great concern that the American people understand we do care about the children and the families. I get this. We do care. And until we go through this process to further develop it and add money, the administration has the money necessary to do as they see fit to protect the American people, to combat this virus--this disease--and to make sure that we get a handle on it.

Mr. Speaker, the value of startups, which is why we are here today, cannot be understated.

Founded in 2013, back home in Dallas, Texas, which I have the pleasure of representing, is the Dallas Entrepreneur Center, or DEC, which is a nonprofit created to help entrepreneurs start, build, and grow companies. According to the DEC, over 1,000 jobs were created in the past 2 years and another 500 are expected to be hired by Dallas startups in 2016. That is the power of what we are talking about.

The SEC has gotten in the way of this, not only with red tape, but with consternation directly back at the process that the free enterprise system has to make these jobs happen.

Investment in startups has been done in Dallas. Companies like Edition Collective, Rise, PICKUP, and Visage Payroll in Dallas, Texas, are prime examples of the success that could take place all across this country, not just in Dallas, Texas, but in other places where entrepreneurs should be king also. And they are king because they are providing jobs--good-paying jobs--for people.

Mr. Speaker, the Helping Angels Lead Our Startups Act is a bipartisan, bicameral bill that provides small, innovative companies and startups access to the capital they need, just as we have talked about that exists in Dallas, Texas. We are helping them succeed. We are helping them to innovate and grow jobs and turn them into opportunities for our Nation to have better products and services.

As Angus King, a Senator from Maine who is one of the Senate's cosponsors, said: ``By fixing flawed Federal rules, the HALOS Act will remove unnecessary roadblocks and help startups grow and thrive.''

I couldn't have said it better myself. He needs it in Maine. We need it in Dallas, Texas. We do not have all the jobs we need. There are still too many people unemployed in our country. That is why we are here doing this.

In particular, two Dallas startups, iSIGHT Partners and Bottle Rocket, are revolutionizing the field of cyber threat intelligence and mobile strategy development, respectively. Imagine for just a moment what it took them, despite these problems in the marketplace, to get started and get done. I think it is time that we allow others the opportunity to make life a little bit easier.

For that reason, I urge my colleagues to support this rule. This awesome legislation and what it represents is bipartisan, is bicameral, and has no boundaries of who may participate.

The material previously referred to by Mr. McGovern is as follows: An Amendment to H. Res. 701 Offered by Mr. McGovern

At the end of the resolution, add the following new sections:

Sec. 2. Immediately upon adoption of this resolution the Speaker shall, pursuant to clause 2(b) of rule XVIII, declare the House resolved into the Committee of the Whole House on the state of the Union for consideration of the bill (H.R. 5044) making supplemental appropriations for fiscal year 2016 to respond to Zika virus. The first reading of the bill shall be dispensed with. All points of order against consideration of the bill are waived. General debate shall be confined to the bill and shall not exceed one hour equally divided among and controlled by the chair and ranking minority member of the Committee on Appropriations and the chair and ranking minority member of the Committee on the Budget. After general debate the bill shall be considered for amendment under the five-minute rule. All points of order against provisions in the bill are waived. At the conclusion of consideration of the bill for amendment the Committee shall rise and report the bill to the House with such amendments as may have been adopted. The previous question shall be considered as ordered on the bill and amendments thereto to final passage without intervening motion except one motion to recommit with or without instructions. If the Committee of the Whole rises and reports that it has come to no resolution on the bill, then on the next legislative day the House shall, immediately after the third daily order of business under clause 1 of rule XIV, resolve into the Committee of the Whole for further consideration of the bill.

Sec. 3. Clause 1(c) of rule XIX shall not apply to the consideration of H.R. 5044. The Vote on the Previous Question: What It Really Means

This vote, the vote on whether to order the previous question on a special rule, is not merely a procedural vote. A vote against ordering the previous question is a vote against the Republican majority agenda and a vote to allow the Democratic minority to offer an alternative plan. It is a vote about what the House should be debating.

Mr. Clarence Cannon's Precedents of the House of Representatives (VI, 308-311), describes the vote on the previous question on the rule as ``a motion to direct or control the consideration of the subject before the House being made by the Member in charge.'' To defeat the previous question is to give the opposition a chance to decide the subject before the House. Cannon cites the Speaker's ruling of January 13, 1920, to the effect that ``the refusal of the House to sustain the demand for the previous question passes the control of the resolution to the opposition'' in order to offer an amendment. On March 15, 1909, a member of the majority party offered a rule resolution. The House defeated the previous question and a member of the opposition rose to a parliamentary inquiry, asking who was entitled to recognition. Speaker Joseph G. Cannon (R-Illinois) said: ``The previous question having been refused, the gentleman from New York, Mr. Fitzgerald, who had asked the gentleman to yield to him for an amendment, is entitled to the first recognition.''

The Republican majority may say ``the vote on the previous question is simply a vote on whether to proceed to an immediate vote on adopting the resolution . . . [and] has no substantive legislative or policy implications whatsoever.'' But that is not what they have always said. Listen to the Republican Leadership Manual on the Legislative Process in the United States House of Representatives, (6th edition, page 135). Here's how the Republicans describe the previous question vote in their own manual: ``Although it is generally not possible to amend the rule because the majority Member controlling the time will not yield for the purpose of offering an amendment, the same result may be achieved by voting down the previous question on the rule . . . When the motion for the previous question is defeated, control of the time passes to the Member who led the opposition to ordering the previous question. That Member, because he then controls the time, may offer an amendment to the rule, or yield for the purpose of amendment.''

In Deschler's Procedure in the U.S. It is one of the only available tools for those who oppose the Republican majority's agenda and allows those with alternative views the opportunity to offer an alternative plan.
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