Last week, the U.S. House of Representatives passed the Incentivizing New Ventures and Economic Strength Through Capital Formation (INVEST) Act  - H.R. 3383, with strong bipartisan support, including backing from all House Republicans and 87 Democrats.

We are grateful for House Financial Services Committee Chairman French Hill’s (R-AR) and Capital Markets Subcommittee Chair Ann Wagner’s (R-MO) leadership, and the hard work of the Financial Services Committee in advancing the INVEST Act. We appreciate the Committee's engagement with ADISA’s members throughout this process, as a number of provisions in the Act are of great interest to our members. We commend Representatives Hill and Wagner and other Committee Members for their commitment to fostering capital formation and protecting investors - values that we believe should guide all securities regulation.

The INVEST Act is lengthy and addresses a number of important securities market issues.  It is designed to advance policies to expand investor opportunity, support small and growing businesses, and facilitate capital formation. Importantly, the Act includes several provisions noteworthy to ADISA members, including:

• One that would codify the recently eliminated SEC staff position that prevented a closed-end fund (including an interval or tender offer fund) from investing more than 15% of its assets in private funds that in turn invest in securities.
• Another that would allow institutional and angel investor gatherings to hear about 506(b) private offerings without requiring any "substantive pre-existing relationship" with the attendees.
• A provision that would permit an increase in the number of owners of "qualifying venture capital funds" from 250 to 500 and allow their total assets to increase from $10m to $50m.
• Provisions that would require the SEC to create a category of accredited investor that would be satisfied by passing a no-charge exam created by the SEC and designed to test financial competence.
• Language augmenting the definition of accredited investor that would pick up most of the definitional elements found in Reg D (e.g., net worth, income, examinations), and impose a go-forward indexing approach for the net worth and income tests. 

We look forward to working with the Senate on this important legislation, and continuing our collaboration with members in both chambers who share our commitment to legislation that balances capital formation and investor protection.

Sincerely,
ADISA Executive Director John Grady and ADISA Legislative & Regulatory Co-Chairs Catherine Bowman, The Bowman Law Firm, and Deborah Froling, Kutak Rock