Regulation A+ Improvement Act of 2017

Floor Speech

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Mrs. BEATTY. Mr. Speaker, I have a motion to recommit at the desk.

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Mrs. BEATTY. Mr. Speaker, I am opposed to it in its present form.

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Mrs. BEATTY. Mr. Speaker, this is the final amendment to the bill, which will not kill the bill or send it back to committee. If adopted, the bill will immediately proceed to final passage, as amended.

Mr. Speaker, this motion to recommit is simple and should be able to garner the support of every Member of this body who seeks to enhance our robust public and private markets while, at the same time, ensuring there are adequate safeguards in place for the benefit of Main Street investors.

Specifically, this motion will accomplish two simple things: one, it will strike the increase in the offering limit to $75 million; and, two, it will require the SEC to review and revise their bad actor disqualification regulations prior to future increases in the offering threshold.

Unfortunately, as currently written, with all due respect to my Republican colleagues, raising the offering threshold is a solution in search of a problem. Congress designated the SEC with regulating the offering. Congress decided the SEC would administer the offering. The SEC is the expert on Regulation A+, and it should be the one to raise the offering threshold, assuming the data supports such an increase.

Under the law, the SEC will be reporting to Congress whether or not they will raise the threshold just next month. This bill is premature, and for the lawyers in the room, it is not ripe for review. So why wouldn't we wait?

Right now there is zero data to suggest Congress needs to raise the threshold, and it seems prudent to wait until next month to see what the SEC has to say before rushing to increase it.

The majority argues this bill will allow companies to raise more money. I say this bill is a solution in search of a problem because only less than a handful of companies have ever actually raised the current maximum amount of $50 million.

With regard to updating the bad actor disqualification regulation, Bloomberg recently published an article on Regulation A+ and the companies using the offering and found one executive of a company was convicted for filing false tax returns, another for obstructing justice, and another was accused of selling unregistered stock. For the sake of time, these are just a few examples. Are these really the types of individuals we want selling securities to Main Street mom-and-pop investors?

Another article, appearing in Barron's, studied the hundreds of companies that have used Regulation A+ to raise funds, and I quote them: ``We were supposed to get new jobs and new industries. Instead, we've gotten GoFundMe-style websites hawking penny stocks and professional wrestlers shilling shares on TV.''

They went on to highlight some of the companies and the products availing themselves of the lightly regulated Regulation A+ offering, which included companies trying to make cannabis paraphernalia, flying cars, guns, and my personal favorite, the founder of a rock band seeking to raise money to study UFOs and light-speed travel.

Now, I am not trying to persuade Members that all companies seeking to raise money through Regulation A+ are Wolf of Wall Street or UFO chasers, because back in my home district, a Scottish-based company successfully used Regulation A+ to open their first brewery and restaurant in the United States. That example is exactly what Congress had in mind when it called for the creation of Regulation A+, and it is precisely the type of opportunity for investors that the law was intended to create.

This is why we need to ensure that we maintain the integrity of the Regulation A+ offering and that we prevent bad actors from using it in a way to rip off and scam all of our constituents.

That is why I urge Congress to adopt this motion, to stand up for strong public and private markets, to wait the 30 days when the SEC can come back to us, and to stand up for strong protections for Main Street investors.

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Mrs. BEATTY. Mr. Speaker, on that I demand the yeas and nays.

The yeas and nays were ordered.

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