[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 5139 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
2d Session
S. 5139
To amend the Securities Act of 1933 to address emerging growth
companies, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
September 23, 2024
Mr. Scott of South Carolina (for himself, Mr. Crapo, Mr. Rounds, Mr.
Tillis, Mr. Kennedy, Mr. Hagerty, Ms. Lummis, Mrs. Britt, Mr. Cramer,
Mr. Daines, and Mr. Moran) introduced the following bill; which was
read twice and referred to the Committee on Banking, Housing, and Urban
Affairs
_______________________________________________________________________
A BILL
To amend the Securities Act of 1933 to address emerging growth
companies, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Empowering Main
Street in America Act of 2024''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definition.
TITLE I--PROMOTING GREATER CAPITAL FORMATION IN U.S. PUBLIC AND PRIVATE
MARKETS
Sec. 101. Helping startups continue to grow.
Sec. 102. Micro-offering exemption.
Sec. 103. Investment companies.
Sec. 104. Public float.
Sec. 105. Crowdfunding.
Sec. 106. Regulatory definition of venture capital fund.
Sec. 107. Unlocking capital for small businesses.
Sec. 108. Rural job creators.
Sec. 109. Studies, reports, and rules regarding small entities.
TITLE II--RESPONSIBLY EXPANDING INVESTMENT OPPORTUNITIES FOR RETAIL
INVESTORS
Sec. 201. Equal opportunity for all investors.
Sec. 202. Encouraging investments in Main Street.
Sec. 203. Main Street investor confidence.
Sec. 204. Increasing investor opportunities.
Sec. 205. Enhancement of 403(b) plans.
TITLE III--FOSTERING INVESTOR CONFIDENCE IN MARKET INTEGRITY, FAIRNESS,
AND TRANSPARENCY
Sec. 301. Study regarding retail investor readability of financial
statements.
Sec. 302. Duties of Ombudsman relating to Regulation Crowdfunding.
Sec. 303. Publication on economic data on securities markets.
Sec. 304. Study on IPO fees.
Sec. 305. Exclusions available regardless of significant social policy
issue.
TITLE IV--HOLDING REGULATORS ACCOUNTABLE THROUGH INCREASED OVERSIGHT
Sec. 401. Required testimony.
Sec. 402. Semiannual report.
Sec. 403. Rulemaking requirements.
Sec. 404. Senate confirmation of Inspector General of the Securities
and Exchange Commission.
SEC. 2. DEFINITION.
In this Act, the term ``Commission'' means the Securities and
Exchange Commission.
TITLE I--PROMOTING GREATER CAPITAL FORMATION IN U.S. PUBLIC AND PRIVATE
MARKETS
SEC. 101. HELPING STARTUPS CONTINUE TO GROW.
(a) Definition of Term.--
(1) Securities act of 1933.--Section 2(a) of the Securities
Act of 1933 (15 U.S.C. 77b(a)) is amended by striking paragraph
(19) and inserting the following:
``(19)(A) The term `emerging growth company' means an
issuer that had total annual gross revenues of less than
$2,000,000,000 (as such amount is indexed for inflation every 5
years by the Commission to reflect the change in the Consumer
Price Index for All Urban Consumers published by the Bureau of
Labor Statistics, setting the threshold to the nearest
1,000,000) during its most recently completed fiscal year.
``(B) An issuer that is an emerging growth company as of
the first day of its most recently completed fiscal year shall,
after submitting a draft registration statement or publicly
filing an initial registration statement under this title,
continue to be deemed an emerging growth company until the
earliest of--
``(i) the date that is 1 fiscal year after the last
day of the fiscal year of the issuer during which it
had total annual gross revenues of $2,000,000,000 (as
such amount is indexed for inflation every 5 years by
the Commission to reflect the change in the Consumer
Price Index for All Urban Consumers published by the
Bureau of Labor Statistics, setting the threshold to
the nearest 1,000,000) or more;
``(ii) the last day of the fiscal year of the
issuer following the tenth anniversary of the date of
the first primary sale of common equity securities of
the issuer for cash pursuant to an effective
registration statement under this title; or
``(iii) the date that is 1 fiscal year after the
last day of the fiscal year of the issuer in which such
issuer has more than $2,000,000,000 (as such amount is
indexed for inflation every 5 years by the Commission
to reflect the change in the Consumer Price Index for
All Urban Consumers published by the Bureau of Labor
Statistics, setting the threshold to the nearest
1,000,000) in non-convertible debt securities
outstanding.''.
(2) Securities exchange act of 1934.--Section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended--
(A) by striking the first paragraph (80) (relating
to emerging growth companies);
(B) by transferring paragraph (79) (relating to
asset-backed securities) to appear after paragraph
(78); and
(C) by adding at the end the following:
``(81) Emerging growth company.--The term `emerging growth
company' has the meaning given the term in section 2(a) of the
Securities Act of 1933 (15 U.S.C. 77b(a)).''.
(3) Rule of application.--The amendments made by this
subsection shall apply with respect to an issuer that--
(A) qualifies as an emerging growth company, as
defined in section 2(a) of the Securities Act of 1933
(15 U.S.C. 77b(a)) or the first paragraph (80) of
section 3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)), as applicable, on the day before the
date of enactment of this Act; or
(B) first qualifies as an emerging growth company,
as defined in such section 2(a) or paragraph (81) of
such section 3(a) (as added by paragraph (2) of this
subsection), as applicable, on or after the date of
enactment of this Act.
(b) Registration.--Section 6(e)(1) of the Securities Act of 1933
(15 U.S.C. 77f(e)(1)) is amended by striking the second sentence.
SEC. 102. MICRO-OFFERING EXEMPTION.
(a) In General.--Section 4 of the Securities Act of 1933 (15 U.S.C.
77d) is amended--
(1) in subsection (a), by adding at the end the following:
``(8) transactions meeting the requirements of subsection
(f).''; and
(2) by adding at the end the following:
``(f) Micro-Offerings.--
``(1) In general.--The transactions referred to in
subsection (a)(8) are transactions involving the sale of
securities by an issuer (including all entities controlled by
or under common control with the issuer) where the aggregate
amount of all securities sold by the issuer, including any
amount sold in reliance on the exemption provided under
subsection (a)(8), during the 12-month period preceding such
transaction, does not exceed $500,000.
``(2) Adjustment.--The dollar amount in paragraph (1) shall
be adjusted by the Commission not less frequently than once
every 5 years and at the same time as the adjustments made
under section 4A(h), by notice published in the Federal
Register to reflect any change in the Consumer Price Index for
All Urban Consumers published by the Bureau of Labor
Statistics, setting the threshold to the nearest $10,000.
``(3) Bad actor prohibition.--The exemption under this
subsection shall not apply to any person subject to--
``(A) an event that would disqualify an issuer or
other covered person under section 230.506(d)(1) of
title 17, Code of Federal Regulations, or any successor
regulation; or
``(B) a statutory disqualification, as defined in
section 3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)).''.
(b) Exemption Under State Regulations.--Section 18(b)(4) of the
Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is amended--
(1) in subparagraph (F), by striking ``or'' at the end;
(2) in subparagraph (G), by striking the period and
inserting ``; or''; and
(3) by adding at the end the following:
``(H) section 4(a)(8).''.
SEC. 103. INVESTMENT COMPANIES.
Section 3(c)(1) of the Investment Company Act of 1940 (15 U.S.C.
80a-3(c)(1)) is amended--
(1) in the matter preceding subparagraph (A), in the first
sentence, by striking ``250 persons'' and inserting ``500
persons''; and
(2) in subparagraph (C)(i)--
(A) by striking ``$10,000,000'' and inserting
``$50,000,000''; and
(B) by striking ``with such dollar amount to be
indexed for inflation once every 5 years by the
Commission, beginning from a measurement made by the
Commission on a date selected by the Commission,
rounded to the nearest $1,000,000'' and inserting the
following: ``which the Commission shall adjust not less
frequently than once every 5 years by notice published
in the Federal Register to reflect any change in the
Consumer Price Index for All Urban Consumers published
by the Bureau of Labor Statistics, setting the
threshold to the nearest $10,000''.
SEC. 104. PUBLIC FLOAT.
Not later than 180 days after the date of enactment of this Act,
the Commission shall amend section 229.10(f)(1)(i) of title 17, Code of
Federal Regulations, or any successor regulation, to provide that the
threshold in that provision shall be a 12-month rolling average of
$700,000,000 (which the Commission shall index for inflation once every
5 years to reflect the change in the Consumer Price Index for All Urban
Consumers published by the Bureau of Labor Statistics, setting the
threshold to the nearest $100,000).
SEC. 105. CROWDFUNDING.
Notwithstanding any other provision of law or regulation, with
respect to a transaction described in section 4(a)(6) of the Securities
Act of 1933 (15 U.S.C. 77d(a)(6)), the following shall apply:
(1) If the transaction involves an offer or sale of
securities by an issuer that is not more than $500,000, the
issuer--
(A) shall not be required to submit a review report
of a public accountant that is independent of the
issuer; and
(B) may provide financial statements and certain
other information that is based on information reported
on the Federal income tax return of the issuer for the
most recently completed year (if any), if--
(i) reviewed or audited financial
statements are not available; and
(ii) those financial statements, and that
other information, is certified by the
principal executive officer of the issuer to be
true and complete in all material respects.
(2) A person described in subsection (b) or (c) of section
3 of the Investment Company Act of 1940 (15 U.S.C. 80a-3) may
purchase the securities that are offered or sold in that
transaction.
SEC. 106. REGULATORY DEFINITION OF VENTURE CAPITAL FUND.
Not later than 180 days after the date of enactment of this Act,
the Commission shall--
(1) amend the definition of a qualifying investment under
paragraph (c) of section 275.203(l)-1 of title 17, Code of
Federal Regulations, or any successor regulation--
(A) to include an equity security issued by a
qualifying portfolio company, whether acquired directly
from the company or in a secondary acquisition; and
(B) to specify that an investment in another
venture capital fund is a qualifying investment under
that definition; and
(2) amend paragraph (a) of section 275.203(l)-1 of title
17, Code of Federal Regulations, or any successor regulation,
to require, as a condition of a private fund qualifying as a
venture capital fund under that paragraph, that the qualifying
investments of the private fund are--
(A) predominantly qualifying investments that were
acquired directly from a qualifying portfolio company;
or
(B) predominantly qualifying investments in another
venture capital fund or other venture capital funds.
SEC. 107. UNLOCKING CAPITAL FOR SMALL BUSINESSES.
(a) Safe Harbors for Finders and Private Placement Brokers.--
(1) In general.--Section 15 of the Securities Exchange Act
of 1934 (15 U.S.C. 78o) is amended by adding at the end the
following:
``(p) Finder Safe Harbor.--
``(1) Disclosures required.--Before the consummation of a
transaction effecting a private placement, a finder shall
disclose clearly and conspicuously, in writing, to all parties
to the transaction as a result of the activities of the
finder--
``(A) that the finder is acting as a finder;
``(B) the amount of any compensation or anticipated
compensation in any form for services rendered as a
finder in connection with such transaction;
``(C) the person entitled to receive any
compensation described in subparagraph (B); and
``(D) any beneficial interest in the issuer, direct
or indirect, of the finder, of a member of the
immediate family of the finder, of an associated person
of the finder, or of a member of the immediate family
of such associated person before the consummation of
the transaction effecting the private placement or
anticipated to be held following the consummation of
the transaction.
``(2) Definitions.--In this subsection:
``(A) Finder.--The term `finder' means a person
that--
``(i) receives transaction-based
compensation--
``(I) for effecting a transaction
by--
``(aa) introducing an
issuer or owner of securities
and a buyer of such securities
in connection with the sale of
a business effected as the sale
of securities; or
``(bb) introducing an
issuer or owner of securities
and a buyer of those securities
in connection with the
placement of securities in
transactions that are exempt
from the registration
requirements under the
Securities Act of 1933 (15
U.S.C. 77a et seq.); and
``(II) that is not with respect
to--
``(aa) a class of publicly
traded securities;
``(bb) the securities of an
investment company, as defined
in section 3 of the Investment
Company Act of 1940 (15 U.S.C.
80a-3); or
``(cc) a variable or
equity-indexed annuity or other
variable or equity-indexed life
insurance product;
``(ii) with respect to a transaction for
which such transaction-based compensation is
received--
``(I) does not handle or take
possession of the funds or securities;
``(II) does not engage in an
activity that requires registration as
an investment adviser under State or
Federal law; and
``(III) is not subject to a
statutory disqualification; and
``(iii) is not a private placement broker,
as defined in subsection (q)(3).
``(B) Private placement.--The term `private
placement' means a transaction described in section
4(a)(2) of the Securities Act of 1933 (15 U.S.C.
77d(a)(2)).
``(q) Private Placement Broker Safe Harbor.--
``(1) Registration requirements.--
``(A) In general.--Not later than 270 days after
the date of enactment of this subsection, the
Commission shall propose regulations with respect to
private placement brokers.
``(B) Restriction.--The regulations proposed under
subparagraph (A) may not require a private placement
broker to comply with any net capital requirement, have
a financial principal, or have or produce for
examination by any regulatory authority audited
financial s