Bill Huizenga

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Speaker, I rise today to recognize Jeff Cook, Vice President of Eagle Alloy Inc. in Muskegon, Michigan, for his long-term contributions to Eagle Alloy and the U.S. metalcasting industry. Eagle Alloy is an innovative steel foundry providing vital castings for key sectors including agriculture, construction, mining, defense and railroads. Metal castings are integral to virtually all U.S. manufacturing activities. Jeff joined Eagle Alloy in 1986 after graduating high school. His first position on the shop floor was as a grinder, machining castings on the third shift. He has worked his way up over the past thirty years to become Vice President of Sales and Marketing. Jeff is passionate about attracting the next generation to the metalcasting industry and has dedicated significant amount of time reaching out to local schools and businesses about careers in the metal casting industry. In addition, he has been actively involved in the leadership of the local American Foundry Society (AFS) West Michigan Chapter for many years. He joined the AFS National Board of Directors in 2011, where he spent the past year as its President traveling across the country, meeting with thousands of metalcasters and suppliers underscoring the importance of taking time to ``Attract. Educate. Support'' the next generation of metalcasters. AFS is the major trade and technical association for the North American metalcasting industry. The association has more than 8,000 members representing over 2,000 metalcasting firms, their suppliers and customers. In Muskegon, Jeff has reached out to educational institutions, including local high schools and Muskegon Community College, to better communicate the skills needed and the certifications that are in demand in the industry. Through the AFS chapter, Jeff has worked with local schools to host student night, where they showcase the traveling casting kit, known as Foundry in a Box. It shows students how to form patterns, melt them, the cleanup process behind it, and gives an overview of how castings are made. Mr. Speaker, it is with great pleasure that I congratulate Jeff Cook, as he completes his successful term as AFS President, for his strong commitment and dedication to Eagle Alloy and to the growth and prospering of the metalcasting industry.

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Speaker, pursuant to House Resolution 242, I call up the bill (H.R. 1219) to amend the Investment Company Act of 1940 to expand the investor limitation for qualifying venture capital funds under an exemption from the definition of an investment company, and ask for its immediate consideration in the House.

Mr. HUIZENGA. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days in which to revise and extend their remarks and to submit extraneous materials on the bill under consideration.

Mr. HUIZENGA. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, we all know that small businesses and entrepreneurs are the heartbeat of the American economy. Access to financial capital is vital for entrepreneurs seeking to start up, operate, or expand their businesses. However, gaining access to capital has remained an enduring challenge for many small businesses. The financial crisis and the Great Recession made the situation worse, frankly, as capital became increasingly hard to access from institutional banks and various capital market players. While conditions have improved somewhat in recent years, many entrepreneurs continue to struggle with accessing the capital they need to compete and to grow. In order to succeed, these companies need capital and credit, the lifeblood for growth, expansion, and job creation. Yet the government continues to construct arbitrary walls that cut them off from essential financing, as smaller companies are caught in a sea of regulatory red tape created by Washington bureaucrats. We know that 60 percent of all net new jobs that have come into this country, that have been created here in the United States, come from these small businesses. They are oftentimes S corporations, LLCs, sole proprietorships. Small companies often have such owners also be operators. They are working alongside their fellow employees. That 60 percent of those jobs that have been created here in the United States isn't just a one-time blip. That is over the last 20 years, the last two decades, that we have seen that trend. Congress has made strides in tailoring the regulatory environment for smaller companies, no doubt, most notably when we passed, with strong bipartisan support, the Jumpstart Our Business Startups, or JOBS, Act in 2012. This was a bipartisan bill that was signed into law by President Obama. The JOBS Act's benefits are notable as more and more companies use its provisions to raise investment capital in both the public and private markets. The JOBS Act has raised the cap on investors in a privately held company from 500 to 2,000 investors, but the limit on the number of investors acting as a coordinated group to invest in a company remained at 100, where it has been since 1940, some 77 years ago. As noted by Kevin Laws of AngelList in his written testimony before our Capital Markets Subcommittee: ``With online fundraising and general solicitation becoming more common because of the JOBS Act, companies are bumping up against the limit more frequently. The current limit . . . now acts as a brake on the amount of money the company wanted to raise, leaving tens of millions of dollars on the table that did not go into startups.'' While H.R. 1219, the Supporting America's Innovators Act, a bipartisan bill introduced by the vice chairman of our Financial Services Committee, Representative Patrick McHenry, and Nydia Velazquez of New York, would amend the cap currently contained in the Investment Company Act to allow 250 investors for a ``qualified venture capital fund,'' therefore enhancing angel investors' ability to provide important funding to small businesses. This bill is a very modest increase to the current exemption that has been in place for nearly 77 years. Modernizing this cap is long overdue and reflects today's capital markets and the reality of the increasingly important role that angel investors and others play as they commit the funds necessary to help small businesses grow. The Securities and Exchange Commission, unfortunately, continues to ignore the backlog of good ideas to spur capital formation, which is recommended by entrepreneurs, small businesses, and market participants from their annual SEC Government-Business Forum on Capital Formation. This is a forum that is put together annually. They take and solicit ideas. They want to hear from people that are in the marketplace to figure out what ways they could go to improve that. Unfortunately, they have not acted on this, and in the SEC's absence, Congress must act to promote market efficiency and capital formation. I think we can all agree that we support smart regulation that protects investors and maintains orderly and efficient markets. But outdated, excessive, and unnecessary regulation whose costs outweigh benefits is dumb regulation that overburdens smaller companies. Let's provide some regulatory relief by enacting the bipartisan bill that will ease the burdens on small businesses and job creators and help foster capital formation and get Americans back to work. Mr. Speaker, I would also like to note, in a hearing that we had on this bill last Congress, it passed our committee 52-2, including the ranking member voting for it. There were no dissenting minority views that were offered, and no amendments were offered at the Rules Committee on this. We have got a lot of consensus. I believe this is the right thing to do to move forward. Mr. Speaker, I reserve the balance of my time.

Mr. HUIZENGA. Mr. Speaker, I yield 2 minutes to the gentleman from North Carolina (Mr. McHenry), our vice chairman and the sponsor of this bill.

Mr. HUIZENGA. Mr. Speaker, I yield 2 minutes to the gentleman from Illinois (Mr. Hultgren), the vice chairman of our Subcommittee on Capital Markets, Securities, and Investments.

Mr. HUIZENGA. Mr. Speaker, I yield 2 minutes to the gentleman from Maine (Mr. Poliquin).

Mr. HUIZENGA. Madam Speaker, may I inquire as to the balance of time each side has left?

Mr. HUIZENGA. Mr. Speaker, I yield 2 minutes to the distinguished gentleman from Arkansas (Mr. Hill).

Mr. HUIZENGA. Madam Speaker, I yield 2 minutes to the gentleman from Minnesota (Mr. Emmer).

Mr. HUIZENGA. Madam Speaker, I yield 2 minutes to the gentleman from Indiana (Mr. Hollingsworth), a new member of our Financial Services Committee.

Mr. HUIZENGA. Madam Speaker, I yield myself such time as I may consume. Madam Speaker, as I close on this very important bill that we have been talking about, H.R. 1219, I just want to say congratulations to our sponsors, Congressman McHenry and Congresswoman Velazquez, for their leadership on this, as well as my Capital Markets, Securities, and Investments Subcommittee ranking member, Representative Maloney, for working together to advance this commonsense bill. As was pointed out by both the chairman and the ranking member, there is strong bipartisan consensus that this bill is a winner for the American people. Some people today, as they tee off the Masters, we might say it is a 6-inch putt for the American people knowing that this is good for them and good for the economy. I want to encourage all of my colleagues on both sides of the aisle to support this bill, H.R. 1219. Madam Speaker, I yield back the balance of my time.

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

Mr. HUIZENGA

Mr. HUIZENGA. I think we can all agree that we need to support smart regulation that protects investors and maintains orderly and efficient markets. But outdated, excessive, and unnecessary regulation where costs outweigh the benefits is just dumb regulation that overly burdens smaller companies. So let's provide some regulatory relief by enacting this bipartisan bill that will ease the burdens on small businesses and job creators to help foster capital formation and get Americans back to work.

Mr. HUIZENGA. Mr. Speaker, I appreciate the opportunity to rise, and I do feel like, to clarify, the bill title of H.R. 1219 is Supporting America's Innovators Act. Our colleagues have seen time and time and time again that the other side has wanted to come to the floor and talk about everything other than what we are dealing with. But I do want to lay out, as one of the senior members of the committee, what has happened in Financial Services when we have dealt with this. Last Congress, this exact bill passed 52-2 in the committee, with the ranking member supporting the bill. There were no dissenting minority views that were offered. And now, with this particular piece of legislation, H.R. 1219, there were no amendments even offered at the Rules Committee. So which is it? My friends across the aisle complain when we don't do regular order. They complain if this had gone on suspension. I am kind of reminded of Groucho Marx in his movie, ``Horse Feathers.'' Whatever that is, I am against it. That seems to be their attitude. But I do look forward to working with my colleagues across the aisle to make sure that they join me in supporting government funding when we are going to be dealing with that here shortly. So on to our bill here, H.R. 1219, unless the opposition, the other side of the aisle, would like to continue to talk about a lot of nongermane things; I will keep bringing up Susan Rice and her illegally unmasking people if they would like to do that. We can continue with that conversation. I would prefer to talk about H.R. 1219. So we know that small businesses and entrepreneurs are the heartbeat of the American economy, and access to financial capital is vital for entrepreneurs seeking startup money, or to operate, or to expand their businesses. However, gaining access to capital has remained an enduring challenge for small businesses. The financial crisis and the Great Recession made the situation worse as capital became increasingly hard to access from institutional banks and various capital players. And while conditions have improved somewhat in the recent years, many entrepreneurs continue to struggle with accessing the capital that they need to compete and to grow. In order to succeed, these companies need capital and credit, which is the lifeblood for growth, expansion, and job creation. Yet the government continues to construct arbitrary walls that cut them off from essential financing as smaller companies are caught in a sea of regulatory red tape created by Washington bureaucrats oftentimes. As we had a similar bill yesterday, I made the point at that time as well. We know that 60 percent of all net new jobs that have been created here in the United States, 60 percent of all net new jobs that have been created here over the last 2 decades, have come from these small businesses. Congress has made strides in tailoring the regulatory environment for these smaller companies--most notably when we passed, with strong bipartisan support, the Jumpstart Our Business Startups Act, or JOBS Act, in 2012. That was a bipartisan bill that was signed by President Obama. The JOBS Act's benefits are notable as more and more companies use its provisions to raise investment capital in both the public and the private markets. And the JOBS Act raised the cap on investors in a privately held company from 500 to 2,000 investors, but the limit on the number of investors acting as a coordinated group to invest in a company remained at 100, where it has been since 1940, some 77 years ago. I think it is about time that we update that. As noted by Kevin Laws, of AngelList in his written testimony before the Capital Markets Subcommittee: ``With online fundraising and general solicitation becoming more common because of the JOBS Act, companies are bumping up against the limit more frequently. The current limit . . . now acts as a brake on the amount of money the company wanted to raise, leaving tens of millions of dollars on the table that did not go into startups.'' Well, H.R. 1219, the Supporting America's Innovators Act, a bipartisan bill introduced by Representatives Patrick McHenry and Nydia Velazquez, would amend the cap currently contained in the Investment Company Act to allow 250 investors, instead of that 100, for a qualified venture capital fund, and, therefore, enhance angel investors' ability to provide important funding to our small businesses. This bill is a very modest increase to the current exemption which has been in place for nearly 77 years, since 1940. Modernizing the cap is long overdue and reflects today's capital markets realities and the increasingly important role that angel investors play as they commit the funds necessary to help these small businesses grow. The Securities and Exchange Commission continues to ignore the backlog of good ideas to spur capital formation recommended by entrepreneurs, small businesses, and market participants at the SEC's annual government-business forum on capital formation. So in the SEC's absence, Congress must act to promote market efficiency and capital formation. That is what we are here to do today, and I do think that that is an extremely important thing for us to do here in Congress. I think that we can all agree that we support smart regulation that protects investors and maintains orderly and efficient markets.

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Speaker, I claim the time in opposition to the motion.

Mr. HUIZENGA. Mr. Speaker, I yield myself the balance of my time to close. My colleague on the other side is trying to maybe split some hairs. We heard some rhetoric earlier on the floor here which, I think, shows why many on both sides of the aisle scratch their heads in opposition to this bill. We heard about monied interests. We heard about corporate wish lists. We heard about Enron which is, by the way, a publicly traded company which has absolutely nothing to do with this bill. Now, that all might play really well on a leftwing political base, but that is detached from the realities of what our economy is about. As we have talked, 60 percent of all new job creation happens in small businesses. These are not corporations. These are LLCs, limited liability corporations. These are subchapter S sole proprietorships. These are small entrepreneurs and innovators. By the way, I looked up the definition of innovator. It is a person who introduces new methods, ideas, or products. Those are the kind of dynamic elements that we are seeing here. And I think this confusion between corporations and Enron and what we are trying to do here is really a disservice to the American people. This is about making sure that we update basically an inflation escalator from 1988. We update a rule that the SEC could have the power to do, which it has not done, that benefits employees and benefits those owner-employer's workers who oftentimes, more often than not, work alongside their employees. So they are the ones who are seeing this on a daily basis. I can just say to you that, as was pointed out by my colleague from across the aisle from Maryland, if we don't do this, what most of those small businesses are going to do is say: You know what, it is just not worth the effort; I am not going to do it. And we will see that lack of upside going to those employees. As was pointed out by my fellow colleague from Michigan, this is beyond their salary, this is beyond bonuses. This is an additional way to make sure that those relationships get cemented in. So, at a minimum, all you would be doing is voting to confirm the inflation escalator from 1988. It is not a radical change to the law. This is a commonsense, I believe, innovative way of trying to make sure that this next generation of workers has the ability to really reap the benefits of success here in the United States. I yield back the balance of my time.

Mr. HUIZENGA. Mr. Speaker, I just want to point out a couple of things. The Senate Banking Committee has moved an identical bill forward, unanimously, recently. Regarding the subject matter that the gentleman from California was throwing out, this bill is not about anything other than providing hardworking Americans an opportunity to succeed. It is not about relitigating the last election or even about Susan Rice illegally unmasking American citizens. This is about an underlying bill that will help American citizens. I urge my colleagues to vote ``no'' on this motion to recommit, and I urge them to vote ``yes'' on the underlying bill. Mr. Speaker, I yield back the balance of my time.

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

Mr. HUIZENGA. Mr. Speaker, I yield 2 minutes to the gentleman from New York (Mr. Zeldin).

Mr. HUIZENGA. Mr. Speaker, I yield 2 minutes to the gentleman from Michigan (Mr. Trott), my fellow Michiganian.

Mr. HUIZENGA. Mr. Speaker, I yield 3 minutes to the gentleman from Georgia (Mr. Loudermilk).

Mr. HUIZENGA. Mr. Speaker, I yield myself such time as I may consume, and I thank the chairman for his leadership on this particular issue. Mr. Speaker, small businesses and entrepreneurs are what drive the American economy. I meet with them in my district, the Second District of Michigan, all the time. I know my colleagues do as well back in their districts. We see them firsthand. We see firsthand the benefits that their dreams, their innovations, their inspiration, and their hard work provide to our communities. These innovators, entrepreneurs, and risk-takers are critical for our country's economic growth and prosperity. In fact, small businesses are responsible for 60 percent of the Nation's net new jobs over the past two decades. Not 2 years, not 10 years, but over the last 20 years, the last two decades. If our Nation is going to have an economy that provides opportunity for every American, then we must promote and encourage success and growth in our small businesses and our startups. It is this notion that brings us this legislation we are discussing today. H.R. 1343, Encouraging Employee Ownership Act, would simply level the playing field for small companies by updating Federal rules that allow small businesses to better compensate their employees with ownership in their own businesses. Currently, Securities and Exchange Commission rule 701 permits private companies to offer their securities as part of written compensation agreements to employees, directors, general partners, trustees, officers, or certain consultants without having to comply with rigid Federal securities registration requirements. SEC rule 701, therefore, allows small companies to reward its employees. Despite the SEC having the authority to increase the $5 million threshold disclosure via rulemaking, the SEC has once again chosen to prioritize highly politicized regulatory undertakings instead of focusing on its core mission. That mission includes facilitating capital formation. If the SEC cannot or will not focus its priorities, Congress will. It is imperative that small businesses in west Michigan, all of Michigan, and across America have the ability to compete. A critical element of competition and success is for those small businesses to be able to offer compensation packages that attract and retain top-tier talent. In today's world, that includes rewarding employees in stock options. To me, this just makes common sense. Small-business employees have a clear and vested interest in the success of their employer. By increasing the rule 701 threshold to $10 million, it will give private companies more flexibility to attract, reward, and retain those highly valuable employees. This simple change will allow companies to offer twice as much stock to their employers annually, as they currently can, without having to trigger additional disclosure information to investors about compensation packages that include these security offerings. By reforming this regulatory burden, startups, small businesses, and emerging growth companies will be better equipped to attract highly talented individuals from companies that are better capitalized and able to maybe provide some additional cash compensation. By incentivizing employees with stock options, small businesses will now be able to compete on a more level playing field with older, larger, and maybe more established companies. They are going to be able to retain their invaluable employees as well. This bill is an example of the positive bipartisan results that can be achieved when Republicans and Democrats reach across the aisle. I commend the sponsors of the bill, Representatives Hultgren, Delaney, Higgins, MacArthur, Sinema, and Stivers for their leadership on this issue. I encourage my colleagues to support H.R. 1343. Mr. Speaker, I reserve the balance of my time.

Mr. HUIZENGA. Mr. Speaker, I yield 2 minutes to the gentleman from Missouri (Mr. Luetkemeyer), my fellow subcommittee chairman.

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Speaker, small businesses and entrepreneurs are what drive the American economy. I meet with these folks all the time when I am back home in the Second District, as I know my colleagues do when they are back in their districts, and we see firsthand the benefits that these people's dreams, their innovations, their hard work, and as they provide to our communities that inspiration. These innovators, entrepreneurs, and risk-takers are critical to our country's economic growth and prosperity. In fact, small businesses are responsible for more than 60 percent of all of the net new jobs. Let me repeat that. Small businesses are responsible for more than 60 percent of all the net new jobs over the past two decades. This isn't just a one-time blip. This is over the last two decades. So if our Nation is going to have an economy that provides opportunities for every American, then we must promote and encourage success and growth for our small businesses, our startups, and our entrepreneurs. It is this notion that I think brings us to this legislation we are discussing here today. H.R. 1343, the Encouraging Employee Ownership Act, would simply level the playing field for small companies by updating Federal rules that allow small businesses to better compensate their employees with ownership in those businesses. Currently, the SEC rule 701 permits private companies to offer their own securities as part of written compensation agreements with employees, directors, general partners, trustees, officers, or other certain consultants without having to comply with rigid Federal securities registration requirements. The SEC rule 701, therefore, allows small companies to reward their employees. Despite the SEC having the authority to increase the $5 million threshold via a rulemaking, the SEC has once again chosen to prioritize what, I would argue, are highly politicized regulatory undertakings instead of focusing on its core mission, which includes the facilitation of capital formation. That is one of the key core jobs of the Securities and Exchange Commission. Well, if the SEC isn't going to focus its priorities, then Congress will help them do that. So that is why we are here today on this bill. I believe it is imperative that small businesses not only in West Michigan, but across America, have the ability to compete. A critical element of competition and success is, first, that small businesses be able to offer compensation packages that attract and retain top-tier talent in their fields. In today's world, that includes rewarding employees with stock options. To me, this is common sense. Small- business employees have a clear and vested interest in the success of their employers, and oftentimes they are attracted to it. I know, having some younger children myself that are coming into adulthood, they are looking for that excitement. They are looking for that opportunity. They are looking to be builders themselves. Well, by increasing the rule 701 threshold to $10 million, it will give these private companies more flexibility to attract, reward, and retain those employees. This simple change would allow companies to offer twice as much stock to their employees annually without having to trigger additional disclosure information to investors about those compensation packages that include securities offerings. By reforming this regulatory burden, Mr. Speaker, startups, small businesses, and emerging growth companies will be better equipped to attract highly talented individuals from companies that are better capitalized and able to provide cash compensation. By incentivizing employees with stock options, small businesses will now be able to compete on a more level playing field in order to retain those valuable employees rather than seeing them flee to cash, frankly. This bill is an example, I believe, of positive, bipartisan results that can be achieved when Republicans and Democrats reach across the aisle. I commend our sponsors of the bills, Representative Hultgren, who spoke a little earlier; Representatives Delaney, Higgins, MacArthur, Sinema, and Stivers, for their leadership on this issue; and my friend from Colorado, as well, and what he is doing. I encourage all my colleagues to support this rule and the underlying bill.