Accredited Investor Definition Review Act

Floor Speech

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Mr. HUIZENGA. Mr. Speaker, this is an issue that is near and dear to me, having spent virtually my entire legislative career on the Capital Markets Subcommittee, including a time as the chair and ranking member, and this is something that many of us have been working on for a long time.

Thanks also to Chairman McHenry for setting out an ambitious agenda to strengthen and expand access to our capital markets.

The legislation being considered here today, both the previous bill, H.R. 835, and my bill, H.R. 1579, make good on this promise while increasing opportunity for small businesses, as well as investors in Michigan's Fourth Congressional District and across America.

Under Gary Gensler, the Securities and Exchange Commission continues to blow past their longstanding three-part mission to protect investors; maintain fair, orderly, and efficient markets; and to facilitate capital formation with a number of other things that are well beyond that. We are here today to refocus the SEC on its core mission to help more Americans participate in our capital markets.

During our bipartisan effort, we have heard uplifting stories from Americans who inspire a new generation of entrepreneurs.

Look, we all know some very hardworking, middle-income folks who know how to manage their money and manage their money well. Frankly, we probably all also know stories of wealthy people who, frankly, don't have a clue financially, and I would never turn over our money to them to manage or to invest.

So let's talk about a couple of those people in the first category. I start, first, with a woman named Omi Bell. Omi Bell founded Black Girl Ventures, an organization focused on providing women of color with access to community networks, capital, and capacity building to develop and grow their businesses. Omi does that right here in Washington, D.C.

Omi testified before our Subcommittee on Capital Markets that her mother invested $10,000 of her own retirement to support Omi's first business venture. Yet her mom was not considered an accredited investor and, despite her desire to support her daughter's ambitions, she could have been disallowed from investing in that.

We also heard testimony from David Olivencia. He is the CEO and cofounder of Angeles Investors, who, while earning his MBA from Notre Dame, learned about startups and how early-stage investments could lead to outsized returns.

Unfortunately for David, as he told his story, he said he did not qualify as an accredited investor because his immigrant family did not have wealth that he could inherit.

That is a horrible way, Mr. Speaker, to decide whether someone should or can invest in a dream and in something that they know about. I can tell you this: Both Omi and David are all too common in the investment world. While innovators often turn to their local communities for support, they often lack the ability to reach those investors, those truly accredited investors, who can make a huge impact.

Mr. Speaker, under current law, accredited investors are allowed to purchase securities that have not been registered with the SEC. These types of offerings carry more risk than public offerings. In theory, individuals with enough financial sophistication or net worth--again, those are two different things--can bear the potential losses that may be associated with these types of securities.

My bill, the Accredited Investor Definition Review Act, would require the SEC to incorporate ``certifications, designations, or credentials that further the purpose of accredited investor definition.''

The bill would expand investment opportunities for knowledgeable investors and provide small business job creators with additional sources of funding.

The current definition the SEC uses to identify accredited investors is outdated and based solely and wrongly on wealth and net income. You shouldn't have to be a millionaire to be an accredited investor.

The ability to participate in a private offering should not be limited to individuals that pass some sort of Federal Government assets test. Instead, participation should be expanded to include all individuals that can demonstrate they have sufficient understanding of the offering.

Mr. Speaker, my legislation is about leveling the playing field. Do you see the theme, by the way? The theme from the Republicans and, I believe, many on the other side is this: We want to make sure that we allow all Americans to participate in our economic system.

So whether it is in Kalamazoo or Portage, whether it is in Benton Harbor or St. Joe, or Battle Creek or in Springfield, investors should be able to support small business startups in their local community across southwest Michigan and around the Nation.

I look forward to continued bipartisan support for this issue. I thank the chairwoman of the Subcommittee on Capital Markets and the ranking member, Mr. Sherman, as well as Representative Lawler, for their work. I look forward to getting this across the finish line and helping the American people and American small businesses.

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