Access to Capital for Job Creators Act

Floor Speech

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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, 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 issuer.

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 security.

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.

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