Equal Opportunity for All Investors Act of 2023
Floor Speech
BREAK IN TRANSCRIPT
Mrs. WAGNER. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2797) to amend the Securities Act of 1933 to require certification examinations for accredited investors, and for other purposes, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows: H.R. 2797
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE.
This Act may be cited as the ``Equal Opportunity for All Investors Act of 2023''. SEC. 2. CERTIFICATION EXAMINATIONS FOR ACCREDITED INVESTORS.
(a) In General.--The Securities and Exchange Commission shall revise the definition of ``accredited investor'' under Regulation D (section 230.501 of title 15, Code of Federal Regulations) to include any natural person who is certified through the examination required under subsection (b).
(b) Establishment of Examination.--Not later than 1 year after the date of the enactment of this Act, the Securities and Exchange Commission shall establish an examination (including a test, certification, or examination program)--
(1) to certify an individual as an accredited investor; and
(2) that--
(A) is designed with an appropriate level of difficulty such that an individual with financial sophistication would be unlikely to fail; and
(B) includes methods to determine whether an individual seeking to be certified as an accredited investor demonstrates competency with respect to--
(i) the different types of securities;
(ii) the disclosure requirements under the securities laws applicable to issuers and private companies as compared to public companies;
(iii) corporate governance;
(iv) financial statements and the components of such statements;
(v) aspects of unregistered securities, securities issued by private companies, and investments into private funds, including risks associated with--
(I) limited liquidity;
(II) limited disclosures;
(III) variance in valuation methods;
(IV) information asymmetry;
(V) leverage risks;
(VI) concentration risk; and
(VII) longer investment horizons;
(vi) potential conflicts of interest, when the interests of the financial professionals and their clients are misaligned or when their professional responsibilities are compromised by financial motivations; and
(vii) other criteria the Commission determines necessary or appropriate in the public interest or for the protection of investors.
(c) Administration.--Beginning not later than 180 days after the date the examination is established under subsection (b), such examination shall be administered and offered free of charge to the public by a registered national securities association under section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o-3).
Mr. Speaker, I rise in support of H.R. 2797, the Equal Opportunity for All Investors Act. I thank my colleagues, Congressman Flood and Congressman Nickel, for their work on this important piece of bipartisan legislation that will safely increase investment opportunities for everyday investors.
The ``accredited investor'' definition is intended to limit private market investments to only those investors who are considered ``sophisticated.''
To qualify as an accredited investor, an individual must have an annual income of at least $200,000 or $300,000 together with a spouse for each of the previous 2 years or a net worth of over $1 million.
However, using wealth as a proxy for determining sophistication excludes a large pool of investors who may have other types of expertise or experience.
According to estimates from the Securities and Exchange Commission, the SEC, in 2016, about 13 percent of U.S. households qualified as accredited investors.
Additionally, only about 1.3 percent and 2.8 percent of accredited investors are Black and Latino, respectively. H.R. 2797 represents a thoughtful approach to expanding the accredited investor definition to include individuals who are certified through an examination established by the SEC and administered by FINRA.
Under this bill, if you can demonstrate competency with these types of investments through an exam, then you qualify as an accredited investor.
Mr. Speaker, by expanding the pathways to qualify as an accredited investor beyond wealth tests, this bill modernizes the outdated definition that has inappropriately sidelined sophisticated-but-not- wealthy individuals from high-growth asset classes historically reserved for the wealthiest individuals. By doing so, this legislation will help more American families realize the American Dream by building wealth through our capital markets.
For these reasons, I urge my colleagues to support H.R. 2797, and I reserve the balance of my time.
BREAK IN TRANSCRIPT
Mrs. WAGNER. Mr. Speaker, I strongly urge my colleagues to support H.R. 2797, and I yield back the balance of my time.
Ms. JACKSON LEE. Mr. Speaker, I rise in support of H.R. 2797 the Equal Opportunity for All Investors Act of 2023, which expands who would be considered an accredited investor for the purposes of participating in private offerings of securities.
Additionally, certain unregistered securities may only be offered to accredited investors.
Furthermore, this bill allows an individual to qualify through an examination established by the Securities and Exchange Commission.
The examination must be designed with an appropriate level of difficulty such that an individual with financial sophistication or training would be unlikely to fail.
It also may include methods to determine competency in certain areas and must be administered by a registered national securities association and offered free of charge to the public.
Currently, accredited investors must satisfy certain requirements indicating their reduced exposure to financial risk, including those related to income, net worth, or knowledge and experience.
I urge all my colleagues to support this legislation.
BREAK IN TRANSCRIPT
Mrs. WAGNER. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
BREAK IN TRANSCRIPT
Source