Today, the House Financial Services Committee passed an amendment by voice vote, introduced by Congressman Al Green (TX-09), to the Entrepreneur Access to Capital Act (H.R. 2930). The amendment prevents individuals who have been convicted of federal or state securities fraud from being exempted from SEC registration requirements when they participate in transactions with aggregate securities issuances of $1 million and where individual investments equal the lesser of $10,000 or 10% of a person's annual income.
The Entrepreneur Access to Capital Act, which was introduced in the 112th Congress by Representative Patrick McHenry (NC-10), is designed to create a sound structure for start-ups and small businesses to use the technique known as "crowdfunding', which consists of raising money over the Internet in relatively small amounts from a large number of people. Currently, "crowdfunding' is principally used to raise money for charitable or artistic purposes.
Congressman Green's amendment, which was cosponsored by Congressman Michael Grimm (NY-13), would also extend the exemption disqualification to individuals working for website intermediaries acting as crowdfunding facilitators.
"Frequently, the investors involved in "crowdfunding' transactions are every day Americans. Without the proper protections in place, the "crowdfunding' exemption that H.R. 2930 creates could leave many of them vulnerable to scams and frauds. My amendment strengthens investor protections," said Congressman Al Green, who emphasized the bipartisanship achieved by the amendment as shown by the fact it was passed unanimously.