Expanding Access to Capital Act of 2023
Floor Speech
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Mrs. WAGNER. Mr. Chair, I yield myself such time as I may consume. Mr. Chair, I rise in support of H.R. 2799, the Expanding Access to Capital Act.
As chair of the Capital Markets Subcommittee, I am so proud of the hard work of our members in crafting this landmark piece of legislation that supports America's Main Street businesses and retail investors. I am also grateful to leadership for affirming that this bill is a crucial priority and taking action to pass this legislation in the House today.
This legislation is the culmination of four hearings that the Capital Markets Subcommittee has held this Congress, where we heard powerful testimony from 19 witnesses, including founders of both private and public companies, investors of all sizes, former SEC Commissioners, securities law practitioners, and even one of the authors of the IPO- related provisions of the JOBS Act.
As the witnesses at each of these hearings made clear, all the bills included in H.R. 2799 play a vital role in strengthening our public markets, improving access to capital for small businesses and entrepreneurs, and expanding investment opportunities for all Americans.
For example, Representative Steil's Helping Startups Continue to Grow Act strengthens our public markets, making them more attractive by allowing more companies to benefit from emerging growth company status. Representative Steil's bill also extends the maximum amount of time an issuer can remain an emerging growth company, helping to rightsize the regulatory burdens on newly public companies that are working to achieve their potential. This commonsense provision builds on one of the most successful and impactful reforms from the JOBS Act of 2012.
Representative Houchin's Regulation A+ Improvement Act improves access to capital for small businesses by increasing the amount that small companies can raise under Regulation A from $50 million to $150 million without being subject to burdensome IPO compliance requirements. In making this adjustment, Regulation A will become a more attractive pathway for small businesses to raise capital.
Our committee's legislation also expands investment opportunities for all Americans by revising the accredited investor definition to include individuals receiving investment advice on a private offering from a qualified accredited investor.
Amendments to H.R. 2799 include Representative Huizenga's Improving Disclosure for Investors Act, Representative Lawler's Helping Angels Lead Our Startups Act, Representative Lucas' Retirement Fairness for Charities and Educational Institutions Act, and my Increasing Investor Opportunities Act, which gives investors greater choice and access to an asset class typically reserved for the wealthy. They are all welcome and thoughtful additions.
Together, these policies ensure that our markets are working efficiently and effectively to provide companies access to the capital that they need to innovate, grow, and create jobs, not just on the coasts but in America's heartland as well.
H.R. 2799 offers targeted, commonsense solutions that level the playing field for Main Street investors looking to save for a new home, their child's future, or retirement.
Moreover, America's IPO market has been on the decline for years due to increased regulatory and compliance costs. This package builds on the success of the JOBS Act and reins in those onerous barriers that are keeping America's innovators from seeking to enter and stay in our public markets.
The thoughtfully crafted bills in H.R. 2799 would address a multitude of inefficiencies within our public and private markets and deliver sustainable and enduring growth to our economy.
I thank Chairman McHenry for his leadership and tireless efforts in getting these bills to the floor, and I also thank the Members who have bills in H.R. 2799 for their incredible work.
Mr. Chair, I urge my colleagues to support this legislation, and I reserve the balance of my time.
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Mrs. WAGNER. Mr. Chair, I yield 1 minute to the gentleman from Texas (Mr. Williams), my classmate and good friend and colleague.
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Mrs. WAGNER. Mr. Chair, I yield 1\1/2\ minutes to the gentleman from South Carolina (Mr. Timmons), my friend and colleague.
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Mrs. WAGNER. Mr. Chair, I yield 1 minute to the gentleman from Wisconsin (Mr. Fitzgerald), my friend and colleague.
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Mrs. WAGNER. Mr. Chair, I yield an additional 30 seconds to the gentleman from Wisconsin.
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Mrs. WAGNER. Mr. Chair, I yield 2 minutes to the gentleman from Wisconsin (Mr. Steil), my friend and colleague.
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Mrs. WAGNER. Mr. Chair, I yield myself the balance of my time.
I want to quickly and swiftly say that H.R. 2799 has been a wonderful collaborative effort. There are many bipartisan pieces of legislation in this bill and amendments that also received bipartisan support out of the committee.
Mr. Chair, I urge all of my colleagues to join Republicans in supporting savers, entrepreneurs, and job creators and to give them the chance to achieve their American Dream by voting ``yes'' on H.R. 2799, and I yield back the balance of my time.
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Mrs. WAGNER. Mr. Chair, I rise in support of my friend and colleague from New York's amendment, which would add his Helping Angels Lead Our Startups, or HALOS, Act to H.R. 2799.
Mr. Lawler's legislation is a commonsense step to promote capital formation by permanently reducing certain burdens on U.S. small businesses and entrepreneurs.
Unfortunately, when implementing the JOBS Act of 2012, the SEC complicated these events for many startups by classifying demo day discussions as general solicitations, blocking companies from being able to use common fundraising practices.
In 2021, then-SEC Chairman Clayton reformed these rules to provide relief for entrepreneurs throughout our country, and my colleague's amendment builds on this progress by adding much-needed certainty that will ensure startups can continue to access demo days without sacrificing their ability to raise capital through popular and practical regulatory pathways.
Members of Congress from both sides of the aisle have recognized the need for this amendment with the current language receiving strong bipartisan support, once again, from the committee.
Therefore, I urge my colleagues to adopt this commonsense amendment and help U.S. startups grow their ideas into thriving and successful businesses.
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Mrs. WAGNER. Madam Chair, I rise in support of the gentleman from Oklahoma's amendment.
Under current law, Americans participating in 401(k) plans through their employer may invest their retirement accounts in collective investment trusts, CITs, and insurance company separate accounts that are exempt from the SEC's registration requirements. This exemption from SEC registration allows these products to be offered at lower costs.
However, teachers, nurses, janitors, and charity workers who participate in 403(b) plans are currently denied access to the cost- effective investments available to private workers in 401(k) plans. Importantly, investment options in a 403(b) plan are always selected by the private or public employer. As such, this amendment does not allow direct retail sales to individuals.
Moreover, unregistered does not mean unregulated. It simply means that investment products available to 403(b) plans will not have to register with the SEC and, thus, will not have to provide a lengthy prospectus document to accompany the filing, thus keeping costs appropriately low.
The amendment preserves important protections for investors in 403(b) plans.
Mr. Lucas' amendment is a thoughtful and balanced bill to allow employees of nonprofit charities and public educational institutions in 403(b) plans to have access to the same low-cost investments available to employees of for-profit companies and other employees in 401(k) plans.
This amendment is co-led in a bipartisan fashion with support from my colleagues across the aisle, Mr. Gottheimer and Mr. Foster. On top of that, the bill this amendment is based on, the Retirement Fairness for Charities and Educational Institutions Act, passed out of the Financial Services Committee last year with very strong bipartisan support.
Madam Chair, I urge my colleagues to support this amendment.
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Mrs. WAGNER. Madam Chair, I yield myself such time as I may consume.
Madam Chair, closed-end funds are a popular tool for everyday investors who gain exposure to private markets in a safe, appropriately regulated way. Approximately 3 million Americans rely on these products to build wealth and save for retirement.
Like other investment options available to Americans looking to save for retirement, send their kids to college, or plan for the future, closed-end funds must comply with the requirements of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Company Act of 1940.
To satisfy their regulatory obligations, closed-end funds must, among other things, register with the SEC, file annual and semiannual reports, and comply with stringent valuation and disclosure requirements. They are also subject to the broad antifraud provisions of the Federal securities laws, which provide additional protections to investors.
Unfortunately, an SEC staff position prevents registered closed-end funds from investing more than 15 percent of their total assets in private funds. This arbitrary restriction is especially harmful to low- income and middle- class Americans who rely on appropriately regulated products like closed-end funds to access high-growth investment opportunities.
In substituting their own judgments for those of financial professionals, SEC bureaucrats have taken another step toward reserving safe access to investment opportunities for wealthy, accredited investors.
My amendment, which mirrors my bipartisan Increasing Investor Opportunities Act, would remove this arbitrary SEC staff position and allow investment professionals to determine which investments a closed- end fund should make. This would increase investment opportunities for millions of Americans and eliminate unnecessary barriers restricting investor access.
Madam Chair, I thank my Democratic friends across the aisle, including Mr. Meeks, Mr. Scott, and Mr. Nickel, for their bipartisan support of my bill on which this amendment is based.
Last year, the Financial Services Committee passed the same text that is in this amendment with strong bipartisan support. I am proud of this legislation and our committee's unwavering commitment to expanding investment opportunities for all Americans.
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Mrs. WAGNER. Madam Chair, I yield 1 minute to the gentleman from New York (Mr. Meeks).
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Mrs. WAGNER. Madam Chair, the closed-end funds are a very popular tool for everyday investors who gain exposure to private markets in a safe, appropriately regulated way.
As I said, approximately 3 million Americans rely on these products to build wealth and save for retirement.
Madam Chair, I urge all of my colleagues to support this amendment, and I yield back the balance of my time.
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Mrs. WAGNER. Madam Chair, I rise in opposition to the amendment.
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Mrs. WAGNER. Madam Chair, a key tenet of H.R. 2799 is to increase access to investment opportunities for everyday investors.
Under the guise of investor protection, this amendment would arbitrarily limit the amount nonaccredited investors can invest in a private offering to 5 percent of an individual's net worth.
In the Expanding Access to Capital Act, the investment cap for a single private offering is set at 10 percent of the investor's net assets or annual income, whichever is greater. Instead of using a number just pulled out of thin air, the 10 percent cap in the bill is rooted in precedent.
There is a 10 percent cap for nonaccredited investors through offerings such as Regulation Crowdfunding and Reg A+. Why would we not go with the percentage cap that is already proven effective?
Additionally, this amendment would arbitrarily cap aggregate investments across private offerings for nonaccredited investors to no more than 25 percent of their net worth. This essentially says to everyday investors that the government knows better than you how to invest your hard-earned dollars.
As I previously said, and we heard from several witnesses at committee, wealth and income should not be a proxy for sophistication. Similarly, if we want to provide more Americans the opportunity to build wealth, we cannot keep them on the sidelines.
Private offerings are often the most high-growth investment opportunities, yet they are largely reserved for high-net-worth investors. This enshrines inequity and blatantly picks winners and losers.
If my colleagues on the other side of the aisle are serious about equity and ownership in the American economy, they will join Republicans in providing more opportunities to everyday investors, not less.
Madam Chair, I urge my colleagues to oppose this amendment, and I reserve the balance of my time.
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Mrs. WAGNER. Mr. Chair, I yield myself the balance of my time.
If my colleagues on the other side of the aisle are serious about equity and ownership in the American economy, they will join Republicans in providing more opportunities to everyday investors, not less.
Mr. Chair, I urge my colleagues to oppose this amendment, and I yield back the balance of my time.
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Mrs. WAGNER. Mr. Chair, I demand a recorded vote.
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Mrs. WAGNER. Mr. Chair, I move that the Committee do now rise.
The motion was agreed to.
Accordingly, the Committee rose; and the Speaker pro tempore (Mr. Moore of Utah) having assumed the chair, Mr. LaLota, Acting Chair of the Committee of the Whole House on the state of the Union, reported that that Committee, having had under consideration the bill (H.R. 2799) to make reforms to the capital markets of the United States, and for other purposes, had come to no resolution thereon.
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