April 25, 2010                                     

 

RE:  Support for Amendments to S. 3217: Restoring American Financial Stability Act of 2010

 

Dear Senator:

 

You may have heard that the financial reform bill passed by the Senate Banking Committee included two sections that have inadvertent consequences and could have hurt many entrepreneurs by reducing the pool of early-stage "angel" capital and making securities regulations complicated and costly for start-up small business.  It is now my understanding that two amendments will be offered by Sen. Christopher Dodd and they will ensure that high growth entrepreneurs have access to a strong pool of angel capital and that investors are better protected from fraud.  I urge you to support both of these amendments.

 

The amendments bring new meanings to two sections of the bill:

 

Section 412:  Adjusting the Accredited Investor Standard. 

The thresholds for "accredited investor" would stay the same as they are currently, although the standard for net worth of $1 million would now exclude the investor's primary residence.  While I would have preferred no adjustment to the standard for angel investors, I believe this is a reasonable compromise. 

 

The act would also have the Securities and Exchange Commission review the thresholds at least every four years, with any adjustments considering the protection of investors, the public interest and the state of the economy.  The amendment's direction to consider the economic impact of any adjustments to accredited investor standards in the future is important, as innovative start-up businesses are some of the most important creators of high quality jobs in the country.

 

Section 926.  Regulation D Offerings.

The amendment deletes all previous language that was problematic and replaces it with language that disqualifies individuals who have been determined to be "bad actors" by Federal and State authorities from using Regulation D 506 private offerings (which include angel investments, but many other types of investments as well).

 

I like this amendment because not only does it increase investor protections against fraud, but it ensures uniform regulation of these private offerings across the United States and it keeps the reporting requirements for entrepreneurs the same as they are currently.  The current uniform system is efficient for small businesses that attract angel capital.

 

IF THESE AMENDMENTS ARE NOT INCLUDED IN S. 3217,

PLEASE VOTE NO ON CLOTURE AND SUPPORT THEIR INCLUSION

 

A YES VOTE WITHOUT THEM WILL KILL SMALL BUSINESS JOBS

 

Thank you for your consideration of these amendments.  Start-up businesses in our state and across the nation need the capital from angel investors to grow and create high quality jobs.

 

Sincerely,