Fair Investment Opportunities for Professional Experts Act
Floor Speech
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Mrs. WAGNER. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 835) to amend the Securities Act of 1933 to codify certain qualifications of individuals as accredited investors for purposes of the securities laws, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows: H.R. 835
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 ``Fair Investment Opportunities for Professional Experts Act''. SEC. 2. DEFINITION OF ACCREDITED INVESTOR.
(a) In General.--Section 2(a)(15) of the Securities Act of 1933 (15 U.S.C. 77b(a)(15)) is amended--
(1) by redesignating subparagraphs (i) and (ii) as subparagraphs (A) and (F), respectively; and
(2) in subparagraph (A) (as so redesignated), by striking ``; or'' and inserting a semicolon, and inserting after such subparagraph the following:
``(B) any natural person whose individual net worth, or joint net worth with that person's spouse or spousal equivalent, exceeds $1,000,000 (which amount, along with the amounts set forth in subparagraph (C), shall be adjusted for inflation by the Commission every 5 years to the nearest $10,000 to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics) where, for purposes of calculating net worth under this subparagraph--
``(i) the person's primary residence shall not be included as an asset;
``(ii) indebtedness that is secured by the person's primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and
``(iii) indebtedness that is secured by the person's primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability;
``(C) any natural person who had an individual income in excess of $200,000 in each of the 2 most recent years or joint income with that person's spouse or spousal equivalent in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
``(D) any natural person who is currently licensed or registered as a broker or investment adviser by the Commission, the Financial Industry Regulatory Authority, or an equivalent self-regulatory organization (as defined in section 3(a)(26) of the Securities Exchange Act of 1934), or the securities division of a State, the District of Columbia, or a territory of the United States or the equivalent division responsible for licensing or registration of individuals in connection with securities activities;
``(E) any natural person the Commission determines, by regulation, to have demonstrable education or job experience to qualify such person as having professional knowledge of a subject related to a particular investment, and whose education or job experience is verified by the Financial Industry Regulatory Authority or an equivalent self- regulatory organization (as defined in section 3(a)(26) of the Securities Exchange Act of 1934); or''.
(b) Rulemaking.--The Commission shall revise the definition of accredited investor under Regulation D (17 CFR 230.501 et seq.) to conform with the amendments made by subsection (a).
Mr. Speaker, I rise in support of H.R. 835, the Fair Investment Opportunities for Professional Experts Act.
I thank my colleagues from both sides of the aisle, Congressmen Hill, Schweikert, Vargas, and others, for working on this important piece of bipartisan legislation that will expand the pool of eligible investors who can build wealth through private placements. The current ``accredited investor'' definition restricts access to investments in private markets to a select few, largely based on income or net worth. This excludes many individuals who have other types of expertise or experience that would make them sophisticated investors.
According to SEC estimates, only 13 percent of U.S. households actually qualified as accredited investors in 2016, and only a small percentage of accredited investors are Black or Latino. This shows that the current definition disproportionately excludes minorities from accessing investment opportunities.
H.R. 835 expands the definition to include individuals with certain licenses, educational qualifications, or job experience, opening up more investment opportunities for those who are knowledgeable in specific fields. I should also note that this bill passed on suspension by voice vote in the 115th Congress.
Mr. Speaker, passing H.R. 835 will help level the playing field for minority entrepreneurs who often struggle to secure funding due to lack of access to accredited investors. It will also help diversify the pool of eligible investors, providing more investment opportunities but also unlocking new sources of innovation and economic growth.
Mr. Speaker, for this reason, I urge my colleagues to support H.R.
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Mrs. WAGNER.
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Mrs. WAGNER. Mr. Speaker, I would just simply urge my colleagues to support H.R. 835, and I yield back the balance of my time.
Ms. JACKSON LEE. Mr. Speaker, I rise today in support of H.R. 835, the Fair Investment Opportunities for Professional Experts Act.
H.R. 835 would expand the eligibility criteria for an accredited investor for purposes of participating in private offerings of securities to include an individual determined by the Securities and Exchange Commission (SEC) to have qualifying professional knowledge through educational or professional experience.
The current definition of an accredited investor relies on a net worth threshold for individuals and households irrespective of the sophistication of the would-be investors.
Traditionally, the accredited investor threshold has been determined through asset and income tests, resulting in both an under- and overinclusive definition that leaves out sophisticated investors who may not meet financial thresholds while including a wealthy person with no experience in financial markets.
Excluding these individuals unfairly limits Americans' participation in capital markets.
This bill would increase the total number of Americans eligible to purchase restricted securities.
H.R. 835 would amend the Securities Act of 1933 to codify certain qualifications of individuals as accredited investors for the purposes of the securities laws.
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