The U.S. House of Representatives passed three bills on February 1, 2016 that propose changes to the federal securities laws, including the Securities Act of 1933 (’33 Act) and Securities Exchange Act of 1934 (’34 Act).

The Fair Investment Opportunities for Professional Experts Act (H.R. 2187) passed the House by a vote of 347 to 8.

This bill directs the SEC to revise its definition of “accredited investor” for natural persons by adding to the definition of that term found in Section 2(a)(15) of the ’33 Act.

First, the bill would codify the net worth and income tests largely in their current forms under Regulation D (17 C.F.R. § 230.501(a)(5) and (6), respectively).

Second, and more importantly, the bill proposes two additional classes of persons to the definition of accredited investor, regardless of the level of that person’s income. The first additional class is straightforward: all brokers or investment advisors currently licensed or registered with any of the SEC, FINRA, or an equivalent SRO.  The second added class, on the other hand, is broader.  It would include persons the SEC determines by regulation to have “demonstrable education or job experience to qualify . . . as having professional knowledge of a subject related to a particular investment, and whose education or job experience is verified by FINRA or an equivalent SRO.”  Based on this somewhat amorphous language, exactly how broad this second class could potentially be is not entirely clear.  Nonetheless, taken as a whole, these two new classes of accredited investors have the potential to open up a broad swath of capital to private placements offered pursuant to Regulation D (particularly capital held by financial services professionals).

You can read the full text of the bill here.

The SEC Small Business Advocate Act of 2016 (H.R. 3784) was passed by the House by a voice vote.

This bill proposes to amend Section 4 of the ’34 Act by adding a new office housed within the SEC. The proposed Office of the Advocate for Small Business Capital Formation (the “Small Business Advocate”) would be charged with, among other things, assisting small businesses and small business investors in resolving problems posed by the SEC and SROs, advocating changes to Congressional legislation, SEC regulations, and SRO rules, conducting outreach to small businesses in order to solicit views on relevant capital formation issues, and advising the Investor Advocate on issues related to small businesses and small business investors.  Also, the Small Business Advocate would be responsible for producing an annual report to each of the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives regarding its activities and recommendations.

The bill also proposes to establish within the SEC a Small Business Capital Formation Committee (the “Small Business Committee”). This committee would be responsible for advising the SEC on its regulations, rules, and policies regarding (i) capital-raising by, (ii) trading in the securities of, and (iii) public reporting and corporate governance requirements of, emerging, privately-held small businesses and publically-traded companies with less than $250 million in public market capitalization.  The Small Business Committee would not advise the SEC with regard to enforcement matters.

You can read the full text of the bill here.

The Small Business Capital Formation Enhancement Act (H.R. 4168) passed the House by a vote of 390 to 1.

This bill seeks to amend Section 503 of the Small Business Investment Incentive Act of 1980 to require the SEC to review the findings and recommendations of the annual government-business forum on capital required to be held pursuant to that statute. In addition, the bill would require the SEC to issue a public statement assessing the findings or recommendations and disclosing the action, if any, the SEC intends to take with respect to the findings or recommendations.

You can read the full text of the bill here.