US House Passes More Legislation Aimed at Improving Access to Capital Including Expansion of Accredited Investor Definition

Last week, CI reported that the US House of Representatives passed several bills that aim to improve access to capital and to level the playing field for retail investors – including an update to the definition of an accredited investor.

This week, the House has passed more legislation – including more language broadening the concept of being an accredited investor.

First, there is H.R. 835, the Fair Investment Opportunities for Professional Experts Act, which expands the accredited investor definition, while maintaining the wealth hurdles. The bill allows individuals to be deemed accredited if they are “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 8 an equivalent self-regulatory organization.”

H.R. 1579 or the Accredited Investor Definition Review Act, aims to update the list of certifications that an investor can satisfy to qualify as an accredited investor.

H.R. 2608 expands the concept of an Emerging Growth Company (EGC) – part of the JOBS Act that has garnered significant success. The language includes scaled reporting and enabling the continuation of EGC status when acquiring a public firm. The hope is this will help the moribund IPO market.

H.R. 2610 is a bill to amend the Securities Exchange Act of 1934 to specify certain registration statement contents for EGCs, to permit issuers to file draft registration statements with the Securities and Exchange Commission for confidential review, and for other purposes.

H.R. 2593, the Senior Security Act of 2023, would create a task force to protect seniors from falling victim to fraud and abuse in our capital markets.

H.R. 2793, the Encouraging Public Offerings Act of 2023, would allow all issuers to submit a confidential draft registration statement for review before going public and permit any issuer to “test the waters” and gauge investor interest before filing.

H.R. 2812, the Middle Market IPO Cost Act, aims to help Congress to understand better the costs incurred by small and medium-sized companies associated with going public.

The House, under the leadership of Republicans, has moved quickly to pass legislation to improve capital markets. While some of the legislation may be altered or combined there appears to be sufficient bipartisan support to get some of these bills approved in the Senate.

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