Fair Investment Opportunities for Professional Experts Act

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I want to commend the gentlewoman from Missouri for all of her work chairing the Subcommittee on Capital Markets, but, particularly, for the hearings that we have had on this bill. I look forward to working with her on this subcommittee for many years to come.

Mr. Speaker, I rise in support of H.R. 3394, the Fair Investment Opportunities for Professional Experts Act, offered by my friend and Financial Services Committee chair, French Hill. This bill is the first step in what I hope will be an effort to reform the definition of ``accredited investor.'' This bill moves us to add to that definition by noting that certain experience, licenses, and education can, indeed, make one an accredited investor.

At the same time, I will point out that our definition of ``accredited investor'' was, I think, wrongfully decided that we should just focus on whoever is rich, then defined people as rich based on 1983 numbers. While $1 million may have made you rich then, Mr. Speaker, it does not mean that you are rich today.

I rise in support of this bill. The accredited investor framework has long protected the general public from investing in high-risk, illiquid private securities. Unlike our public capital markets, in the private capital markets, companies don't provide anywhere near the same financial and other disclosures to investors. There are not the same legal protections for investors either, nor is there the same ability of the SEC or the State securities regulators to police these markets.

When the accredited investor framework was first being debated, accredited investors were thought to be those who possess an intimate understanding and knowledge of the risks inherent in investing in private securities. These risks include heightened volatility, less transparency, difficulty obtaining accurate pricing, long lockup periods, and limited liquidity.

Ultimately, industry argued for a simpler approach, so the SEC adopted the current definition, which is based around income and wealth. Today, to be an accredited investor, the investor must have a net worth, either individually or, with spouse, exceeding $1 million excluding the value of their home, or they must make more than $200,000 a year or $300,000 with a spouse.

Those were definitions applicable in 1983 that may not have defined those with the requisite knowledge, but at least defined those who were high-income, high-net worth individuals. Of course, certain professional certifications or designations such as being an investment adviser could also qualify a person under the existing rules.

The wealth and income thresholds, as I have said several times, were set back in 1983. Back then, roughly 2 percent of all Americans were considered accredited investors. As of 2023, that number had risen to 20 percent. Clearly either the standard was wrong in 1983 or it is wrong now, because it is an entirely different level of real wealth and real income.

Mr. Hill's bill aims to return back to the original concept of accredited investor, which is that investors in private offerings should be fully aware and knowledgeable of the risks involved.

As my friend and ranking member of the Financial Services Committee, Ms. Waters, has said during our markup of this bill:

Just because you have $1 million doesn't mean you

understand the complexities of the private markets. On the

other hand, you shouldn't be prohibited from investing in

products if you have full knowledge of the risks involved but

don't happen to have $1 million.

I would add to that that our definition of ``accredited investors,'' when we are done improving it, and this bill is an important step toward improving it, should focus on what percentage of net worth a person is investing in the particular private offering or private offerings in general.

That is because one may be accredited to invest 5 or 10 percent of their net worth, but when you start betting the mortgage payments on one private investment, Mr. Speaker, then that is where our definition of ``accredited investor'' should protect you from that. So there should be diversification and limitation on the amount that an accredited investor can invest in any one or in all private offerings.

Nonetheless, that is for a different bill. This bill simply makes one important improvement in our definition of ``accredited investor.''

It is critical for the SEC to revise and update the accredited investor definition to protect those who don't possess the proper knowledge or information about the risks of private unregistered securities. Mr. Hill's bill moves us in the right direction by indicating that certain credentials, such as someone with a master's in business administration, an MBA, or a FINRA certification, for example, should be deemed accredited without needing to meet income or wealth requirements. It also

reconfirms Congress' mandate to the SEC that it must adjust the wealth and income thresholds to account for inflation. This is the right balance.

I look forward to passing this bill, and I look forward to our subcommittee and the full committee making other changes in the definition of ``accredited investor.''

Mr. Speaker, I urge my colleagues to support this bill, and I reserve the balance of my time.

Mr. Speaker, I have no speakers on my side, and I yield myself the balance of my time.

Mr. Speaker, I rise in support of Chairman Hill's bill, H.R. 3394. This bill will improve the definition of ``accredited investor.''

Mr. Speaker, I urge a ``yes'' vote, and I yield back the balance of my time.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3394) to amend the Securities Act of 1933 to codify certain qualifications of individuals as accredited investors for purposes of the securities laws, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days to revise and extend their remarks and include extraneous material on this bill.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in strong support of H.R. 3394, the Fair Investment Opportunities for Professional Experts Act.

I thank our Financial Services Committee chairman, the gentleman from Arkansas (Mr. Hill), for his leadership on this bipartisan legislation.

For decades, the SEC's accredited investor definition has served as a gatekeeper to private investment opportunities, relying almost entirely on income and net worth thresholds.

This approach has excluded millions of Americans who may not meet those financial metrics but have the education, licenses, or professional experiences to make informed investment decisions.

H.R. 3394 modernizes that definition. It directs the SEC to expand eligibility to individuals who hold certain professional certifications, relevant degrees, or job experience, criteria that actually reflect financial sophistication.

This change is long overdue. It will unlock capital for small businesses, broaden investor participation, and better align our rules with how Americans build expertise and manage risk in today's economy.

The bill maintains investor protections, while removing arbitrary barriers that have held back individual investors and early-stage entrepreneurs alike.

Mr. Speaker, I urge my colleagues to support this commonsense reform, and I reserve the balance of my time.

Mr. Speaker, I yield such time as he may consume to the gentleman from Arkansas (Mr. Hill), who is the chairman of the Financial Services Committee and the author of this bill.

Mr. Speaker, I yield 3 minutes to the gentleman from Florida (Mr. Haridopolos).

In closing, Mr. Speaker, the Fair Investment Opportunities for Professional Experts Act maintains investor protections while removing arbitrary barriers that have held back individual investors and early-stage entrepreneurs alike.

Mr. Speaker, I urge my colleagues to support H.R. 3394, and I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

Mr. Speaker, I certainly thank our distinguished chair of the subcommittee, Mrs. Wagner of Missouri, for her daily leadership of our agenda to make America more competitive by having the most liquid, competitive capital markets in the world. These bills certainly take a step in that direction to support that goal. I thank my friend from California (Mr. Sherman) for his comments in support of the bill.

The gentleman is right, Mr. Speaker. I think we have all learned in our lives that intelligence and wealth aren't directly correlated. This is another example of that, where people are held back from their ability to use their expertise and their knowledge just because they don't have a specific net worth. That is what H.R. 3394, the Fair Investment Opportunities for Professional Experts Act seeks to clarify.

Many individuals, whether through work, education, or other experience, have the knowledge to make an informed investment decision, but they are excluded simply because of an income or net worth test.

Before I was in Congress, I helped investors and founders start new companies and raise funds through regulation D private placements.

I witnessed firsthand on an annual basis routinely how the current accredited investor definition impaired talented, knowledgeable innovators from fully participating up front in their business formation dream.

This bill, with my good friend from California, Representative Vargas, would expand the definition of an ``accredited investor'' and allow Americans who can demonstrate education, professional experience, or other similar credentials the opportunity to invest in a private offer.

It passed out of our Financial Services Committee 45-1, Mr. Speaker, demonstrating clear, bipartisan support. I agree with my friend from California. This bill is a step in the right direction, offering more Americans a chance to participate in the American Dream, build capital, help start a business, and use their God-given talent, skills, ability, and professional expertise to help that company be successful.

Mr. Speaker, I urge a ``yes'' vote from all the Members on both sides of the aisle.

Mr. Speaker, I will be brief with this explanation. I will first say that it is so nice to see our economy moving in the right direction. This bill will give more opportunities to Americans to invest with not as many regulations in their way. With these challenging times overseas, it is nice to see that we recognize that economic security equals national security, and by expanding the qualified investor rule, which will give exactly that: more opportunity to others.

This bill, led by our chairman, expands access to private capital markets with those who have proven expertise. The bill allows investors to qualify based on licenses, education, and job experience, not just net worth.

It truly modernizes our investor standards to reflect today's knowledge-based economy by widening their pool for investors who are qualified. It fuels private investment and business growth while at the same time keeping protections in place by the SEC and FINRA.

For these reasons, I support the good bill by our chairman.

Mr. Speaker, I was absent from the floor and the roll call votes today.

Had I been present, I would have voted: YEA on Roll Call No. 172, the Motion to Suspend the Rules and Pass H.R. 1998; YEA on Roll Call No. 173, the Motion to Suspend the Rules and Pass H.R. 3394; and YEA on Roll Call No. 174, the Motion to Suspend the Rules and Pass H.R. 3422.