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house Bill H.R. 1839

Exempting Transactions with Accredited Investors From Certain SEC Prohibitions

Argument in favor

Making this exemption — which is already being utilized through regulatory regimes — into law would provide clarity for both investors and businesses that are trying to offer ownership in their company through private markets.

SherryTX's Opinion
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10/06/2015
Government needs to have fewer regulations and allow people to conduct business without their interference. What most liberals don't understand is that we don't want or need a nanny state. The 10th amendment should cover this if the politicians have any questions.
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John's Opinion
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10/06/2015
Yes! We should be reducing red tape and regulations whenever possible. How on Earth does any regulation remain from the Securities Act of 1933!?!? My god the Securities world has changed dramatically since 1933...
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jrivesjr's Opinion
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10/11/2015
Accredited investor are that for a reason. They should be responsible for their own diligence and investments.
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Argument opposed

The SEC shouldn’t allow accredited investors to make these sort of investment transactions. If businesses need to access capital, or shareholders want to sell their stock, they should use the existing mechanisms available to them.

Alis's Opinion
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10/06/2015
Whose crooked friends is this supposed to help? Are you seriously going to legalize stock market fuckery?
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Jake's Opinion
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02/02/2016
Basically this bill aims to legalize insider trading. Did DC legalize marijuana too?
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addavis's Opinion
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12/01/2015
We're really going to pass a bill that decreases oversight and transparency? Did we learn nothing from the financial crisis? There's a reason these prohibitions were enacted in the 30's- to prevent entities from taking advantage of the system and gaming for their gains.
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What is House Bill H.R. 1839?

This bill would exempt certain investment transactions from prohibitions within the Securities Act of 1933 that are related to interstate commerce to facilitate investment in startups. The exemption would apply when:
  • All purchasers are considered accredited investors by the Securities and Exchange Commission (SEC) — meaning that they meet certain income or net worth requirements;

  • If the securities are being offered through a general solicitation or advertising and the sales are made through a platform available only to accredited investors.


The exemption would be denied for transactions where the seller is:

  • An issuer of the securities, or the issuer’s subsidiary or parent;

  • A securities dealer;

  • An underwriter acting on behalf of the issuer, its subsidiaries, or parent, which receives compensation from the issuer related to the sale.


There is an existing exemption for investors who buy securities through a private placement that allows them to resell those securities publicly after a holding period that was granted by the SEC and codified into law. This bill essentially codifies into law the same regulatory exemption that exists allowing the sale of restricted securities via private placement.

Impact

Accredited investors and businesses looking to privately purchase or sell stock, and the SEC.

Cost of House Bill H.R. 1839

$500.00 Thousand
The CBO estimates that implementing this bill would cost less than $500,000 over the 2016-2020 period.

More Information

In-Depth: Sponsoring Rep. Patrick McHenry (R-NC) noted the need for strong secondary markets to facilitate transactions between investors and businesses: “Secondary markets are among the most important arenas for entrepreneurs seeking capital, but the lack of liquidity in these markets has limited their viability as a tool for growing companies. My bill is a narrow and straightforward fix which, if enacted, would provide more liquidity thereby facilitating growth for investors and entrepreneurs participating in secondary markets.”


Nelson Griggs, a board member of Nasdaq Private Market LLC, explained in an op-ed in VentureBeat: why this legislation would improve the status quo for people who hold shares or stock options in privately-held companies:

“this [reform] amounts to good growth: more startups able to conserve their resources, employ new and retain talented employees, raise and expend capital, and time their public offering on their terms. In addition, the proposed legislation will result in increased income and capital gains tax paid at the state and federal levels as options are exercised and shares are sold.”


The House Financial Services Committee passed this legislation unanimously on a vote of 58-0.


Media:

Summary by Eric Revell
(Photo Credit: Flickr user AndreasPike)

AKA

Reforming Access for Investments in Startup Enterprises Act of 2015 or the RAISE Act of 2015

Official Title

To amend the Securities Act of 1933 to exempt certain transactions involving purchases by accredited investors, and for other purposes.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
      senate Committees
      Committee on Banking, Housing, and Urban Affairs
  • The house Passed October 6th, 2015
    Roll Call Vote 404 Yea / 0 Nay
      house Committees
      Committee on Financial Services
      Investor Protection, Entrepreneurship, and Capital Markets
    IntroducedApril 16th, 2015

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    Whose crooked friends is this supposed to help? Are you seriously going to legalize stock market fuckery?
    Like (4)
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    Government needs to have fewer regulations and allow people to conduct business without their interference. What most liberals don't understand is that we don't want or need a nanny state. The 10th amendment should cover this if the politicians have any questions.
    Like (3)
    Follow
    Share
    Basically this bill aims to legalize insider trading. Did DC legalize marijuana too?
    Like (3)
    Follow
    Share
    We're really going to pass a bill that decreases oversight and transparency? Did we learn nothing from the financial crisis? There's a reason these prohibitions were enacted in the 30's- to prevent entities from taking advantage of the system and gaming for their gains.
    Like (2)
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    Share
    So much Liberty for big business in the US already and so many problems. Don't make it any easier
    Like (1)
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    Yes! We should be reducing red tape and regulations whenever possible. How on Earth does any regulation remain from the Securities Act of 1933!?!? My god the Securities world has changed dramatically since 1933...
    Like (1)
    Follow
    Share
    Why do we need exemptions for any laws or regulations? You force the average citizen to fully comply but strangely the exemptions work for the ruling class. Eg: You are exempt from the ACA but we must use it or face penalties. No incumbents!! - Should be the battle cry of all voters!
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    We need increased regulation. Not decreased regulation. I'm sick of seeing the republican congress pander to the super rich and doing nothing for anyone else.
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    The precipitous rise in greed compels an equal if not greater increase in regulation. The Wolf in charge of a hen house gets very fat, driving hen futures into the ground.
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    Exemptions my ass. Only the rich get exemptions. The rest of us poor slobs get trickle down NOTHING. WELL NOTTICKLE FIWN ON UOUR BULLSHIT EXEMPTIONS EITHER just my opinion
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    Regulate the shit out of ALL financial institutions.
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    Again they aren't trustworthy.
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    No exemptions to any law If a law cannot apply to everyone then it is a bad law and should be repealed. See obamacare which congress exempts themselves knowing it is a bad law
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    If passed, another step toward a repeated financial system failure, like 2004.
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    The government needs to get out of the free market
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    Don't change!
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    The Government needs to backup from intrusions it has made into private industry when and where it makes sense. This makes sense, partly because it make adgustments to an eighty-two year old law.
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    SEC works well. The current process works well; it isn't broken, it doesn't need fixing.
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    Less restrictions the better
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    Forward progress
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