Equity Crowdfunding Improvement Act of 2014

“III Entrepreneur Access to Capital

“301. Crowdfunding exemption

“(a) In general—Section 4(a) of the Securities Act of 1933 (15 U.S.C. 77d(a)(6)) is amended by adding at the end the following:

“(b) Requirement on intermediaries—The Securities Act of 1933 (15 U.S.C. 77a et seq.) is amended by inserting after section 4 the following:

“(c) Rulemaking—Not later than 120 days after the date of the enactment of this title, the Securities and Exchange Commission shall issue such rules as may be necessary to carry out section 4A of the Securities Act of 1933. In issuing such rules, the Commission shall consider the costs and benefits of the action.

“(d) Disqualification—Not later than 120 days after the date of the enactment of this title, 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 4(a)(6) of the Securities Act of 1933 based on the disciplinary history of the issuer or its predecessors, affiliates, officers, directors, or persons fulfilling similar roles. 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 4(a)(6) of the Securities Act of 1933 based on the disciplinary history of the intermediary or its predecessors, affiliates, officers, directors, or persons fulfilling similar roles. Such provisions shall be substantially similar to the disqualification provisions contained in the regulations adopted in accordance with section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (15 U.S.C. 77d note).

“(e) Treatment of crowdfunding investment companies—Section 3(c) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(c)) is amended by adding at the end the following:

“302. Exclusion of crowdfunding investors from shareholder cap

“Section 12(g)(5) of the Securities Exchange Act of 1934 (15 U.S.C. 78l(g)(5)) is amended—

“(1) by striking “(5) For the purposes”; and inserting the following:

“(2) by adding at the end the following:

“303. Preemption of State law

“(a) In general—Section 18(b)(4) of the Securities Act of 1933 (15 U.S.C. 77r(b)(4)) is amended—

“(1) by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively; and

“(2) by inserting after subparagraph (B) the following:

“(b) Clarification of the Preservation of State Enforcement Authority

“(1) In general—The amendments made by subsection (a) relate solely to State registration, documentation, and offering requirements, as described under section 18(a) of the Securities Act of 1933 (15 U.S.C. 77r(a)), and shall have no impact or limitation on other State authority to take enforcement action with regard to an issuer, intermediary, or any other person or entity using the exemption from registration provided by section 4(a)(6) of such Act.

“(2) Clarification of state jurisdiction over unlawful conduct of intermediaries, issuers, and custodians—Section 18(c)(1) of the Securities Act of 1933 is amended by striking “with respect to fraud or deceit, or unlawful conduct by a broker or dealer, in connection with securities or securities transactions.” and inserting the following:”