HR2799-118

1202. Emerging growth company criteria Section 2(a)(19) of the Securities Act of 1933 (15 U.S.C. 77b(a)(19)) is amended— by striking $1,000,000,000 each place such term appears and inserting $1,500,000,000; in subparagraph (B)— by striking fifth and inserting 7-year; and by adding or at the end; in subparagraph (C), by striking ; or and inserting a period; and by striking subparagraph (D). Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended, in the first paragraph (80) (related to emerging growth companies)— by striking $1,000,000,000 each place such term appears and inserting $1,500,000,000; in subparagraph (B)— by striking fifth and inserting 7-year; and by adding or at the end; in subparagraph (C), by striking ; or and inserting a period; and by striking subparagraph (D).

1601. Definition of well-known seasoned issuer For purposes of the Federal securities laws, and regulations issued thereunder, an issuer shall be a well-known seasoned issuer if— the aggregate market value of the voting and non-voting common equity held by non-affiliates of the issuer is $250,000,000 or more (as determined under Form S–3 general instruction I.B.1. as in effect on the date of enactment of this Act); and the issuer otherwise satisfies the requirements of the definition of well-known seasoned issuer contained in section 230.405 of title 17, Code of Federal Regulations without reference to any requirement in such definition relating to minimum worldwide market value of outstanding voting and non-voting common equity held by non-affiliates.

1701. Smaller reporting company, accelerated filer, and large accelerated filer thresholds The Securities and Exchange Commission shall revise the definition of a smaller reporting company under section 229.10(f)(1) of title 17, Code of Federal Regulations— in paragraph (i), by adjusting the public float threshold from $250,000,000 to $500,000,000; and in paragraph (ii)— by adjusting the annual revenue threshold from $100,000,000 to $250,000,000; and in paragraph (B), by adjusting the public float threshold from $700,000,000 to $900,000,000. The Securities and Exchange Commission shall revise paragraphs (1)(ii) and (2)(iii)(B) under the definition of smaller reporting company under section 229.10(f)(1) of title 17, Code of Federal Regulations, by substituting three-year rolling average annual revenues for annual revenues. The Securities and Exchange Commission shall revise the definition of a smaller reporting company under sections 230.405 and 240.12b–2 of title 17, Code of Federal Regulations, and any other rule of the Commission in the same manner as such definition is revised under paragraphs (1) and (2). The Securities and Exchange Commission shall revise the definition of a large accelerated filer under section 240.12b–2(2) of title 17, Code of Federal Regulations, to increase the threshold amount (for the aggregate worldwide market value of the voting and non-voting common equity held by non-affiliates of an issuer) from $700,000,000 to $750,000,000. The Securities and Exchange Commission shall revise section 240.12b–2(3)(ii) of title 17, Code of Federal Regulations, to increase the threshold amount (for the aggregate worldwide market value of the voting and non-voting common equity held by non-affiliates of an issuer) at which an issuer is no longer an accelerated filer from $60,000,000 to $75,000,000. The Securities and Exchange Commission shall revise section 240.12b–2(3)(iii) of title 17, Code of Federal Regulations, to increase the threshold amount (for the aggregate worldwide market value of the voting and non-voting common equity held by non-affiliates of an issuer) at which an issuer is no longer a large accelerated filer from $560,000,000 to $750,000,000. The Securities and Exchange Commission shall revise the definitions of an accelerated filer and a large accelerated filer under paragraphs (1) and (2) of section 240.12b–2 of title 17, Code of Federal Regulations, respectively, to exclude any issuer that is a smaller reporting company, as defined under section 229.10(f)(1) of title 17, Code of Federal Regulations.

2102. Safe harbors for private placement brokers and finders Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o) is amended by adding at the end the following: Not later than 180 days after the date of the enactment of this subsection the Commission shall promulgate regulations with respect to private placement brokers that are no more stringent than those imposed on funding portals. Not later than 180 days after the date of the enactment of this subsection the Commission shall promulgate regulations that require the rules of any national securities association to allow a private placement broker to become a member of such national securities association subject to reduced membership requirements consistent with this subsection. Before effecting a transaction, a private placement broker shall disclose clearly and conspicuously, in writing, to all parties to the transaction as a result of the broker’s activities— that the broker is acting as a private placement broker; the amount of any payment or anticipated payment for services rendered as a private placement broker in connection with such transaction; the person to whom any such payment is made; and any beneficial interest in the issuer, direct or indirect, of the private placement broker, of a member of the immediate family of the private placement broker, of an associated person of the private placement broker, or of a member of the immediate family of such associated person. In this subsection, the term private placement broker means a person that— receives transaction-based compensation— for effecting a transaction by— introducing an issuer of securities and a buyer of such securities in connection with the sale of a business effected as the sale of securities; or introducing an issuer of securities and a buyer of such securities in connection with the placement of securities in transactions that are exempt from registration requirements under the Securities Act of 1933; and that is not with respect to— a class of publicly traded securities; the securities of an investment company (as defined in section 3 of the Investment Company Act of 1940); or a variable or equity-indexed annuity or other variable or equity-indexed life insurance product; with respect to a transaction for which such transaction-based compensation is received— does not handle or take possession of the funds or securities; and does not engage in an activity that requires registration as an investment adviser under State or Federal law; and is not a finder as defined under subsection (q). A finder is exempt from the registration requirements of this Act. A finder shall not be required to become a member of any national securities association. In this subsection, the term finder means a person described in paragraphs (A) and (B) of subsection (p)(4) that— receives transaction-based compensation of equal to or less than $500,000 in any calendar year; receives transaction-based compensation in connection with transactions that result in a single issuer selling securities valued at equal to or less than $15,000,000 in any calendar year; receives transaction-based compensation in connection with transactions that result in any combination of issuers selling securities valued at equal to or less than $30,000,000 in any calendar year; or receives transaction-based compensation in connection with fewer than 16 transactions that are not part of the same offering or are otherwise unrelated in any calendar year. Section 29 of the Securities Exchange Act of 1934 (15 U.S.C. 78cc) is amended by adding at the end the following: Subsection (b) shall not apply to a contract made for a transaction if— the transaction is one in which the issuer engaged the services of a broker or dealer that is not registered under this Act with respect to such transaction; such issuer received a self-certification from such broker or dealer certifying that such broker or dealer is a registered private placement broker under section 15(p) or a finder under section 15(q); and the issuer either did not know that such self-certification was false or did not have a reasonable basis to believe that such self-certification was false. Section 5312 of title 31, United States Code, is amended in subsection (a)(2)(G) by inserting with the exception of a private placement broker as defined in section 15(p)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(p)(4)) before the semicolon at the end. Section 3(a)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)) is amended by adding at the end the following: A private placement broker as defined in section 15(p)(4) is not a broker for the purposes of this Act. (p)Private placement broker safe harbor(1)Registration requirementsNot later than 180 days after the date of the enactment of this subsection the Commission shall promulgate regulations with respect to private placement brokers that are no more stringent than those imposed on funding portals.(2)National securities associationsNot later than 180 days after the date of the enactment of this subsection the Commission shall promulgate regulations that require the rules of any national securities association to allow a private placement broker to become a member of such national securities association subject to reduced membership requirements consistent with this subsection.(3)Disclosures requiredBefore effecting a transaction, a private placement broker shall disclose clearly and conspicuously, in writing, to all parties to the transaction as a result of the broker’s activities—(A)that the broker is acting as a private placement broker;(B)the amount of any payment or anticipated payment for services rendered as a private placement broker in connection with such transaction;(C)the person to whom any such payment is made; and(D)any beneficial interest in the issuer, direct or indirect, of the private placement broker, of a member of the immediate family of the private placement broker, of an associated person of the private placement broker, or of a member of the immediate family of such associated person.(4)Private placement broker definedIn this subsection, the term private placement broker means a person that—(A)receives transaction-based compensation—(i)for effecting a transaction by—(I)introducing an issuer of securities and a buyer of such securities in connection with the sale of a business effected as the sale of securities; or(II)introducing an issuer of securities and a buyer of such securities in connection with the placement of securities in transactions that are exempt from registration requirements under the Securities Act of 1933; and(ii)that is not with respect to—(I)a class of publicly traded securities;(II)the securities of an investment company (as defined in section 3 of the Investment Company Act of 1940); or(III)a variable or equity-indexed annuity or other variable or equity-indexed life insurance product;(B)with respect to a transaction for which such transaction-based compensation is received—(i)does not handle or take possession of the funds or securities; and(ii)does not engage in an activity that requires registration as an investment adviser under State or Federal law; and(C)is not a finder as defined under subsection (q).(q)Finder safe harbor(1)NonregistrationA finder is exempt from the registration requirements of this Act.(2)National securities associationsA finder shall not be required to become a member of any national securities association.(3)Finder definedIn this subsection, the term finder means a person described in paragraphs (A) and (B) of subsection (p)(4) that—(A)receives transaction-based compensation of equal to or less than $500,000 in any calendar year;(B)receives transaction-based compensation in connection with transactions that result in a single issuer selling securities valued at equal to or less than $15,000,000 in any calendar year;(C)receives transaction-based compensation in connection with transactions that result in any combination of issuers selling securities valued at equal to or less than $30,000,000 in any calendar year; or(D)receives transaction-based compensation in connection with fewer than 16 transactions that are not part of the same offering or are otherwise unrelated in any calendar year.. (d)Subsection (b) shall not apply to a contract made for a transaction if—(1)the transaction is one in which the issuer engaged the services of a broker or dealer that is not registered under this Act with respect to such transaction;(2)such issuer received a self-certification from such broker or dealer certifying that such broker or dealer is a registered private placement broker under section 15(p) or a finder under section 15(q); and(3)the issuer either did not know that such self-certification was false or did not have a reasonable basis to believe that such self-certification was false.. (G)Private placement brokersA private placement broker as defined in section 15(p)(4) is not a broker for the purposes of this Act..

2302. Qualifying venture capital funds Section 3(c)(1) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(c)(1)) is amended— in the matter preceding subparagraph (A), by striking 250 persons and inserting 600 persons; and in subparagraph (C)(i), by striking $10,000,000 and inserting $150,000,000.

2402. Micro-offering exemption Section 4 of the Securities Act of 1933 (15 U.S.C. 77d) is amended— in subsection (a), by adding at the end the following: transactions meeting the requirements of subsection (f). by adding at the end the following: The transactions referred to in subsection (a)(8) are transactions involving the sale of securities by an issuer (including all entities controlled by or under common control with the issuer) where the aggregate amount of all securities sold by the issuer, including any amount sold in reliance on the exemption provided under subsection (a)(8), during the 12-month period preceding such transaction, does not exceed $250,000. Not later than 270 days after the date of enactment of this Act, the Securities and Exchange Commission shall, by rule, establish disqualification provisions under which an issuer shall not be eligible to offer securities pursuant to section 4(a)(8) of the Securities Act of 1933, as added by this section. Disqualification provisions required by this subsection shall— be substantially similar to the provisions of section 230.506(d) of title 17, Code of Federal Regulations (or any successor thereto); and disqualify any offering or sale of securities by a person that— is subject to a final order of a covered regulator that— bars the person from— association with an entity regulated by the covered regulator; engaging in the business of securities, insurance, or banking; or engaging in savings association or credit union activities; or constitutes a final order based on a violation of any law or regulation that prohibits fraudulent, manipulative, or deceptive conduct, if such final order was issued within the previous 10-year period; or has been convicted of any felony or misdemeanor in connection with the purchase or sale of any security or involving the making of any false filing with the Commission. In this subsection, the term covered regulator means— a State securities commission (or an agency or officer of a State performing like functions); a State authority that supervises or examines banks, savings associations, or credit unions; a State insurance commission (or an agency or officer of a State performing like functions); a Federal banking agency (as defined under section 3 of the Federal Deposit Insurance Act); and the National Credit Union Administration. Section 18(b)(4) of the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is amended— in subparagraph (F), by striking or at the end; in subparagraph (G), by striking the period and inserting ; or; and by adding at the end the following: section 4(a)(8). (8)transactions meeting the requirements of subsection (f).; and (f)Micro-OfferingsThe transactions referred to in subsection (a)(8) are transactions involving the sale of securities by an issuer (including all entities controlled by or under common control with the issuer) where the aggregate amount of all securities sold by the issuer, including any amount sold in reliance on the exemption provided under subsection (a)(8), during the 12-month period preceding such transaction, does not exceed $250,000.. (H)section 4(a)(8)..

2502. JOBS Act-related exemption Section 3(b) of the Securities Act of 1933 (15 U.S.C. 77c(b)) is amended— in paragraph (2)(A), by striking $50,000,000 and inserting $150,000,000, adjusted for inflation by the Commission every 2 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; and in paragraph (5)— by striking such amount as and inserting: such amount, in addition to the adjustment for inflation provided for under such paragraph (2)(A), as; and by striking such amount, it and inserting such amount, in addition to the adjustment for inflation provided for under such paragraph (2)(A), it.

2702. Crowdfunding revisions Section 18(b)(4)(A) of the Securities Act of 1933 (15 U.S.C. 77r(b)(4)(A)) is amended by striking pursuant to section and all that follows through the semicolon at the end and inserting the following: “pursuant to— section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o(d)); or section 4A(b) or any regulation issued under that section; Section 4A(c) of the Securities Act of 1933 (15 U.S.C. 77d–1(c)) is amended— by redesignating paragraph (3) as paragraph (4); and by inserting after paragraph (2) the following: For the purposes of this subsection, a funding portal, as that term is defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)), shall not be considered to be an issuer unless, in connection with the offer or sale of a security, the funding portal knowingly— makes any untrue statement of a material fact or omits to state a material fact in order to make the statements made, in light of the circumstances under which they are made, not misleading; or engages in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person. Section 4A(a) of the Securities Act of 1933 (15 U.S.C. 77d–1(a)) is amended— in paragraph (11), by striking and at the end; in paragraph (12), by striking the period at the end and inserting ; and; and by adding at the end the following: not be subject to the recordkeeping and reporting requirements relating to monetary instruments under subchapter II of chapter 53 of title 31, United States Code. Section 5312 of title 31, United States Code, is amended by striking subsection (c) and inserting the following: The term financial institution (as defined in subsection (a))— includes any futures commission merchant, commodity trading advisor, or commodity pool operator registered, or required to register, under the Commodity Exchange Act (7 U.S.C. 1 et seq.); and does not include a funding portal, as that term is defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)). Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended— by redesignating the second paragraph (80) (relating to funding portals) as paragraph (81); and in paragraph (81)(A), as so redesignated, by inserting after recommendations the following: (other than by providing impersonal investment advice by means of written material, or an oral statement, that does not purport to meet the objectives or needs of a specific individual or account). The Securities and Exchange Commission shall amend paragraph (t)(1) of section 227.201 of title 17, Code of Federal Regulations so that such paragraph applies with respect to an issuer offering or selling securities in reliance on section 4(a)(6) of the Securities Act of 1933 (15 U.S.C. 77d(a)(6)) if— the offerings of such issuer, together with all other amounts sold under such section 4(a)(6) within the preceding 12-month period, have, in the aggregate, a target amount of more than $124,000 but not more than $250,000; the financial statements of such issuer that have either been reviewed or audited by a public accountant that is independent of the issuer are unavailable at the time of filing; and such issuer provides a statement that financial information certified by the principal executive officer of the issuer has been provided instead of financial statements reviewed by a public accountant that is independent of the issuer. Section 4A(f) of the Securities Act of 1933 (15 U.S.C. 77d–1(f)) is amended— in paragraph (2), by inserting or after the semicolon; by striking paragraph (3); and by redesignating paragraph (4) as paragraph (3). Section 4(a)(6) of the Securities Act of 1933 (15 U.S.C. 77d(a)(6))) is amended— in subparagraph (A), by striking $1,000,000 and inserting $10,000,000; and in subparagraph (B), by striking does not exceed and all that follows through more than $100,000 and inserting does not exceed 10 percent of the annual income or net worth of such investor. The Securities Act of 1933 (15 U.S.C. 77a et seq.) is amended— by striking the term section 4(6) each place such term appears and inserting section 4(a)(6); by striking the term section 4(6)(B) each place such term appears and inserting section 4(a)(6)(B); and in section 4A(f), by striking Section 4(6) and inserting Section 4(a)(6). (i)section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o(d)); or(ii)section 4A(b) or any regulation issued under that section;. (3)Liability of funding portalsFor the purposes of this subsection, a funding portal, as that term is defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)), shall not be considered to be an issuer unless, in connection with the offer or sale of a security, the funding portal knowingly—(A)makes any untrue statement of a material fact or omits to state a material fact in order to make the statements made, in light of the circumstances under which they are made, not misleading; or(B)engages in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.. (13)not be subject to the recordkeeping and reporting requirements relating to monetary instruments under subchapter II of chapter 53 of title 31, United States Code.. (c)Additional clarificationThe term financial institution (as defined in subsection (a))—(1)includes any futures commission merchant, commodity trading advisor, or commodity pool operator registered, or required to register, under the Commodity Exchange Act (7 U.S.C. 1 et seq.); and(2)does not include a funding portal, as that term is defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))..