,i  #aacth ,,congress  #b;d ,session    
,h4 ,r4 #defd  ,,in ,,the ,,house ,,of  
,,representatives  ,may #f1 #bjad ,mr4  
,mc,henry 7for himself and ,mr4         
,garrett7 introduced the following bill2
 which was referred to the ,committee on
 ,financial ,services  ,a ,,bill  ,to   
amend the ,jumpstart ,our ,business     
,startups ,act to improve the           
crowdfunding provisions1 and for other  
purposes4  #a4 ,short title ,this ,act  
may be cited as the ,equity             
,crowdfunding ,improvement ,act of      
#bjad4  #b4 ,crowdfunding  7a7 ,repeal  
of existing law ,the ,,crowdfund ,act is
 hereby repealed and the provisions of  
law amended by such ,act are revived or 
restored as if such ,act had not been   
enacted4  7b7 ,new crowdfunding law ,the
 ,jumpstart ,our ,business ,startups    
,act is amended--  7#a7 by inserting    
after title ,,ii the following3  ,,iii  
,entrepreneur ,access to ,capital  #cja4
 ,crowdfunding exemption  7a7 ,in       
general ,section #d7;a7 of the          

,securities ,act of #aicc 7#ae ,u4,s4,c4
 #gg;d7a77#f77 is amended by adding at  
the end the following3  7#f7            
transactions involving the offer or sale
 of securities by an issuer1 provided   
that--  7,a7 the aggregate amount sold  
within the previous #ab-month period in 
reliance upon this exemption is--  7i7  
#c1jjj1jjj1 as such amount is adjusted  
by the ,commission to reflect the annual
 change in the ,consumer ,price ,index  
for ,all ,urban ,consumers published by 
the ,bureau of ,labor ,statistics1 or   
less2 or  7ii7 if the issuer provides   
potential investors with audited        
financial statements1 #e1jjj1jjj1 as    
such amount is adjusted by the          
,commission to reflect the annual change
 in the ,consumer ,price ,index for ,all
 ,urban ,consumers published by the     
,bureau of ,labor ,statistics1 or less2 
7,b7 the aggregate amount sold to any   
investor who is not an accredited       
investor in reliance on this exemption  
within the previous #ab-month period    

does not exceed the greater of--  7i7   
#e1jjj1 as such amount is adjusted by   
the ,commission to reflect the annual   
change in the ,consumer ,price ,index   
for ,all ,urban ,consumers published by 
the ,bureau of ,labor ,statistics2  7ii7
 #aj percent of the investor's annual   
income2 or  7iii7 #aj percent of the    
investor's net worth2  7,c7 in the case 
of a transaction involving an           
intermediary between the issuer and the 
investor1 such intermediary complies    
with the requirements under section     
#d;,a7a72  7,d7 if the aggregate amount 
sold within the previous #ab-month      
period in reliance upon this exemption  
is--  7i7 #ejj1jjj or less1 the issuer  
provides potential investors with       
financial statements that have been     
certified by the principal executive    
officer of the issuer to be true and    
complete in all material respects2 and  
7ii7 more than #ejj1jjj and less than   
#c1jjj1jjj1 the issuer provides         
potential investors with financial      

statements that have been reviewed by a 
public accountant who is independent of 
the issuer1 using professional standards
 and procedures for such review2 and    
7,e7 at the time such securities are    
issued1 the issuer is a corporation4  4 
7b7 ,requirement on intermediaries ,the 
,securities ,act of #aicc 7#ae ,u4,s4,c4
 #gg;a et seq47 is amended by inserting 
after section #d the following3  #d;,a4 
,requirements on intermediaries with    
respect to crowdfunding transactions    
7a7 ,requirements on intermediaries ,for
 purposes of section #d7;a77#f71 a      
person acting as an intermediary in a   
transaction involving the offer or sale 
of securities shall comply with the     
requirements of this subsection if the  
intermediary--  7#a7 registers with the 
,commission as--  7,a7 a broker2 or     
7,b7 a person acting as an intermediary 
who does not--  7i7 offer investment    
advice or recommendations2  7ii7        
explicitly solicit purchases1 sales1 or 
offers to buy particular securities     

offered or displayed on its website or  
portal2  7iii7 directly compensate      
employees1 agents1 or other persons for 
direct sale of securities displayed or  
referenced on its website or portal2 or 
7iv7 manage1 possess1 or otherwise      
handle investor funds or securities2    
7#b7 warns investors1 including on the  
intermediary's website used for the     
offer and sale of such securities1 of   
the speculative nature generally        
applicable to investments in startups1  
emerging businesses1 and small issuers1 
including risks in the secondary market 
related to illiquidity2  7#c7 warns     
investors that they are subject to the  
restriction on sales requirement        
described under subsection 7d72  7#d7   
takes reasonable measures to reduce the 
risk of fraud with respect to such      
transaction2  7#e7 provides the         
,commission with the intermediary's     
physical address1 website address1 and  
the names of the intermediary1 the chief
 officer of the intermediary 7or person 

fulfilling a similar role71 and any     
employee of the intermediary responsible
 for the intermediary's direct          
compliance with the securities laws 7as 
defined under section #c of the         
,securities ,exchange ,act of #aicd71   
and updates such information with the   
,commission within #f business days of  
such information changing2  7#f7        
provides the ,commission with continuous
 investor-level access to the           
intermediary's website2  7#g7 requires  
each potential investor to answer       
questions demonstrating--  7,a7 an      
understanding of the level of risk      
generally applicable to investments in  
startups1 emerging businesses1 and small
 issuers2  7,b7 an understanding of the 
risk of illiquidity2 and  7,c7 such     
other areas as the ,commission1 in      
consultation with self-regulatory       
organizations 7as defined in section #c 
of the ,securities ,exchange ,act of    
#aicd71 may determine appropriate by    
rule or regulation2  7#h7 requires the  

issuer to state a target offering amount
 and a deadline to reach the target     
offering amount and ensure the third    
party custodian described under         
paragraph 7#aa7 withholds offering      
proceeds until--  7,a7 aggregate capital
 raised from investors other than the   
issuer is no less than #ajj percent of  
the target offering amount2 and  7,b7   
the issuer has complied with all        
requirements under this section2  7#i7  
carries out a background check on the   
executive officers1 directors1 and      
shareholders with #ae percent or more   
voting control of the issuer 7or persons
 fulfilling similar roles7 to ensure    
such persons would not meet the         
disqualification provisions adopted in  
accordance with section #ibf of the     
,dodd-,frank ,wall ,street ,reform and  
,consumer ,protection ,act2  7#aj7      
provides the ,commission and potential  
investors with notice of the offering1  
not later than the first day securities 
are offered to potential investors1     

including--  7,a7 the issuer's name1    
legal status1 physical address1 and     
website address2  7,b7 the names of the 
executive officers1 directors1 and      
shareholders with #ae percent or more   
voting control of the issuer 7or persons
 fulfilling similar roles72  7,c7 the   
intended use of the proceeds of the     
offering2 and  7,d7 the target offering 
amount and the deadline to reach the    
target offering amount2  7#aa7          
outsources cash functions to a qualified
 third party custodian1 such as a broker
 or dealer registered under section     
#ae7;b77#a7 of the ,securities ,exchange
 ,act of #aicd or an insured depository 
institution2  7#ab7 maintains such books
 and records as the ,commission         
determines appropriate2  7#ac7 makes    
available on the intermediary's website 
a method of communication that permits  
the issuer and investors to communicate 
with one another2  7#ad7 provides the   
,commission with a notice upon          
completion of the offering1 which shall 

include the aggregate offering amount   
and the number of purchasers2 and  7#ae7
 does not offer investment advice4  7b7 
,verification of investor information   
,for purposes of section #d7;a71 an     
intermediary may rely on a certification
 by an investor as to--  7#a7 the       
investor's status as an accredited      
investor2 and  7#b7 with respect to an  
unaccredited investor1 the investor's   
annual income1 net worth1 and the       
aggregate amount of securities sold to  
the investor in reliance on the         
exemption provided by section #d7;a7    
within the previous #ab-month period4   
7c7 ,information ,available to ,states  
,the ,commission shall make the notices 
described under subsections 7a77#aj7 and
 7a77#ad7 and the information described 
under subsection 7a77#e7 available to   
the ,states4  7d7 ,restriction on ,sales
 ,newly issued securities purchased in a
 transaction made in reliance on section
 #d7;a77#f7 may not be resold by any    
person during the #a-year period        

beginning on the date of original       
purchase1 unless such securities are    
sold to--  7#a7 the issuer of such      
securities2 or  7#b7 an accredited      
investor4  7e7 ,requirement for use of  
intermediaries when selling to          
unaccredited investors ,with respect to 
a transaction described under section   
#d7;a77#f71 an issuer may only enter    
into a transaction with an unaccredited 
investor through the use of an          
intermediary1 and any resale of a       
security originally issued in reliance  
on section #d7;a77#f7 may only be made  
with an unaccredited investor through   
the use of an intermediary4  7f7 ,rules 
of construction  7#a7 ,no registration  
as broker ,with respect to a transaction
 either made pursuant to section        
#d7;a77#f7 or involving the resale of a 
security originally issued pursuant to  
section #d7;a77#f7 and involving an     
intermediary1 such intermediary shall   
not be required to register as a broker 
under section #ae7;a77#a7 of the        

,securities ,exchange ,act of #aicd     
solely by reason of participation in    
such transaction4  7#b7 ,right to select
 transactions ,an intermediary may      
select in which transactions to serve as
 an intermediary1 and such selection    
shall not be considered investment      
advice or subject the intermediary to   
regulation under the ,investment        
,advisers ,act of #aidj4  7#c7 ,right to
 terminate transaction ,an intermediary 
may review the transaction and terminate
 the transaction at any time if--  7,a7 
in carrying out the intermediary's due  
diligence under the transaction1 the    
intermediary determines that termination
 is appropriate2  7,b7 the intermediary 
is able to return all funds provided by 
potential investors2 and  7,c7 the      
custodian has not transferred the       
offering proceeds to the issuer4  7#d7  
,no preclusion of other capital raising 
,nothing in this section or section     
#d7;a77#f7 shall be construed as        
preventing an issuer from raising       

capital through securities offerings    
made in reliance on other exemptions    
from registration4  4  7c7 ,rulemaking  
,not later than #abj days after the date
 of the enactment of this title1 the    
,securities and ,exchange ,commission   
shall issue such rules as may be        
necessary to carry out section #d;,a of 
the ,securities ,act of #aicc4 ,in      
issuing such rules1 the ,commission     
shall consider the costs and benefits of
 the action4  7d7 ,disqualification ,not
 later than #abj days after the date of 
the enactment of this title1 the        
,securities and ,exchange ,commission   
shall by rule or regulation establish   
disqualification provisions under which 
an issuer shall not be eligible to      
utilize the exemption under section     
#d7;a77#f7 of the ,securities ,act of   
#aicc based on the disciplinary history 
of the issuer or its predecessors1      
affiliates1 officers1 directors1 or     
persons fulfilling similar roles4 ,the  
,commission shall also establish        

disqualification provisions under which 
an intermediary shall not be eligible to
 act as an intermediary in connection   
with an offering utilizing the exemption
 under section #d7;a77#f7 of the        
,securities ,act of #aicc based on the  
disciplinary history of the intermediary
 or its predecessors1 affiliates1       
officers1 directors1 or persons         
fulfilling similar roles4 ,such         
provisions shall be substantially       
similar to the disqualification         
provisions contained in the regulations 
adopted in accordance with section #ibf 
of the ,dodd-,frank ,wall ,street       
,reform and ,consumer ,protection ,act  
7#ae ,u4,s4,c4 #gg;d note74  7e7        
,treatment of crowdfunding investment   
companies ,section #c7;c7 of the        
,investment ,company ,act of #aidj 7#ae 
,u4,s4,c4 #hj;a-#c7;c77 is amended by   
adding at the end the following3  7#ae7 
,any person substantially all of whose  
business is confined to investing in    
securities purchased in a transaction   

made in reliance on section #d7;a77#f7  
of the ,securities ,act of #aicc4  4    
#cjb4 ,exclusion of crowdfunding        
investors from shareholder cap ,section 
#ab7;g77#e7 of the ,securities ,exchange
 ,act of #aicd 7#ae ,u4,s4,c4           
#ghl7g77#e77 is amended--  7#a7 by      
striking 7#e7 ,for the purposes2 and    
inserting the following3  7#e7          
,definitions  7,a7 ,in general ,for the 
purposes  2 and  7#b7 by adding at the  
end the following3  7,b7 ,exclusion for 
persons holding certain securities ,for 
purposes of this subsection1 securities 
originally issued in transactions       
described under section #d7;a77#f7 of   
the ,securities ,act of #aicc shall     
neither be deemed to be nor counted     
towards the definition of held of       
record4  4  #cjc4 ,preemption of ,state 
law  7a7 ,in general ,section           
#ah7;b77#d7 of the ,securities ,act of  
#aicc 7#ae ,u4,s4,c4 #ggr7b77#d77 is    
amended--  7#a7 by redesignating        
subparagraphs 7,c7 and 7,d7 as          

subparagraphs 7,d7 and 7,e71            
respectively2 and  7#b7 by inserting    
after subparagraph 7,b7 the following3  
7,c7 section #d7;a77#f72  4  7b7        
,clarification of the ,preservation of  
,state ,enforcement ,authority  7#a7 ,in
 general ,the amendments made by        
subsection 7a7 relate solely to ,state  
registration1 documentation1 and        
offering requirements1 as described     
under section #ah7;a7 of the ,securities
 ,act of #aicc 7#ae ,u4,s4,c4 #ggr7a771 
and shall have no impact or limitation  
on other ,state authority to take       
enforcement action with regard to an    
issuer1 intermediary1 or any other      
person or entity using the exemption    
from registration provided by section   
#d7;a77#f7 of such ,act4  7#b7          
,clarification of state jurisdiction    
over unlawful conduct of intermediaries1
 issuers1 and custodians ,section       
#ah7;c77#a7 of the ,securities ,act of  
#aicc is amended by striking with       
respect to fraud or deceit1 or unlawful 

conduct by a broker or dealer1 in       
connection with securities or securities
 transactions4 and inserting the        
following3  1 in connection with        
securities or securities transactions1  
with respect to-- 7,a7 fraud or deceit2 
7,b7 unlawful conduct by a broker or    
dealer2 and  7,c7 with respect to a     
transaction described under section     
#d7;a77#f71 unlawful conduct by an      
intermediary1 issuer1 or custodian4  4  
2 and  7#b7 in the table of contents for
 such ,act by amending the items        
relating to title ,,iii to read as      
follows3  ,,title ,,iii--,entrepreneur  
,access to ,capital ,sec4 #cja4         
,crowdfunding exemption4 ,sec4 #cjb4    
,exclusion of crowdfunding investors    
from shareholder cap4 ,sec4 #cjc4       
,preemption of ,state law4  4