Garrett Says U.S. House Republicans Will Push Jobs Act Expansion
U.S. House Republicans will advance legislation to further deregulate securities laws for small public companies and startups, saying the changes would spark more investment, Representative Scott Garrett said today in Washington.
The House Financial Services Committee’s capital markets subcommittee, which Garrett leads, will hold hearings this year to consider a package of bills to scale back disclosure and audit requirements and require regulators to test programs intended to improve liquidity of less-active stocks, said Garrett, a New Jersey Republican.
The legislation is aimed at building on the bipartisan Jumpstart Our Business Startups Act, which Congress passed last year and President Barack Obama endorsed early on. The law lifted the ban on advertising of private securities offerings and legalized equity crowdfunding.
“While the Jobs Act was a great success and is already having a positive economic impact, I believe we can do more,” Garrett told the Security Traders Association market structure conference today. He didn’t say whether the measures have any support from House Democrats.
The bill package will include a measure advanced by Wisconsin Republican Sean Duffy which would require the SEC to conduct a pilot program to increase the minimum quoting increment for less-active stocks. SEC Chairman Mary Jo White said yesterday the agency is developing a plan for a pilot program to vary the tick size for smaller companies.
The SEC is still working on rules required by the Jobs Act including a proposal to allow companies to raise as much as $1 million through crowdfunding. Businesses that use crowdfunding will be able to raise money through the Internet by issuing a limited amount of stock to small investors.
White has said the crowdfunding proposal is a top priority for the SEC to issue this year. Garrett today criticized the agency for delaying the rule, which the law required to be finished by the end of 2012.
The Jobs Act exempted companies with less than $1 billion in revenue from a requirement to have their internal financial controls audited for five years, a requirement of the 2002 Sarbanes-Oxley accounting reform law. It also allowed them to go public with two, instead of three, years of audited financial statements.
Without providing details, Garrett said the new legislation would “enhance” those exemptions. It also will try to “appropriately scale certain regulations for small public companies,” he said.
Some brokers and small-company chief executives say the move to quote stock prices in pennies in 2001 slowed trading activity in less-active stocks. Proponents of a tick-size pilot program say larger increments will spur market makers to supply more buying and selling volume, while skeptics say it will cause people to pay more when they trade.
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