This evening, Congressman Patrick McHenry (R, NC-10), Vice Chairman of the House Financial Services Committee, released the following statement after the House passed his legislation, H.R. 1839 the Reforming Access for Investments in Startup Enterprises Act of 2015 or RAISE Act:

"While secondary markets have the potential to serve as an excellent source of capital for our nation's entrepreneurs and investors, the lack of liquidity in these markets has limited their impact. The RAISE Act changes that. By making these small, technical fixes my bill will open up our secondary markets, allowing them to be used as a valuable tool for small and emerging companies."

Congressman McHenry first introduced the RAISE Act on April 17th at which time it was referred to the House Financial Services Committee. On July 29th, the RAISE Act was unanimously passed out of the Committee by a vote of 58-0. It cleared the full House this evening by a vote of 404 to 0. 

Earlier this afternoon, Congressman McHenry spoke in support of the RAISE Act on the House floor. Video of his speech can be found here.

BACKGROUND: The RAISE Act of 2015 amends the Securities Act of 1933 to include Section 4(a)(7) with the existing Rule 4(a)(1 ½) legal framework for transactions involving the secondary markets. Rule 4(a)(1 ½) was developed from case law by creating a federal exemption for the resale of restricted securities in a private placement. 

Currently, a holder of securities issued in a private placement may resell the securities on a public trading market, after a holding period, pursuant to Rule 144.  However, there is not a similar codified law for private resale of restricted securities. Accordingly, this bill codifies a clear and established legal framework for these transactions to facilitate private company capital formation.