Four bills made their way through the Capital Markets and
Government Sponsored Enterprises Subcommittee of the House Financial Services
The Private Company Flexibility and Growth Act,
introduced by Rep. David Schweikert, raises the shareholder threshold for
mandatory registration with the SEC from 500 to 1,000 shareholders. I'm
surprised it's not called the Google/Facebook Act. The 500 shareholder limit is
most famous for forcing Google to go public and is close to forcing Facebook to
do the same.
The Access to Capital for Job Creators Act removes the
regulatory ban that prohibit general solicitation and advertising in private
placements. There were two amendments to the bill during the mark-up session.
Maxine Waters (D-CA)
included and amendment that the revised SEC rules allowing a general
solicitation under Regulation D must require the issuer to take reasonable
steps to verify that purchasers of the securities are accredited investors
using methods determined by the SEC. Scott
Garrett (R-NJ) included an amendment that Section 4(2) of the Securities
Act be revised to add the language: "whether or not such transactions involve
general solicitation or general advertising."
The Entrepreneur Access to Capital Act permits
"crowdfunding" to finance new businesses by allowing companies to accept and
pool donations up to $5 million without registering with the SEC. It would
limit individual investments to the lesser of $10,000 or 10% of an investor's
annual income. An amendment requiring a notice filing with the SEC was rejected
as was an amendment that would have barred felons from being involved.
The Small Company Job Growth and Regulatory Relief Act
would expand the exemptions available to small companies from the Section
404(b) auditor attestation reporting requirements to small and mid-size
companies with a market capitalization of less than $500 million. The exemption
is currently at the $75 million cap set by the Dodd-Frank Act. During the
mark-up, the House panel amended the bill to lower the market float from $500
million to $350 million.
Will these go anywhere? The votes seemed to very partisan
with Republicans voting yes and Democrats voting no. That does not bode well
for moving up the chain through the house, through the Senate and on to the
President's desk. However, President Obama has already indicated an
interest in the crowdfunding idea.
These are not the grand, sweeping changes of Dodd-Frank.
These are small tweaks to the regulations on the capital markets.
additional commentary on developments in compliance and ethics, visit Compliance Building,
a blog hosted by Doug Cornelius.
For more information about LexisNexis
products and solutions connect with us through our corporate site.