Creating Financial Prosperity for Businesses and Investors Act

Floor Speech

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Ms. VELAZQUEZ. Mr. Speaker, I yield myself such time as I may consume.

I rise in support of H.R. 6427, a bipartisan package of commonsense measures that will help small businesses raise capital and better protect investors and retirees of the U.S. territories.

Today's bill contains numerous bipartisan solutions to ensure the SEC is more responsive to small business regulatory concerns. For example, it creates a new Office of the Advocate for Small Business Capital Formation and a new Small Business Advisory Committee. Taken together, these efforts will ensure the agency is more responsive to entrepreneurs' needs.

Furthermore, we have all heard that demand for small business capital outstrips supply. H.R. 6427 makes targeted changes to attract more investors to the small business market. By expanding definition of accredited investor, raising the investor cap on small venture capital funds, and making improvements to the equity crowdfunding rules implemented under the JOBS Act, this bill will help more startups and fast-growing businesses secure financing.

Beyond the small business provisions, today's bill will provide investors and retirees in Puerto Rico and other U.S. territories the same protections as their mainland counterparts. For 7 decades, the Investment Company Act of 1940 provided U.S. investors with basic safeguards, regulating everything from leverage limits to capitalization levels, to preventing conflicts of interest.

Due to a historical artifact, however, all funds located in and sold only to residents of U.S. territories are exempted from the act. The reason is U.S. territories were deemed to be too geographically distant from Washington, D.C. Obviously, the cost of air travel today is no longer an issue. Regulators routinely travel to Hawaii and Alaska to conduct oversight. In fact, SEC Chair White testified earlier this year that the exemption should be removed.

To close the loophole and provide territorial residents with the protections they deserve, I introduced the U.S. Territories Investor Protection Act. Over the past year, we met with stakeholders, heard their concerns and further fine-tuned the bill.

Investment companies will have an initial 3-year compliance period, with an option at the approval of the SEC, for an additional 3 years. This balances investor protections while granting more than reasonable time for financial institutions to comply. It is important to note that if investment companies need further relief, they are able to request such a reprieve under existing law.

I thank Chairman Hensarling, Ranking Member Waters, and Congressman Garrett for working with me on this provision. Their cooperation was critical to developing an approach that would apply the act in a manner sensitive to investors and investment companies alike. In sum, I will argue that this is a strong bill. It will reduce compliance costs, facilitate access to capital for thousands of small businesses, and better protect investors and retirees in territories like Puerto Rico.

I urge Members to support this legislation, and I reserve the balance of my time.

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Ms. VELAZQUEZ. Mr. Speaker, I am prepared to close. I yield myself such time as I may consume.

Mr. Speaker, access to capital is the lifeblood of every business. By expanding the pool of accredited investors and venture capital firms, improving the equity crowdfunding rules, and giving small business a bigger voice in SEC decisionmaking, H.R. 6427 provides the tools necessary to inject much-needed equity capital into our Main Street businesses.

Finally, closing the U.S. territories loophole in the Investment Company Act of 1940 will harmonize regulatory oversight and give millions of investors and retirees, mostly in Puerto Rico, the peace of mind that their hard-earned money will receive the same level of protection afforded to those on the mainland.

I thank the chairman, ranking member, and all of the cosponsors for their hard work in bringing this bipartisan package to the floor. I urge Members to support this bill, and I yield back the balance of my time.

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