(House of Representatives - November 03, 2011)

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[Pages H7289-H7295]
From the Congressional Record Online through the Government Publishing Office []


  Mr. BACHUS. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
on H.R. 2940 and to insert extraneous material therein.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Alabama?
  There was no objection.
  Mr. BACHUS. Mr. Speaker, pursuant to the rule just adopted, I call up 
the bill (H.R. 2940) to direct the Securities and Exchange Commission 
to eliminate the prohibition against general solicitation as a 
requirement for a certain exemption under Regulation D, and ask for its 
immediate consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 453, the 
amendment in the nature of a substitute recommended by the Committee on 
Financial Services printed in the bill is adopted and the bill, as 
amended, is considered read.
  The text of the bill, as amended, is as follows:

                               H.R. 2940

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,


       This Act may be cited as the ``Access to Capital for Job 
     Creators Act''.


       (a) Removal of Restriction.--Section 4(2) of the Securities 
     Act of 1933 (15 U.S.C. 77d(2)) is amended by adding before 
     the period the following: ``, whether or not such 
     transactions involve general solicitation or general 
       (b) Modification of Rules.--Not later than 90 days after 
     the date of the enactment of this Act, the Securities and 
     Exchange Commission shall revise its rules issued in section 
     230.506 of title 17, Code of Federal Regulations, to provide 
     that the prohibition against general solicitation or general 
     advertising contained in section 230.502(c) of such title 
     shall not apply to offers and sales of securities made 
     pursuant to section 230.506, provided that all purchasers of 
     the securities are accredited investors. Such rules shall 
     require the issuer to take reasonable steps to verify that 
     purchasers of the securities are accredited investors, using 
     such methods as determined by the Commission.

  The SPEAKER pro tempore. After 1 hour of debate on the bill, as 
amended, it shall be in order to consider the further amendment printed 
in part B of House Report 112-265, if offered by the gentleman from 
North Carolina (Mr. Miller) or his designee, which shall be considered 
read, and shall be separately debatable for 10 minutes equally divided 
and controlled by the proponent and an opponent.
  The gentleman from Alabama (Mr. Bachus) and the gentlewoman from 
California (Ms. Waters) each will control 30 minutes.
  The Chair recognizes the gentleman from Alabama.
  Mr. BACHUS. Mr. Speaker, I yield myself such time as I may consume.
  I rise today in strong support of H.R. 2940, the Access to Capital 
for Job Creators Act.
  Throughout this week, the House is considering several jobs bills 
that are sponsored by members of the Financial Services Committee and 
that have recently been approved by the committee. They have been 
sponsored by both Republicans and Democrats. Yesterday, we passed two 
of those bills overwhelmingly, and today we will consider the other 
  Presently, we're considering H.R. 2940, which was introduced by Mr. 
McCarthy, a member of the committee and of leadership. What this bill 
does is create jobs. It gives entrepreneurs the ability to raise 
capital, and that capital translates into jobs.
  The President, in his State of the Union, called on the Congress to 
create ways, additional ways, alternative ways for entrepreneurs to 
raise capital. He also called on Congress to address burdensome 
regulations and restrictions imposed on American businesses that create 
American jobs, and that's what brings us on the floor today.
  I received a letter last week from Emanuel Cleaver, a member of our 
committee who voted in favor of all four of these bills in committee. 
And this is what he said--and this is, I think, what we're doing today: 
``As we attempt to breach the divide in Congress, I want to share an 
insightful civility story.
  ``Two young boys went to a neighborhood park to have some play time 
before their respective mothers called them in for dinner. But upon 
arriving, a controversy ensued. One boy said, `let's play on the 
seesaw.' `No,' the other replied, `I want to play catch.' One boy got 
on the seesaw, but because no one sat on the other end, he never got 
off the ground. The other boy threw the ball, but no one threw it back. 
That sounds a lot like the two sides in Congress: Both sides have come 
to Congress for the same purpose but with different priorities.
  ``As representatives of the people of the greatest Nation on Earth, 
we must be willing to alter one preference in order to acquire another, 
often resulting in accommodation of both.'' It was signed by my 
colleague, Emanuel Cleaver, a Member of Congress from Missouri.

                              {time}  1500

  That's why we're here today. We're here today to set aside our 
differences and do what the American people have asked us to do, and 
that's create jobs. I can't think of a better way to create jobs, 
particularly for small and middle-sized businesses, than the 
legislation of the gentleman from California (Mr. McCarthy), and I'm 
happy to report that the Democratic members of Financial Services 
overwhelmingly agreed with us.
  Yesterday the job numbers came out, and it showed that while large 
corporations actually lost 1,000 jobs last month, small- and medium-
sized businesses created 107,000 or 108,000 jobs. They did that despite 
what was described as ``restrictions.'' The greatest restriction was 
the lack of capital.

[[Page H7290]]

  There are two ways to obtain funds needed to hire new employees. One 
is to go to the bank and borrow it. Anyone on the Financial Services 
Committee will tell you that when entrepreneurs go to the bank to get a 
loan for their business, they're often told, I'm sorry, it's too risky.
  There is an alternative to loans. And we all know loans can be hard 
to come by for new businesses and for small businesses who create 
almost all the innovation and new jobs in our country. The other way is 
to attract capital, people willing to invest and have the opportunity 
to share in the profits and share in the growth of that company but, at 
the same time, willing to take the risk.
  That's what the gentleman from California's bill does, in a nutshell. 
It makes it easiest for people to invest in companies.
  We've often said that in America one of the dreams--and we've had a 
difficult time with this recently--is homeownership. Another is to 
either own a business or invest in a business that does well.
  How many of us have thought, I wish we had invested in Apple. I wish 
we had invested in Google. I wish we'd gotten in on the ground floor.
  The gentleman from California's bill allows investors to get in on 
the ground floor without having to spend $200,000 or $300,000 to the 
Securities Exchange Commission, and put their money that they have 
earned, not the government, to work.
  And let me say this: when it comes to investing our money, I'll trust 
individual investors every time over the government.
  With that, Mr. Speaker, I reserve the balance of my time.
  Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
  I rise today in support of H.R. 2940, the Access to Capital for Job 
Creators Act.
  Before I begin my remarks, I would like to thank Chairman Bachus, 
Chairman Garrett, Congressman McCarthy, and Ranking Member Frank for 
their assistance and support with this bill. We were able to work in a 
bipartisan manner on this bill in our committee, passing it on a voice 
  H.R. 2940 amends the Securities Act of 1933 to remove the prohibition 
on general solicitation or general advertising for offers of securities 
made under rule 506 of regulation D, if those securities are only sold 
to accredited investors. In other words, investors will be able to 
advertise their private, unregistered securities offerings if those 
securities are only sold to accredited investors.
  As you know, accredited investors are individuals, companies, or 
organizations that generally have the sophistication needed to make 
complex financial decisions. These folks are thought to need less 
protection than average retail investors.
  Because this lifting of the ban on general solicitation and 
advertising would only apply when securities were sold to accredited 
investors, I am sympathetic to the goals of the gentleman from 
California's bill.
  The current ban on general advertising has been interpreted to mean 
that companies can only raise capital from investors with whom they 
have had a preexisting relationship. This requirement would hamper 
their ability to obtain capital and it's, therefore, appropriate to 
modernize this provision.
  However, during the hearing on this bill in September, the North 
American Securities Administrators Association and others noted that 
one problem with the original bill was that it would be difficult to 
limit the sale of these securities to only accredited investors when 
issuers advertise to everyone, particularly since accredited investors 
were able to self-certify their status.
  An amendment I offered in subcommittee, which was accepted, directs 
the SEC to write rules requiring issuers to verify that purchasers are 
accredited investors. I think this will substantially improve the 
potential fraud issues identified by the State regulators.
  Given this improvement, I'd like to offer my support for this 
legislation. This bill will make it just a bit easier for some 
companies to raise funds in the private market, enabling them to grow 
their businesses.
  But make no mistake. I believe that we still need to pass the 
American Jobs Act in order to truly get people back to work in this 
Nation. In addition to this small change to enable capital formation, 
we need to keep teachers, police officers and firefighters on the job, 
extend unemployment insurance for laid-off workers, and revitalize 
neighborhoods devastated by foreclosures. A truly comprehensive 
approach is needed to get Americans working again. And I hope my 
colleagues are willing to work with me on passing the American Jobs 
  With that, Mr. Speaker, I reserve the balance of my time.
  Mr. McCARTHY of California. Mr. Speaker, I yield myself such time as 
I may consume.
  I first want to start by thanking the gentlelady from California for 
her work on this legislation and her amendment making the bill better.
  Mr. Speaker, as many know on this floor, I started, before I was in 
Congress, as a small business owner. At the age of 20, I took some 
savings I had, some luck within a lottery, and some investments in the 
market and I took a risk. I went out and opened a deli. I didn't put a 
lot of thought into the name, so I named it after myself.
  But as I took that risk, as many people across this country do, you 
find the challenges of a small business. Fortunately, I was successful, 
able to hire people, able to work through; and at the end of 2 years, I 
now had enough money to pay my way through college.
  But when I think back to those days of the risk I took, I wonder if 
in today's environments could I do the same. Unfortunately, the answer 
is, no, I could not. I cringe at the thought today of the regulations 
and the challenges a small business faced.
  When I look at what small businesses do to this economy, they 
represent 99.7 percent of all employers. When you analyze the growth of 
America, if you just want to take from the beginning of the last 
recession, 2001, the end of it to the beginning of this one in 2007, 
and you look at that time in America when we had job growth, when you 
think about who created that growth, well, small businesses added 7 
million jobs. Large corporations cut 1 million jobs during that same 
  Today, when we look at the market, we're at our all-time low in the 
last 16 years for new small businesses entering. And all statistics 
tells us we will not grow unless small businesses grow.
  Unfortunately, the entrance to market has become too great. The 
regulations have been too tough, and the access to capital has been too 
hard to get.
  So just with that story I tell you of starting my own small business 
when it became successful, before I sold it I actually looked to 
expand. I had dreams of putting five new delis throughout my town. I 
even started negotiating on a new lease.
  But to raise that extra capital, when, one, a bank had turned me 
down, because of the regulations by the Federal Government, I could 
only talk to those people I already had a relationship with. Well, I 
came from a side of town that didn't have great wealth. I didn't know 
people with money.

                              {time}  1510

  So for me to be able to talk to them, I'd have to hire an attorney, 
file with the SEC all things that I did not have the time to do as a 
small business, even to talk to somebody about the idea. So I ended up 
  Well, that law was based in 1933. This country has moved forward, and 
this Congress should move forward as well. That's why today that's 
exactly what this bill will do. It will allow the small business to 
unshackle the capital which it needs. It will allow the individual to 
talk to those who are accredited, and it has the protections to do 
that. But the idea could actually gain the capital. And you have to 
think, when you're in a small business, sometimes this capital is 
better than going to a bank. It's what you negotiate.
  The cash flow is very important in a small business. A bank makes you 
pay monthly. The investment of an individual allows you to have growth. 
It also allows Americans to invest in America. It is a win-win all the 
way around. It is involving in a place that allows small business to 
  I will tell you that the strength from the amendment from Maxine 
Waters, and the adoption in the committee, requires insurers to verify 
that purchasers are in fact SEC accredited. And I thank you for that 

[[Page H7291]]

  This was approved in the Financial Services Committee by a bipartisan 
vote. This is another example of an issue where we can find common 
ground, work on both sides of the aisle, work with this President, but 
more importantly, let America start working again.
  Mr. Speaker, I urge all of my colleagues to support this commonsense 
legislation, and I reserve the balance of my time.
  The SPEAKER pro tempore. Without objection, the gentleman from 
California will control the remaining time on the bill.
  There was no objection.
  Ms. WATERS. Mr. Speaker, I yield 3 minutes to the gentlelady from New 
York (Mrs. Maloney).
  Mrs. MALONEY. I thank my good friend and the ranking member on the 
subcommittee, the gentlewoman from California, for her leadership on 
this bill and her amendment and her efforts to make a good product an 
even better one. And I thank our ranking member, Mr. Frank, for all of 
his leadership on Dodd-Frank and in the committee now, and also 
Chairman Bachus, Chairman Garrett, and Representative McCarthy.
  This was a bipartisan effort. So in a Congress that everyone says 
we're not working together, this is one example where we work together 
in the best sense of the word to bring this bill to the floor.
  I rise in strong support of the Access to Capital for Job Creators 
Act because I believe that it will help businesses in our country raise 
money they need to create jobs and help our economy recover.
  This was an important bill for businesses across our country, but it 
is particularly important to New York City. New York City is the home 
of many innovators, innovation. Entrepreneurs come there from across 
the country, and this bill will help them raise money and grow the 
American Dream and help them go up that ladder of success in providing 
jobs and helping our economy.
  Under our current system, companies seeking to raise capital by 
selling shares are barred from many types of advertising and 
solicitations. In effect, our current system tells businesses: Go out 
and create jobs, but don't tell people who might want to invest in your 
company or invest in your idea or invest in America, don't tell them 
  So this message is contradictory at best and patently unfair at 
worst, and it is bad for businesses at a time when we are asking 
businesses across this country to lead our economic recovery and to 
create jobs.
  This bill before us today would end this contradiction by removing 
the restrictions on general solicitation and advertising for certain 
private securities offerings. It will help companies attract potential 
investors and raise the capital that they need to be successful. This 
bill accomplishes this task in a balanced way.
  During the committee markup and work on this bill, we incorporated 
numerous ideas from both sides of the aisle, including a provision 
requiring that issuers verify that an investor is actually eligible to 
purchase the offered securities. The Waters amendment made sure that 
the investors were credible and accredited.
  Today, as it stands, investors only self-certify that they have a 
million in assets or make $200,000 a year to qualify to purchase the 
private security. Now, with this bill, we will have additional 
safeguards in place to make sure that investors are qualified and that 
these financial transactions are safer.
  I support this bill today. I urge my colleagues to join in supporting 
it. And I feel that this is really an investment in the American Dream.
  I hope that we can likewise work together to pass the American Jobs 
Act in a bipartisan way. We are not going to cut our way to prosperity. 
We need to invest and grow our economy. This bill helps us to do that. 
The American Jobs Act does, too. I hope our colleagues will join us in 
supporting that important job-creator initiative also.
  So this is a vote for the American Dream. I'm proud to support it.
  Mr. McCARTHY of California. Mr. Speaker, I yield 2 minutes to a 
doctor, mother, businesswoman, who brings a fresh perspective to the 
freshman class and knows firsthand the challenges that job creators 
face, having started her own medical practice from scratch, the 
gentlelady from New York's 19th District, Congresswoman Nan Hayworth.
  Ms. HAYWORTH. Thank you, mister whip.
  Last week, I had the privilege of coming to the floor and sharing a 
letter from one of our constituents in the 19th Congressional District 
of New York, Mr. Paul Manahan from Mahopac, New York. This is what he 
  ``We don't need or want more government spending. Cut regulations; 
cut taxes; repeal the 2010 health care law and let business do what it 
does best--create jobs based upon demand, not government dictates, 
spending, and attempts at market manipulation.''
  Today, in this bill, the Access to Capital for Job Creators Act, H.R. 
2940, we are taking yet another step toward implementing this kind of 
advice from a commonsense American.
  Small businesses, as many of us have already mentioned, they really 
are the job creators and the key to a healthy and strong economy. Our 
number one priority in this Congress is to ensure that the regulatory 
environment for small businesses supports capital formation, 
investment, and job creation. This bill does exactly that, furthering 
job creation by eliminating unnecessary regulations.
  The Access to Capital for Job Creators Act creates jobs by 
eliminating a prohibition on solicitation that is a barrier to capital 
formation and job creation. And regulations that are unnecessary in 
this case are being eliminated because investors under regulation D 
have to be sophisticated and accredited.
  So there is the common sense. This is a win all the way around.
  I'm very proud to cosponsor this important piece of legislation, and 
I am so glad to join colleagues on both sides of the aisle supporting 
this bill.
  I want to make mention of the fact that this bill now joins 15 other 
bills that have been supported by both Democrats and Republicans. They 
are listed on a card that we're carrying with us and that you've 
probably seen quite a bit. I want the Senate to know that this support 
from both sides indicates how strongly we are committed to creating 
jobs; and our Nation cannot wait for the Senate to hold yet this one 
hostage as well, so I urge its swift passage.
  Ms. WATERS. I yield myself such time as I may consume.
  I am very pleased that we have bipartisan support for this 
legislation. It has been stated over and over again that access to 
capital is extremely important to our businesses, and small businesses 
in particular.
  Mr. Speaker and Members, we talk a lot about our support for small 
businesses; but I know there's a long way to go in order to make sure 
that they have not only access to capital, but we have one-stop shops 
and other kinds of efforts that will help them not only to grow their 
businesses and expand their businesses but to hire people. And really, 
that's what this is all about.
  This is about how do we stimulate our economy, how do we get it 
working, how do we create jobs. This is one way that we can do this.

                              {time}  1520

  While we're talking about small businesses, let me remind you that, 
in the American Jobs Act that is being debated by this Congress, we 
have similar efforts for small businesses. We have tax credits for 
small businesses; we have tax credits when they hire workers, when they 
hire veterans. So I am very pleased that both sides of the aisle are 
showing more and more support. These small businesses need this capital 
to acquire inventory. Many of them need to get up to speed with their 
computer equipment to be able to market their services, their goods, 
and their products. As we do this, let us keep in mind that this is one 
aspect of how we stimulate the economy, of how we grow our small 
businesses, of how we give support to them.
  Let's look at the other ways we're talking about stimulating the 
economy. Don't forget that many small businesses will benefit from the 
repair of our infrastructure. Just think about it. When we're repairing 
our roads and our bridges and our water systems, small business persons 
will have many

[[Page H7292]]

opportunities to grow their small businesses, whether or not they are 
wholesalers and people in the middle who will be providing supplies and 
materials to those contractors or whether or not they are 
subcontracting for some aspect of this development and growth and 
repair of our infrastructure. So we're on the right track here when we 
talk about assistance to small businesses and job creation, but let us 
open up our minds and really think about how the infrastructure repair 
will certainly be a big boon for small businesses.
  I can point to other things in the American Jobs Act. Just think 
about the construction and repair of our schools. We have schools that 
still need a lot of repair. They don't have science labs. The 
laboratories and much of what is involved in the whole construction of 
schools is very much needed. Again, our small businesses will benefit 
from this. Just think about it. When they go to their local boards of 
education and when they get involved in supplying goods and services as 
we repair these schools and build more schools, that's how you 
stimulate the economy. You cannot separate small businesses from jobs. 
Small businesses create jobs. Jobs allow people the ability to spend 
money and to stimulate our economy.
  I am just so pleased that we see bipartisan support in the effort for 
small businesses. Let's not stop here. Let's keep going. Let's keep 
creating these opportunities so that we can say that we're a country 
that not only respects small businesses but that we're going to put our 
money where our mouths are, and we're going to give them the 
opportunity again to create and grow and expand.
  With that, Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  Mr. McCARTHY of California. Mr. Speaker, I yield 2 minutes to an 
integral member of the Financial Services Committee, a member who ran 
one of the oldest pest management companies in the country and who has 
personally faced many of the challenges confronting small businesses 
today, the gentleman from Illinois (Mr. Dold).
  Mr. DOLD. I certainly want to thank the gentleman from California for 
yielding the time.
  One thing that I am very pleased about today is that we're talking 
about some bipartisan legislation that does focus in on the number one 
issue that we face in our country today, which is jobs and the economy.
  As a small business owner, I can personally understand that access to 
capital is critical in sometimes determining the factor between success 
and failure for small businesses. Small businesses do represent two-
thirds of all net new jobs created in our Nation. Businesses, 
especially small businesses, must raise capital to create and maintain 
jobs, to invest in research and development, to sell and market goods 
and services, and generally to expand their businesses.
  Debt financing is very difficult and sometimes impossible in today's 
market, especially for smaller businesses like my own. Equity financing 
is also very difficult, with enormous transaction costs and very 
expensive and time-consuming SEC regulation requirements. Our capital 
markets, both debt and equity, are struggling and are expensive for 
small businesses, so we need to find creative ways to reduce the 
regulatory costs and burdens.
  This legislation, this commonsense legislation, I would add, would do 
just that. It would give companies greater access to capital to grow 
and to create jobs while still protecting the less sophisticated 
investors at no cost to the American taxpayers. Specifically, this bill 
removes the ban on small companies from soliciting equity financing 
from accredited investors. It expands the pool of those that we can go 
out to to help raise dollars, to help raise resources so that we can 
invest in our businesses and so that we can grow them.
  There are 29 million small businesses in our Nation. If we can create 
an environment here in Washington where half of those businesses can 
create a single job, think about where we'd be then. This is the kind 
of bipartisan legislation we talk about with regard to jobs and the 
economy, and we are doing things in the United States Congress.
  I certainly want to thank the gentlelady from California for her 
leadership. I want to thank Chairman Bachus for his leadership, 
certainly want to thank Chairman Garrett, because this is the kind of 
bipartisan legislation that can get our economy moving again and our 
focus back on jobs.
  Mr. McCARTHY of California. Mr. Speaker, I am pleased to yield 1 
minute to a man who knows what it takes to create jobs and meet a 
payroll in having spent 20 years building a real estate development 
company that he started with his brothers and sisters, the gentleman 
from Texas (Mr. Canseco).
  Mr. CANSECO. Mr. Speaker, I rise today in support of the Access to 
Capital for Job Creators Act.
  I want to thank the gentleman from California (Mr. McCarthy) and the 
gentlelady from California (Ms. Waters) for this bipartisan effort as 
well as thank our leadership on the committee.
  As a nation, we have an unemployment rate that is hovering around 9 
percent and 14 million Americans out of work. We've had 32 consecutive 
months with unemployment rates at or above 8 percent. Yet Senator Harry 
Reid, the Senate majority leader, insists, ``It's very clear that 
private sector jobs have been doing fine.''
  The American people disagree.
  I'm 62 years old and a freshman in this, the people's House. Before 
coming to Congress, I spent my entire career in the private sector. 
I've signed the front of a paycheck. I know something about how to 
create jobs. What I know is that attempting to spend our way to an 
economic recovery won't work, and we have the economy today that proves 
just that.
  From the experiences gained from an almost 40-year career in private 
business, to get the private sector creating jobs again and our economy 
growing, government needs to get out of the way and not be an 
impediment to job creation.
  This is the philosophy that has governed bill after bill that the 
House has passed to get our economy moving again. Unfortunately, these 
bills are rotting at the doorstep of the Senate as Harry Reid refuses 
to allow them to be considered. The Access to Capital for Job Creators 
Act is governed by the same philosophy. This will help fix an outdated 
government regulation that is inhibiting capital formation for small 
businesses that are having a hard time accessing loans from financial 
  To get the economy back on track, job creation in the private sector 
is the key. We need to get government out of the way and let private 
sector job creators do what they do best--create jobs.
  Mr. McCARTHY of California. Mr. Speaker, it is my pleasure now to 
yield 2 minutes to the chairman of the Capital Markets and Government 
Sponsored Enterprises Subcommittee, one who has been a leading advocate 
for pro-growth economic policies, the gentleman from New Jersey (Mr. 
  Mr. GARRETT. I thank the gentleman for yielding.
  I thank the gentleman from California as well for his leadership on 
this issue, as well as others, and also behind us over here, the 
chairman of the full committee, Spencer Bachus, for his leadership on 
this issue as well as on the general issue of trying to do what we can 
do best in order to facilitate the greater liquidity and openness of 
credit in the marketplace. This bill is one step in that direction, so 
I commend both gentlemen for their efforts in that regard.
  I've been on the floor, I guess, for the last few days now, and I've 
heard Members from the other side of the aisle repeatedly coming to the 
floor, saying, Where are the jobs bills? We haven't had any jobs bills 
come through.
  Here is certainly one of the pinnacles of the jobs bills that we've 
been talking about that this House has passed already and that today we 
will pass going forward.
  What this bill will do is provide, as has already been indicated, to 
both small and big businesses the opportunity to get the wherewithal to 
start their businesses, grow their businesses, expand their 
businesses--and to do what after that? Create jobs. That's what this is 
all about.
  We just had a litany of people come to the floor, one right after the 
other, just as the sponsor of the bill has done.

[[Page H7293]]

He is someone who started out with probably not much in his pockets but 
was able to get that all together and probably get some capital outside 
of that as well--and do what? Create a business. It wasn't a one-man 
operation, I'm sure. He then brought people into that business. He 
created jobs. The other speakers who came to this floor, they created 
jobs as well. As the other side of the aisle has already indicated, 
this bill will create jobs.
  Now, one of the other things this bill does is to create certainty in 
the marketplace, which is something that has been a problem over the 
last couple of years with all of the legislation and regulation that 
has been coming out of Washington. This will provide some degree of 
certainty in the marketplace so that investors and business owners will 
understand how they can get into the credit marketplace and then do so.
  I know a little bit later from now we may see some attempts to amend 
this bill which would go in just the opposite direction. What would it 
do? It would provide more uncertainty in the marketplace; it would 
provide more convolution to the system; and it would make it even more 
difficult to do what we're trying to do today.
  Support this bill clean as it is right now in order to create more 
jobs for the American public.

                              {time}  1530

  Mr. McCARTHY of California. Mr. Speaker, I yield 1 minute to the 
former chairman of the Small Business Committee, who has never stopped 
working to create good-paying jobs for northern Illinois, Mr. Manzullo.
  Mr. MANZULLO. Mr. Speaker, I hear complaints from our small business 
constituents back home about the difficulty in raising capital. Today 
we have an opportunity to fix one aspect of this problem so that our 
Nation's small businesses can obtain the funds that they need to hire 
  Current law bars companies from raising capital through unsolicited 
advertisements. Requiring potential investors to have an existing 
relationship with a particular company limits the pool of potential 
investors and hampers the efforts of small companies who have a great 
idea to raise much-needed capital to expand and hire workers. This bill 
would make an exemption in the advertising ban for accredited 
investors. H.R. 2940 will make it easier for companies to raise capital 
without putting less sophisticated investors at risk.
  As a former chairman of the Small Business Committee, I urge my 
colleagues to support H.R. 2940. The bill will help small gazelle firms 
raise capital during these difficult economic times.
  Mr. McCARTHY of California. Mr. Speaker, I yield 1 minute to a Member 
who is leading the way in encouraging job creation in Ohio's 15th 
Congressional District, Mr. Stivers.
  Mr. STIVERS. I would like to thank the gentleman from California for 
yielding me time and for his leadership on this issue.
  I want to voice my support for the Access to Capital for Job Creators 
Act. This is straightforward legislation that provides a simple method 
for job creators to find funding for their businesses. This legislation 
will allow entrepreneurs to advertise their investment opportunity to 
accredited investors and to solicit investment without being subject to 
costly and burdensome regulations. This exemption would only apply to 
general solicitations or advertising if the buyers are accredited 
investors, those people that have $1 million net worth or an income 
above $200,000. This leaves protections in place for those who may be 
less sophisticated investors. Simply put, this bill helps finance job 
growth in America by connecting small businesses and job creators with 
sophisticated investors while keeping protections for less 
sophisticated investors.
  Mr. McCARTHY of California. Mr. Speaker, I yield 1 minute to a new 
Member who knows firsthand how to create jobs through his work--he has 
employed over 100 people--the gentleman from Butler, Pennsylvania (Mr. 
  Mr. KELLY. I rise in strong support of this piece of legislation. 
This is so commonsense. This is so basic. It is as basic as blood is to 
the body, the access to capital for small businesses, the ability to 
raise capital in hard times.
  I will tell you right now the biggest inhibitor right now to us 
creating jobs is the uncertainty. And for anybody in small business to 
go to a bank right now and say, I need to borrow money, I want to buy 
equipment, I want to invest in inventory, you know what they're met 
with: we are not sure we can do that. With the new rules and 
regulations, we don't know them yet, so we have to kind of hold back on 
  But you know what, we need access to that capital if we are to 
succeed. If we are to move forward as a country, we need to unleash 
those bonds that are keeping us moored by them, and we can do it.
  This legislation is commonsense. And as I said earlier, this is the 
same as blood is to the body. Access to capital for small business is 
absolutely critical. It has to be done now. There is great bipartisan 
support for it.
  Mr. McCARTHY of California. Mr. Speaker, it is my pleasure to yield 1 
minute to the Member whose top priority in Washington is getting the 
Granite Staters back to work, the gentleman from Manchester, New 
Hampshire (Mr. Guinta).
  Mr. GUINTA. I thank the gentleman for yielding the time.
  Mr. Speaker, you know all too well that Granite Staters are still 
hurting in this economy, as are many other Americans. One thing we can 
do as a body in a bipartisan way is to continue to bring jobs bills to 
this floor and vote them out in a bipartisan way, as the country has 
asked. And we are doing that today. The leadership that Mr. McCarthy 
and Ms. Waters have both demonstrated is an opportunity for this 
country to get greater access to capital, to get innovators and job 
creators the ability to hire quicker, for those like our own Dean Kamen 
to continue to find the next revolutionary way to change our State and 
our Nation.
  This is a great opportunity for us to reform an old piece of 
legislation, going back to 1933, update it to make sure it meets the 
required standards of 2011 for the new job creators of tomorrow. And I 
am thrilled to support it, and I look forward to more job creation 
bills to come to this floor for us to vote on and get our country 
moving back in the right direction.
  Mr. McCARTHY of California. Mr. Speaker, this bill represents an 
important step towards unleashing the potentials of entrepreneurs and 
small businesses. We must all remember, an entrepreneur never takes a 
job from someone. They only create them. Today we're going to unleash 
  I urge all my colleagues to join me in this bipartisan effort to help 
promote small businesses' capital formation by supporting the 
underlying bill.
  I yield back the balance of my time.
  Ms. JACKSON LEE of Texas. Mr. Speaker, I rise today in support of 
H.R. 2940, ``Access to Capital for Job Creators Act,'' to remove the 
prohibition against general solicitation or advertising on sales of 
non-publicly traded securities, provided that all purchasers of the 
securities are ``accredited investors.'' Requires the Securities 
Exchange Commission to write rules on how an issuer would verify that 
the purchasers of securities are accredited investors.
  The legislation before us today is designed to encourage companies to 
advertise in order to attract additional capital which will allow them 
to invest and hire additional employees. As part of a broader effort to 
tie the financial regulatory environment to U.S. job creation and 
economic competitiveness. The bill amends section 4(2) of the 
Securities Act of 1933 to permit use of public solicitation in 
connection with private securities offerings.
  At present, the Securities and Exchange Commission (SEC) rules 
(including Rule 506) create a ``safe harbor'' for companies that want 
to issue private securities to raise an unlimited amount of money from 
an unlimited number of accredited investors (and up to 35 other 
investors). However, the safe harbor does not permit the use of general 
solicitation or advertising to market these securities. This measure 
requires the SEC to revise Rule 506 within 90 days to provide that 
companies can use general solicitation or advertising to market these 
private securities, providing that all purchasers of the securities are 
accredited investors.
  In addition, it mandates SEC to write rules requiring issuers using 
general solicitation to verify that investors are accredited, rather 
than rely on investor self-certification, as is currently permitted. In 
addition to a number of different types of institutions, an 
``accredited investor'' is an investor with more than $1 million in 
assets excluding the primary residence,

[[Page H7294]]

or an annual income greater than $200,000 for an individual and 
$300,000 for a couple.

  Before us is a measure that will allow companies to more easily raise 
capital by removing restrictions on general solicitation and 
advertising for certain private securities. It fairly balances the need 
to ease capital formation to spur job creation, with a provision to 
better protect investors by putting greater responsibility on the 
  One of the more important provisions in the bill is to ensure the 
identities of investors. The onus is on the issuer to verify that an 
investor actually is eligible to purchase the offered securities. 
Currently, investors only self-certify that they have $1 million in 
assets or make $200,000 a year to qualify to purchase the private 
  This has created the balance we need to ease restrictions on capital 
formation with protecting investors from fraud. NASAA continues to 
oppose the private offering process generally, which does not provide 
notice to the States, and therefore opposes this bill. This bill will 
ease a regulation that implements stipulations on garnering investors 
and capital.
  Without access to investors and capital, Houston native Michael Dell 
would not have been able to start one of the most successful computer 
retail businesses in the world. His $1,000 primary investment in the 
1980s allowed Dell Computers to become a household name. Without this 
capital, America would not have had one of its premier innovators.
  The economic impact of this legislation is encouraging. Businesses 
require investors and capital in order to expand and flourish. When 
businesses are presented with this opportunity, jobs are created that 
in turn, will stimulate economic growth. Dell's headquarters alone 
employs roughly 16,000 people.
  I urge my colleagues to join me in supporting H.R. 2930, 
``Entrepreneur Access to Capital Act''; this will ease SEC restrictions 
in order to stimulate our economic recovery and job creation.
  The SPEAKER pro tempore. All time for debate on the bill has expired.

           Amendment Offered by Mr. Miller of North Carolina

  Mr. MILLER of North Carolina. I have an amendment at the desk.
  The SPEAKER pro tempore. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 4, line 9, insert before the period the following: 
     ``and the person offering or selling such securities 
     utilizing the general advertising or general solicitation 
     permitted by such rules discloses in any advertising 
     materials connected with such offering or selling any bonus 
     compensation structures and `golden parachute' severance 
     packages that the person has provided to executive officers, 
     directors, or other principals of the person''.

  The SPEAKER pro tempore. Pursuant to House Resolution 453, the 
gentleman from North Carolina (Mr. Miller) and a Member opposed each 
will control 5 minutes.
  The Chair recognizes the gentleman from North Carolina.
  Mr. MILLER of North Carolina. Mr. Speaker, this amendment will 
require a disclosure that if there are going to be unregulated 
solicitations, unregulated advertisements asking for investments in 
these companies, at the very least, the advertisement or the 
solicitations should reveal if they are to disclose if there is a 
compensation agreement with the executives or a golden parachute 
severance package and what those are so that investors won't find that 
they are buying into a company that, if it does make a profit, there 
are already contracts in place that will make sure all those profits go 
to the executives who are there and not to the investors.
  We've heard all manner of glowing praise for the kinds of small 
businesses that might benefit from this bill. I think the gentleman 
from Illinois referred to these as gazelle companies.
  Mr. Speaker, there has been a bad history of flim-flams that have 
taken investors' money. The reason that we have investor protections is 
not just because of the self-aggrandizing ambitions of regulators. It 
is because there has been a history of abuse, and that abuse 
discourages capital from coming. No one is going to want to invest when 
there have been well publicized examples of investors who put their 
money into unregulated companies like these, like what this bill would 
create and lost their entire investment because it all was grabbed by a 
handful of executives.
  And these disclosures are even more important because these companies 
will not be subject to the say-on-pay rules under the financial reform 
legislation passed and signed into law just last year. And we've 
already seen from the experience on say-on-pay that there remain real 
abuses of executive compensation. Even though many companies have 
changed their practices and have made them more transparent because 
they are worried about putting their pay practices to a vote of the 
shareholders, they fear disapproval, and they've changed their 
  But even with that, about 2 percent--which is actually a pretty big 
number--get turned down. And they all get turned down for pretty much 
the same reasons. There is no connection between pay and performance. 
There are poor pay practices, like long-term benefits without any kind 
of a performance measure. There are bonuses that were way too easy to 
achieve, that the bar was set very, very low. There are performance 
measures that make no sense or simply that there was poor disclosure of 
what the compensation was, or the compensation was simply too much for 
the size of the company and what others in the industry are paying.
  These companies will not have say-on-pay. They will not get a chance 
to vote on executive compensation, and they might find that they have 
bought into a company that has pay practices already in place, 
executive compensation contracts, golden parachute contracts that 
really ensures that even if the company does prove to be profitable, 
they won't get the benefit of the profits. It will all go to the 
executives who are selling them investments, who are encouraging them 
to invest in those companies.

                              {time}  1540

  These are obviously very, very helpful disclosures. This is important 
information for investors, and honest small businesses should not 
hesitate in the least to provide it.
         State of North Carolina, Department of the Secretary of 
                                                 November 3, 2011.
     Re H.R. 2930--``Entrepreneur Access to Capital Act of 2011''

     Hon. Melvin Watt,
     Rayburn HOB,
     Washington, DC.

       Dear Representative Watt: I am writing to express my 
     concern with H.R. 2930, the Entrepreneur Access to Capital 
     Act, which could be voted on by the House this week. This 
     legislation, intended to promote an internet-based 
     fundraising technique known as ``crowd-funding'' as a tool 
     for investment, will preempt state investor protection laws 
     and weaken important investor protections.
       Crowdfunding is an online money-raising strategy that began 
     as a way for the public to donate small amounts of money, 
     often through social networking websites, to help artists, 
     musicians, filmmakers and other creative people finance their 
     projects. The concept has recently been suggested as a way of 
     assisting small businesses and start-ups looking for 
     investment capital to get their business ventures off the 
       Soliciting charitable donations from strangers online to 
     advance a goal or cause is one thing. Selling shares in a 
     business online to strangers who expect to realize a 
     potential return on their investment is something very 
       H.R. 2930 contains a preemption provision that would 
     prohibit my agency from requiring the filing or disclosure of 
     information about these investment opportunities before they 
     are offered to the public in my state. I believe enacting 
     this preemption would be a serious mistake because, based on 
     our previous experience, many of the crowdfunding 
     opportunities will be targeted at Mom and Pop retail 
     investors. The authority to require filings is critical to my 
     office's ability to ``get under the hood'' of an offering to 
     make sure that it really is what it says it is.
       I appreciate efforts by Congressman Ed Perlmutter (D-CO) to 
     work with the bill's sponsor to produce a bipartisan 
     amendment that would alleviate the states' concern with the 
     preemptive provisions of H.R. 2930. Unfortunately, the 
     Perlmutter-McHenry Amendment made in order by the Rules 
     Committee on November 2 does not achieve this goal. Indeed, 
     by simply clarifying that states ``retain jurisdiction . . . 
     to investigate and bring enforcement actions with respect to 
     fraud or deceit,'' the amendment essentially restates the 
     preemptive provisions as they existed in the original bill.
       H.R. 2930 may he well intended. but I am concerned that it 
     could create serious enforcement challenges and potentially 
     open the door to the possibility of significant increases in 
     investment fraud. Small businesses are vital to job growth 
     and to improving the economy in our state, but by displacing 
     significant safeguards currently provided by the crucial role 
     of state securities regulators. Congress could enact policies 
     intended to strengthen the economy that have precisely the 
     opposite effect.
       As North Carolina's top investor protection official, I 
     urge you not to support H.R. 2930 in its current form. I 
     understand the North American Securities Administrators

[[Page H7295]]

     Association (NASAA), of which I am a member, is already hard 
     at work on a state level model rule on crowdfunding that 
     would preserve a state's ability to prevent scam artists from 
     using crowdfunding offerings as the latest method for ripping 
     off Main Street investors. I urge you to remove the state 
     preemption section from the bill.
       Thank you for your attention to this important matter. 
     Please don't hesitate to contact me if I may be of any 
     assistance, or if you or your staff have questions regarding 
     the legislation in question.
                                               Elaine F. Marshall,
                                               Secretary of State.

  I yield back the balance of my time.
  Mr. McCARTHY of California. Mr. Speaker, I rise to claim the time in 
  The SPEAKER pro tempore. The gentleman is recognized for 5 minutes.
  Mr. McCARTHY of California. Mr. Speaker, I yield myself such time as 
I may consume.
  The gentleman from North Carolina's amendment goes against the very 
purpose of this bill. This amendment would force private companies 
raising capital to actually face stiffer regulations than public 
companies regarding compensation. The Securities and Exchange 
Commission doesn't require public companies selling to retail investors 
to put this in their advertising, and even Dodd-Frank did not go this 
  With Ms. Waters' help, we made sure that this bill specifically 
targets only sophisticated Securities and Exchange accredited 
investors. The SEC has no authority to regulate the compensation of 
executives at private companies. At a time when the costs and benefits 
of regulations are so important, the Miller amendment would fail 
anyone's cost benefit analysis. I, therefore, urge my colleagues to 
reject this amendment.
  I yield 1 minute to the gentlelady from New York, Nan Hayworth.
  Ms. HAYWORTH. Mr. Speaker, I would like to add to my colleague's 
comments by noting that shareholders in major public corporations, 
major issuers of public stock have said over and over again that they 
do not find that the amount of capital that would have to be devoted, 
the amount of resources that would have to be devoted to unusual 
disclosures about executive compensation beyond what the SEC rules 
already require prior to Dodd-Frank actually make any difference to 
their decisions about investing at all. So you can certainly expect 
that accredited investors who are sophisticated will not need this kind 
of additional burden to be placed on companies that clearly they want 
to see thrive and grow with the precious capital that they have.
  Mr. McCARTHY of California. Mr. Speaker, the purpose of H.R. 2940 is 
to help facilitate capital for small business. This amendment flies 
directly in the face of that effort. I urge my colleagues to oppose the 
  I yield back the balance of my time.
  The SPEAKER pro tempore. Pursuant to the rule, the previous question 
is ordered on the bill, as amended, and on the amendment offered by the 
gentleman from North Carolina (Mr. Miller).
  Mr. McCARTHY of California. Mr. Speaker, I ask unanimous consent that 
the Speaker may postpone further proceedings on the amendment offered 
by Mr. Miller of North Carolina to H.R. 2940 as though under clause 
8(a)(1)(A) of rule XX.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  The SPEAKER pro tempore. The question is on the amendment offered by 
the gentleman from North Carolina (Mr. Miller).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. MILLER of North Carolina. Mr. Speaker, on that I demand the yeas 
and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
previous order of the House, further proceedings on this question will 
be postponed.