[Congressional Record Volume 158, Number 50 (Tuesday, March 27, 2012)]
[House]
[Pages H1586-H1593]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
JUMPSTART OUR BUSINESS STARTUPS ACT
Mr. BACHUS. Madam Speaker, I move to suspend the rules and concur in
the Senate amendment to the bill (H.R. 3606) to increase American job
creation and economic growth by improving access to the public capital
markets for emerging growth companies.
The Clerk read the title of the bill.
The text of the Senate amendment is as follows:
Senate amendment:
Strike title III and insert the following:
TITLE III--CROWDFUNDING
SEC. 301. SHORT TITLE.
This title may be cited as the ``Capital Raising Online
While Deterring Fraud and Unethical Non-Disclosure Act of
2012'' or the ``CROWDFUND Act''.
SEC. 302. CROWDFUNDING EXEMPTION.
(a) Securities Act of 1933.--Section 4 of the Securities
Act of 1933 (15 U.S.C. 77d) is amended by adding at the end
the following:
``(6) transactions involving the offer or sale of
securities by an issuer (including all entities controlled by
or under common control with the issuer), provided that--
``(A) the aggregate amount sold to all investors by the
issuer, including any amount sold in reliance on the
exemption provided under this paragraph during the 12-month
period preceding the date of such transaction, is not more
than $1,000,000;
``(B) the aggregate amount sold to any investor by an
issuer, including any amount sold in reliance on the
exemption provided under this paragraph during the 12-month
period preceding the date of such transaction, does not
exceed--
``(i) the greater of $2,000 or 5 percent of the annual
income or net worth of such investor, as applicable, if
either the annual income or the net worth of the investor is
less than $100,000; and
``(ii) 10 percent of the annual income or net worth of such
investor, as applicable, not to exceed a maximum aggregate
amount sold of $100,000, if either the annual income or net
worth of the investor is equal to or more than $100,000;
``(C) the transaction is conducted through a broker or
funding portal that complies with the requirements of section
4A(a); and
``(D) the issuer complies with the requirements of section
4A(b).''.
(b) Requirements To Qualify for Crowdfunding Exemption.--
The Securities Act of 1933 (15 U.S.C. 77a et seq.) is amended
by inserting after section 4 the following:
``SEC. 4A. REQUIREMENTS WITH RESPECT TO CERTAIN SMALL
TRANSACTIONS.
``(a) Requirements on Intermediaries.--A person acting as
an intermediary in a transaction involving the offer or sale
of securities for the account of others pursuant to section
4(6) shall--
``(1) register with the Commission as--
``(A) a broker; or
``(B) a funding portal (as defined in section 3(a)(80) of
the Securities Exchange Act of 1934);
``(2) register with any applicable self-regulatory
organization (as defined in section 3(a)(26) of the
Securities Exchange Act of 1934);
``(3) provide such disclosures, including disclosures
related to risks and other investor education materials, as
the Commission shall, by rule, determine appropriate;
``(4) ensure that each investor--
``(A) reviews investor-education information, in accordance
with standards established by the Commission, by rule;
``(B) positively affirms that the investor understands that
the investor is risking the loss of the entire investment,
and that the investor could bear such a loss; and
``(C) answers questions demonstrating--
``(i) an understanding of the level of risk generally
applicable to investments in startups, emerging businesses,
and small issuers;
``(ii) an understanding of the risk of illiquidity; and
``(iii) an understanding of such other matters as the
Commission determines appropriate, by rule;
``(5) take such measures to reduce the risk of fraud with
respect to such transactions, as established by the
Commission, by rule, including obtaining a background and
securities enforcement regulatory history check on each
officer, director, and person holding more than 20 percent of
the outstanding equity of every issuer whose securities are
offered by such person;
``(6) not later than 21 days prior to the first day on
which securities are sold to any investor (or such other
period as the Commission may establish), make available to
the Commission and to potential investors any information
provided by the issuer pursuant to subsection (b);
``(7) ensure that all offering proceeds are only provided
to the issuer when the aggregate capital raised from all
investors is equal to or greater than a target offering
amount, and allow all investors to cancel their commitments
to invest, as the Commission shall, by rule, determine
appropriate;
``(8) make such efforts as the Commission determines
appropriate, by rule, to ensure that no investor in a 12-
month period has purchased securities offered pursuant to
section 4(6) that, in the aggregate, from all issuers, exceed
the investment limits set forth in section 4(6)(B);
``(9) take such steps to protect the privacy of information
collected from investors as the Commission shall, by rule,
determine appropriate;
``(10) not compensate promoters, finders, or lead
generators for providing the broker or funding portal with
the personal identifying information of any potential
investor;
``(11) prohibit its directors, officers, or partners (or
any person occupying a similar status or performing a similar
function) from having any financial interest in an issuer
using its services; and
``(12) meet such other requirements as the Commission may,
by rule, prescribe, for the protection of investors and in
the public interest.
``(b) Requirements for Issuers.--For purposes of section
4(6), an issuer who offers or sells securities shall--
``(1) file with the Commission and provide to investors and
the relevant broker or funding portal, and make available to
potential investors--
``(A) the name, legal status, physical address, and website
address of the issuer;
``(B) the names of the directors and officers (and any
persons occupying a similar status or performing a similar
function), and each person holding more than 20 percent of
the shares of the issuer;
``(C) a description of the business of the issuer and the
anticipated business plan of the issuer;
``(D) a description of the financial condition of the
issuer, including, for offerings that, together with all
other offerings of the issuer
[[Page H1587]]
under section 4(6) within the preceding 12-month period,
have, in the aggregate, target offering amounts of--
``(i) $100,000 or less--
``(I) the income tax returns filed by the issuer for the
most recently completed year (if any); and
``(II) financial statements of the issuer, which shall be
certified by the principal executive officer of the issuer to
be true and complete in all material respects;
``(ii) more than $100,000, but not more than $500,000,
financial statements reviewed by a public accountant who is
independent of the issuer, using professional standards and
procedures for such review or standards and procedures
established by the Commission, by rule, for such purpose; and
``(iii) more than $500,000 (or such other amount as the
Commission may establish, by rule), audited financial
statements;
``(E) a description of the stated purpose and intended use
of the proceeds of the offering sought by the issuer with
respect to the target offering amount;
``(F) the target offering amount, the deadline to reach the
target offering amount, and regular updates regarding the
progress of the issuer in meeting the target offering amount;
``(G) the price to the public of the securities or the
method for determining the price, provided that, prior to
sale, each investor shall be provided in writing the final
price and all required disclosures, with a reasonable
opportunity to rescind the commitment to purchase the
securities;
``(H) a description of the ownership and capital structure
of the issuer, including--
``(i) terms of the securities of the issuer being offered
and each other class of security of the issuer, including how
such terms may be modified, and a summary of the differences
between such securities, including how the rights of the
securities being offered may be materially limited, diluted,
or qualified by the rights of any other class of security of
the issuer;
``(ii) a description of how the exercise of the rights held
by the principal shareholders of the issuer could negatively
impact the purchasers of the securities being offered;
``(iii) the name and ownership level of each existing
shareholder who owns more than 20 percent of any class of the
securities of the issuer;
``(iv) how the securities being offered are being valued,
and examples of methods for how such securities may be valued
by the issuer in the future, including during subsequent
corporate actions; and
``(v) the risks to purchasers of the securities relating to
minority ownership in the issuer, the risks associated with
corporate actions, including additional issuances of shares,
a sale of the issuer or of assets of the issuer, or
transactions with related parties; and
``(I) such other information as the Commission may, by
rule, prescribe, for the protection of investors and in the
public interest;
``(2) not advertise the terms of the offering, except for
notices which direct investors to the funding portal or
broker;
``(3) not compensate or commit to compensate, directly or
indirectly, any person to promote its offerings through
communication channels provided by a broker or funding
portal, without taking such steps as the Commission shall, by
rule, require to ensure that such person clearly discloses
the receipt, past or prospective, of such compensation, upon
each instance of such promotional communication;
``(4) not less than annually, file with the Commission and
provide to investors reports of the results of operations and
financial statements of the issuer, as the Commission shall,
by rule, determine appropriate, subject to such exceptions
and termination dates as the Commission may establish, by
rule; and
``(5) comply with such other requirements as the Commission
may, by rule, prescribe, for the protection of investors and
in the public interest.
``(c) Liability for Material Misstatements and Omissions.--
``(1) Actions authorized.--
``(A) In general.--Subject to paragraph (2), a person who
purchases a security in a transaction exempted by the
provisions of section 4(6) may bring an action against an
issuer described in paragraph (2), either at law or in equity
in any court of competent jurisdiction, to recover the
consideration paid for such security with interest thereon,
less the amount of any income received thereon, upon the
tender of such security, or for damages if such person no
longer owns the security.
``(B) Liability.--An action brought under this paragraph
shall be subject to the provisions of section 12(b) and
section 13, as if the liability were created under section
12(a)(2).
``(2) Applicability.--An issuer shall be liable in an
action under paragraph (1), if the issuer--
``(A) by the use of any means or instruments of
transportation or communication in interstate commerce or of
the mails, by any means of any written or oral communication,
in the offering or sale of a security in a transaction
exempted by the provisions of section 4(6), makes an untrue
statement of a material fact or omits to state a material
fact required to be stated or necessary in order to make the
statements, in the light of the circumstances under which
they were made, not misleading, provided that the purchaser
did not know of such untruth or omission; and
``(B) does not sustain the burden of proof that such issuer
did not know, and in the exercise of reasonable care could
not have known, of such untruth or omission.
``(3) Definition.--As used in this subsection, the term
`issuer' includes any person who is a director or partner of
the issuer, and the principal executive officer or officers,
principal financial officer, and controller or principal
accounting officer of the issuer (and any person occupying a
similar status or performing a similar function) that offers
or sells a security in a transaction exempted by the
provisions of section 4(6), and any person who offers or
sells the security in such offering.
``(d) Information Available to States.--The Commission
shall make, or shall cause to be made by the relevant broker
or funding portal, the information described in subsection
(b) and such other information as the Commission, by rule,
determines appropriate, available to the securities
commission (or any agency or office performing like
functions) of each State and territory of the United States
and the District of Columbia.
``(e) Restrictions on Sales.--Securities issued pursuant to
a transaction described in section 4(6)--
``(1) may not be transferred by the purchaser of such
securities during the 1-year period beginning on the date of
purchase, unless such securities are transferred--
``(A) to the issuer of the securities;
``(B) to an accredited investor;
``(C) as part of an offering registered with the
Commission; or
``(D) to a member of the family of the purchaser or the
equivalent, or in connection with the death or divorce of the
purchaser or other similar circumstance, in the discretion of
the Commission; and
``(2) shall be subject to such other limitations as the
Commission shall, by rule, establish.
``(f) Applicability.--Section 4(6) shall not apply to
transactions involving the offer or sale of securities by any
issuer that--
``(1) is not organized under and subject to the laws of a
State or territory of the United States or the District of
Columbia;
``(2) is subject to the requirement to file reports
pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934;
``(3) is an investment company, as defined in section 3 of
the Investment Company Act of 1940, or is excluded from the
definition of investment company by section 3(b) or section
3(c) of that Act; or
``(4) the Commission, by rule or regulation, determines
appropriate.
``(g) Rule of Construction.--Nothing in this section or
section 4(6) shall be construed as preventing an issuer from
raising capital through methods not described under section
4(6).
``(h) Certain Calculations.--
``(1) Dollar amounts.--Dollar amounts in section 4(6) and
subsection (b) of this section shall be adjusted by the
Commission not less frequently than once every 5 years, by
notice published in the Federal Register to reflect any
change in the Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics.
``(2) Income and net worth.--The income and net worth of a
natural person under section 4(6)(B) shall be calculated in
accordance with any rules of the Commission under this title
regarding the calculation of the income and net worth,
respectively, of an accredited investor.''.
(c) Rulemaking.--Not later than 270 days after the date of
enactment of this Act, the Securities and Exchange Commission
(in this title referred to as the ``Commission'') shall issue
such rules as the Commission determines may be necessary or
appropriate for the protection of investors to carry out
sections 4(6) and section 4A of the Securities Act of 1933,
as added by this title. In carrying out this section, the
Commission shall consult with any securities commission (or
any agency or office performing like functions) of the
States, any territory of the United States, and the District
of Columbia, which seeks to consult with the Commission, and
with any applicable national securities association.
(d) Disqualification.--
(1) In general.--Not later than 270 days after the date of
enactment of this Act, the Commission shall, by rule,
establish disqualification provisions under which--
(A) an issuer shall not be eligible to offer securities
pursuant to section 4(6) of the Securities Act of 1933, as
added by this title; and
(B) a broker or funding portal shall not be eligible to
effect or participate in transactions pursuant to that
section 4(6).
(2) Inclusions.--Disqualification provisions required by
this subsection shall--
(A) be substantially similar to the provisions of section
230.262 of title 17, Code of Federal Regulations (or any
successor thereto); and
(B) disqualify any offering or sale of securities by a
person that--
(i) is subject to a final order of a State securities
commission (or an agency or officer of a State performing
like functions), a State authority that supervises or
examines banks, savings associations, or credit unions, a
State insurance commission (or an agency or officer of a
State performing like functions), an appropriate Federal
banking agency, or the National Credit Union Administration,
that--
(I) bars the person from--
(aa) association with an entity regulated by such
commission, authority, agency, or officer;
(bb) engaging in the business of securities, insurance, or
banking; or
(cc) engaging in savings association or credit union
activities; or
(II) constitutes a final order based on a violation of any
law or regulation that prohibits fraudulent, manipulative, or
deceptive conduct within the 10-year period ending on the
date of the filing of the offer or sale; or
(ii) has been convicted of any felony or misdemeanor in
connection with the purchase or sale of any security or
involving the making of any false filing with the Commission.
SEC. 303. EXCLUSION OF CROWDFUNDING INVESTORS FROM
SHAREHOLDER CAP.
(a) Exemption.--Section 12(g) of the Securities Exchange
Act of 1934 (15 U.S.C. 78l(g)) is amended by adding at the
end the following:
[[Page H1588]]
``(6) Exclusion for persons holding certain securities.--
The Commission shall, by rule, exempt, conditionally or
unconditionally, securities acquired pursuant to an offering
made under section 4(6) of the Securities Act of 1933 from
the provisions of this subsection.''.
(b) Rulemaking.--The Commission shall issue a rule to carry
out section 12(g)(6) of the Securities Exchange Act of 1934
(15 U.S.C. 78c), as added by this section, not later than 270
days after the date of enactment of this Act.
SEC. 304. FUNDING PORTAL REGULATION.
(a) Exemption.--
(1) In general.--Section 3 of the Securities Exchange Act
of 1934 (15 U.S.C. 78c) is amended by adding at the end the
following:
``(h) Limited Exemption for Funding Portals.--
``(1) In general.--The Commission shall, by rule, exempt,
conditionally or unconditionally, a registered funding portal
from the requirement to register as a broker or dealer under
section 15(a)(1), provided that such funding portal--
``(A) remains subject to the examination, enforcement, and
other rulemaking authority of the Commission;
``(B) is a member of a national securities association
registered under section 15A; and
``(C) is subject to such other requirements under this
title as the Commission determines appropriate under such
rule.
``(2) National securities association membership.--For
purposes of sections 15(b)(8) and 15A, the term `broker or
dealer' includes a funding portal and the term `registered
broker or dealer' includes a registered funding portal,
except to the extent that the Commission, by rule, determines
otherwise, provided that a national securities association
shall only examine for and enforce against a registered
funding portal rules of such national securities association
written specifically for registered funding portals.''.
(2) Rulemaking.--The Commission shall issue a rule to carry
out section 3(h) of the Securities Exchange Act of 1934 (15
U.S.C. 78c), as added by this subsection, not later than 270
days after the date of enactment of this Act.
(b) Definition.--Section 3(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)) is amended by adding at the
end the following:
``(80) Funding portal.--The term `funding portal' means any
person acting as an intermediary in a transaction involving
the offer or sale of securities for the account of others,
solely pursuant to section 4(6) of the Securities Act of 1933
(15 U.S.C. 77d(6)), that does not--
``(A) offer investment advice or recommendations;
``(B) solicit purchases, sales, or offers to buy the
securities offered or displayed on its website or portal;
``(C) compensate employees, agents, or other persons for
such solicitation or based on the sale of securities
displayed or referenced on its website or portal;
``(D) hold, manage, possess, or otherwise handle investor
funds or securities; or
``(E) engage in such other activities as the Commission, by
rule, determines appropriate.''.
SEC. 305. RELATIONSHIP WITH 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:
``(C) section 4(6);''.
(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
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, funding portal,
or any other person or entity using the exemption from
registration provided by section 4(6) of that Act.
(2) Clarification of state jurisdiction over unlawful
conduct of funding portals and issuers.--Section 18(c)(1) of
the Securities Act of 1933 (15 U.S.C. 77r(c)(1)) 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:
``, in connection with securities or securities transactions
``(A) with respect to--
``(i) fraud or deceit; or
``(ii) unlawful conduct by a broker or dealer; and
``(B) in connection to a transaction described under
section 4(6), with respect to--
``(i) fraud or deceit; or
``(ii) unlawful conduct by a broker, dealer, funding
portal, or issuer.''.
(c) Notice Filings Permitted.--Section 18(c)(2) of the
Securities Act of 1933 (15 U.S.C. 77r(c)(2)) is amended by
adding at the end the following:
``(F) Fees not permitted on crowdfunded securities.--
Notwithstanding subparagraphs (A), (B), and (C), no filing or
fee may be required with respect to any security that is a
covered security pursuant to subsection (b)(4)(B), or will be
such a covered security upon completion of the transaction,
except for the securities commission (or any agency or office
performing like functions) of the State of the principal
place of business of the issuer, or any State in which
purchasers of 50 percent or greater of the aggregate amount
of the issue are residents, provided that for purposes of
this subparagraph, the term `State' includes the District of
Columbia and the territories of the United States.''.
(d) Funding Portals.--
(1) State exemptions and oversight.--Section 15(i) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(i)) is
amended--
(A) by redesignating paragraphs (2) and (3) as paragraphs
(3) and (4), respectively; and
(B) by inserting after paragraph (1) the following:
``(2) Funding portals.--
``(A) Limitation on state laws.--Except as provided in
subparagraph (B), no State or political subdivision thereof
may enforce any law, rule, regulation, or other
administrative action against a registered funding portal
with respect to its business as such.
``(B) Examination and enforcement authority.--Subparagraph
(A) does not apply with respect to the examination and
enforcement of any law, rule, regulation, or administrative
action of a State or political subdivision thereof in which
the principal place of business of a registered funding
portal is located, provided that such law, rule, regulation,
or administrative action is not in addition to or different
from the requirements for registered funding portals
established by the Commission.
``(C) Definition.--For purposes of this paragraph, the term
`State' includes the District of Columbia and the territories
of the United States.''.
(2) State fraud authority.--Section 18(c)(1) of the
Securities Act of 1933 (15 U.S.C. 77r(c)(1)) is amended by
striking ``or dealer'' and inserting ``, dealer, or funding
portal''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Alabama (Mr. Bachus) and the gentleman from Connecticut (Mr. Himes)
each will control 20 minutes.
The Chair recognizes the gentleman from Alabama.
General Leave
Mr. BACHUS. Madam Speaker, I ask unanimous consent that all Members
have 5 legislative days in which to revise and extend their remarks and
to add any extraneous material on this bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Alabama?
There was no objection.
{time} 1230
Mr. BACHUS. Madam Speaker, I yield myself such time as I may consume.
I rise in strong support of the JOBS Act and urge the House to
approve this bill today so that we can send it to the President for his
immediate signature. The President has indicated that he strongly
supports the legislation.
The JOBS Act is a victory for unemployed Americans who are literally
crying out for more jobs. It is a victory for small companies and for
entrepreneurs who want Washington to reduce the red tape that stifles
innovation, economic growth, and job creation. The JOBS Act will do
exactly what its title says, jump-start our economy by creating new job
opportunities for America's start-up companies and small businesses.
And I would like to introduce into the Record some statistics on the
number of jobs created by new companies.
As chairman of the Financial Services Committee, I am proud that the
JOBS Act is comprised of six pieces of legislation that originated in
our committee and received overwhelming bipartisan support. In fact,
managing this bill for the minority is the gentleman from Connecticut,
who was the sponsor of one of those six bills; and I commend Mr. Himes
for his work on all of these bills. The JOBS Act is proof that
Republicans and Democrats can come together to find common ground, work
together, and offer legislation that will help small businesses. Small
businesses are the growth engine of our economy.
A study between 1985 and 2005 found that 96 percent of the jobs
created at new companies are created within 5 years of an IPO, and this
will give those companies who want to offer an IPO the opportunity to
do so at a much reduced cost.
Nearly 65 percent of new jobs traditionally are created by small
businesses. Now, that's not the case in this economic recovery. Almost
all the job growth has come from large corporations, which is really
the opposite of what you normally see. Small businesses have not been
created and have not been growing as they should, and there are two
reasons for that: one is regulation. These regulations are costly;
they're time consuming; and they're simply inhibiting the growth of
small businesses. The second reason is a lack of capital.
Now, there are two ways traditionally to raise capital. One is to go
to a bank, a lending institution, and ask for a loan. Well, because of
tighter lending standards, these new companies don't have a track
record, so they don't have
[[Page H1589]]
a record of generating profits. Many of them are offering new services,
new products that have not really found a market or have a small
market. And there is a risk involved. So when banks turn those
companies down, the other path is for someone to invest in those
companies; and that is exactly what that bill does. It offers those
companies an opportunity to receive investments, capital investments
from individuals who want to participate not only in the risk but in
the reward.
With the JOBS Act, start-up companies--like those at the Innovation
Depot in Birmingham, Alabama, where there are several start-up
companies with new products, new services--the JOBS Act will allow
those companies and companies throughout the United States, people with
new ideas, new services, new products, like a Google of the future or
an eBay or an Amazon. Take those companies, they didn't exist 20 years
ago. Now they're the fastest-growing companies in America. There are
other Googles, there are other eBays, there are other Amazons, there
are other Costcos, there are other Chick-fil-A's that are just waiting
to come to market.
And for that reason, I want to commend the Senate, and I want to
thank the sponsors of this legislation. Finally, I want to salute this
House for coming together when it counted to address the lack of growth
in jobs in our small businesses.
There are some signs that hiring is coming back at larger companies,
but not at our small businesses and startup companies. There are 2 main
reasons for that The first is regulation--which has a bigger impact on
small companies than large companies. The second is capital--it is
harder for business startups to get traditional bank financing so they
have to rely more on investors and capital markets for financing. The
JOBS Act will make it easier for them to access capital, locate
investors and go public.
This bill is designed specially to help the type of small business
startups and emerging growth companies that you find at places like the
Innovation Depot.
We know that small business is the growth engine of our economy.
Nearly 65 percent of all new jobs created over the last 15 years were
created by small businesses. Yet today, many small companies find it
hard to obtain the investments and the financing they need to expand
their operations and create jobs. That's why Congress mist cut the red
tape that prevent many startup companies from raising capital and going
public. The JOBS Act removes some of the unnecessary and outdated
government barriers to capital formation--so entrepreneurs have more
freedom to access capital, hire workers and grow their businesses.
We need to do everything we can to ensure that America remains a
country of opportunity, where jobs are created and small businesses
flourish without being stifled by costly and unnecessary red tape. The
JOBS Act will help foster an environment that allows our small
businesses, startups and entrepreneurs to raise the capital needed to
get job creation going again.
I'm proud that all 6 bills that make up the JOBS Act originated in
the Financial Services Committee and that all 6 received overwhelming,
strong bipartisan support. It shows that Republicans and Democrats CAN
find common ground and work together when it comes to helping America's
small businesses.
Companies obtain capital through either borrowing, from places like
community banks, or through equity financing.
Equity financing, in which investors purchase ownership stakes in a
company in exchange for a share of the company's future profit, allows
companies to obtain funds without having to repay specific amounts at
particular times.
The tightening of credit has made equity financing all the more
important as a means of providing small companies with the capital they
need to grow and create jobs.
The JOBS Act will make it easier for small companies to access
capital through both the public and private markets, which will
facilitate economic growth and job creation. For example:
Title 3 of the bill will allow what is known as ``crowdfunding''--
which will allow groups of investors to pool money, typically comprised
of very small individual contributions, to support an effort such as
growing a new company like those that are found at the Innovation
Depot. Investments would be limited to an amount equal to or less than
the lesser of $10,000 or 10 percent of the investor's annual income.
Before the JOBS Act, the SEC had outdated regulations that prohibited
this type of investment.
Title 1 of the JOBS Act will provide smaller to mid-sized private
companies with temporary exemptions from several government
regulations, who could go public and raise capital needed to expand
their business but for the expense associated with complying with them.
These companies will have up to a five year timeframe to be on an ``On
Ramp'' to comply with certain regulatory requirements (Section 404(b)
of Sarbanes-Oxley or 953(b) of the Dodd-Frank Act). This ``On-Ramp''
status is designed to be temporary and transitional, encouraging small
companies to go public but ensuring they transition to full compliance
over time or as they grow large enough to have the resources to sustain
the type of compliance infrastructure associated with more mature
enterprises. A task force put together to study how to help smaller
companies found that from 1980 to 2005, firms less than 5 years old
accounted for all net U.S. job growth. On average, 92 percent of a
company's job growth occurs after an ``initial public offering'' (IPO).
Since 2006, companies have reported an average of 86 percent job growth
since IPO.
Titles 5 and 6 of the JOBS Act would allow private companies and
community banks to increase the number of shareholders they have before
they are forced to register with the SEC. This will save these
companies regulatory compliance costs from regulations that are
generally intended for large companies and instead give small companies
and banks more readily available capital to hire new employees and lend
to local businesses to expand.
I reserve the balance of my time.
Mr. HIMES. Madam Speaker, I now yield myself such time as I may
consume.
Madam Speaker, I am thrilled to be participating in the management of
this debate today and want to start by thanking Chairman Bachus and
thanking my friends on the other side of the aisle for the bipartisan
and collaborative spirit with which we moved this legislation.
This is important legislation, but the process by which it moved, I
think, is something that we should celebrate. This is a time, of
course, when the American people are none too happy with us; but this
bill was done collaboratively with the support of the President of the
United States, the majority and the minority in the House; and it will
be good for our economy. So I thank the chairman for his leadership on
this, the ranking member, and all who participated in the creation of
this important legislation.
As the chairman said, this is good stuff. It has received the support
of entrepreneurs, of industry associations, and of people on both sides
of the aisle because it does something very, very important, which is
acknowledge that regulation is always a balance. It's not always good;
it's not always bad. And one of the duties of legislators and
regulators is to make sure that our regulation is finely calibrated to
protect us, to protect us from fraud, to protect us from mortgages that
blow up, to keep our air clean, to keep our water clean. But if it's
done in too ham-handed a fashion, it can compromise the vibrancy that
provides so much economic opportunity in this country. Every day this
institution should be focused on finding that balance, and that's what
this bill is about.
It's been criticized here and there by people who I think are of the
mindset that any retreat, any revisiting, any amendment to our current
regulatory structure is a bad idea. That can't be the right way to
think about this stuff. Regulation, like anything else, has to adapt to
change with the times. And what we're doing here is particularly
important because we are talking about the regulation of small banks
which, let's face it, have a tough time competing against the big
banks.
And it's about our start-up and emerging-growth companies that may
not have the free cash flow in their first couple of years of existence
to completely adopt all of the regulation, the disclosure that we might
expect of a multibillion-dollar corporation. We have provided an onramp
for entrepreneurs as they gain currency, as they increase their
revenues, as they become more of a presence--and frankly, therefore,
affect the lives of more people--to gradually work into the full
regulatory structures of Sarbanes-Oxley and other regulation. And
that's a good thing to do.
Today in Palo Alto, there are companies that might not have made it
but for this legislation. In Connecticut and Massachusetts, there are
start-up companies for which this legislation is going to make the
difference between thriving, as the chairman said--maybe being the next
Microsoft or the next
[[Page H1590]]
Google--and actually not making it. So I'm very happy that we have, in
a bipartisan fashion, put forward this legislation which will be good
for economic vibrancy and opportunity in this country. Again, I thank
the chairman for his collaborative and thoughtful work on this bill.
With that, I reserve the balance of my time.
Mr. BACHUS. At this time, I yield 2 minutes to the gentlelady from
Illinois (Mrs. Biggert), the chairman of the subcommittee.
Mrs. BIGGERT. I thank the chairman for yielding.
Madam Speaker, the American economy has the capacity and the
resilience to overcome almost any obstacle. We've seen it time and time
again. In the face of foreign crises, natural disaster, or fiscal
adversity, American entrepreneurs and job creators never stop
innovating. But to harness that power and the jobs that come with it,
we need to clear a path for the start-ups and fledgling businesses that
bring new goods and ideas into the marketplace. That's the purpose of
H.R. 3606, the Jumpstart Our Business Startups, or JOBS, Act.
{time} 1240
This legislation package includes six bipartisan proposals, many of
which I cosponsored, to streamline or eliminate the regulatory and
legal barriers that prevent emerging businesses from reaching out to
investors, accessing capital, and selling shares on the public market.
This legislation will make it possible for promising new businesses to
go public and access financial opportunities that currently are limited
to large corporations, and it eliminates needless costs and delays
imposed by the SEC and other regulators.
Madam Speaker, for tens of millions of Americans, including families
from my suburban Chicago district, there is no priority more important
or urgent than job creation. Over the last few months, unemployment has
slowly receded to 8.3 percent nationally and 9.1 percent in Illinois,
but Washington must pick up the pace. And that means unleashing the
drive and ingenuity of hardworking Americans.
I urge my colleagues to support the JOBS Act and empower American
businesses to do what they do best.
Mr. HIMES. I continue to reserve the balance of my time.
Mr. BACHUS. I would like to inquire, Madam Speaker, as to how much
time remains on our side.
The SPEAKER pro tempore. The gentleman from Alabama has 13\1/2\
minutes remaining, and the gentleman from Connecticut has 16\1/2\
minutes remaining.
Mr. BACHUS. At this time, Madam Speaker, I yield 2 minutes to another
Illinois Congressman, Mr. Dold.
Mr. DOLD. I certainly want to thank the chairman for yielding. I
think it's important, and I'm delighted to be able to speak here on
this bipartisan piece of legislation.
Madam Speaker, as part of any jobs agenda, I believe that increased
access to capital for small businesses is absolutely critical. That's
why I'm a supporter of this bipartisan JOBS Act. When we empower small
businesses to grow and expand, we enable them to create jobs and get
people back to work.
As a member of the Financial Services Committee, I cosponsored
several of the bills that are in this package because they allow small
businesses to increase capital formation, spur the growth of small
businesses, and pave the way for our small businesses and entrepreneurs
to create new jobs.
Two-thirds of all net new jobs, Madam Speaker, are created by small
business. We have 29 million small businesses in our Nation. If we can
create an environment here in Washington, D.C., that enables half of
those businesses to create a single job, think about where we'd be
then.
Finding new ways to spur the economy is not a Republican idea or a
Democratic priority, but it certainly should be an American priority.
As a small business owner, I know that we have to start putting people
before politics and progress before partisanship and remain focused on
finding solutions for the barriers that stand in the way of
entrepreneurs and job creators. I want to encourage my colleagues to
support this bipartisan piece of legislation.
Madam Speaker, pieces of this legislation, aspects of this bill
passed this House with over 400 votes. We hear a lot about the gridlock
that's going on in Washington, D.C. When we can get legislation that
passes this body with over 400 votes, that is wildly bipartisan, things
that I believe that the American public are asking for us to do: come
up with solutions to the problems that they face; to try to stem the
8.3 percent unemployment, which we know is much larger if we count the
underemployed and those that have left the workforce.
We certainly need the Senate to act. It's absolutely critical. And I
ask my colleagues to support this legislation, find common ground, and
move our country forward.
Mr. HIMES. I continue to reserve the balance of my time.
Mr. BACHUS. At this time, I yield 2 minutes to the gentleman from
Arizona (Mr. Schweikert), a member of the committee, who sponsored and
worked on these bills.
Mr. SCHWEIKERT. I thank the gentleman.
Madam Speaker, I rise in support of the JOBS Act.
Think about this. We literally started over a year ago putting
together the pieces of legislation that moved forward with us today.
Many of them were bipartisan. Many of them had to go through
subcommittee and committee and then back through more hearings and more
testimony. A couple of these bills have actually been to this floor
multiple times. It's been well vetted. And I hold a great appreciation,
because I've only been here 15 months and this is my first opportunity
to actually have a piece of legislation with multiple bills I've
sponsored heading on their way to the President, hopefully, after the
votes today and tomorrow. And I owe a great thank you to Chairman
Garrett and Committee Chairman Spencer Bachus.
But I also want to share a bit of a concern.
Congressman McHenry has a really neat portion of this bill. We call
it crowdfunding. The Senate has amended that in such a way that I
believe it does great damage to the goal of a much more egalitarian,
technologically advanced, using-the-Internet way for people to invest,
for being able to reach out and gain that capital for very small
companies. And I'm hoping I can reach out to my friends and say, Let's
fix what the Senate did.
We still should be voting for this bill. This is wonderful. We're
making progress. But there are things we have to do to fix this for the
future.
Mr. HIMES. I yield myself such time as I may consume.
I thank my friend, Mr. Schweikert, with whom I've enjoyed working on
this legislation and in a spirit of bipartisanship; ultimately a bill
that was designed to make it easier for small banks, which Congressman
Schweikert and I worked together.
I would also like to highlight the work of Congressman Steve Womack
of Arkansas on that bill. It found its way into this legislation under
another Congressman's name, but it is important and good legislation,
and I continue to support it and am thrilled that it's part of this.
Madam Speaker, I would just take issue with one thing that my good
friend from Arizona said. The crowdfunding provisions in this
legislation should be subject to scrutiny and to careful regulatory
oversight. When you combine the concept of the Internet and retail
investors into one piece of legislation, be careful.
The Senate amendment to the House crowdfunding provisions in fact
adds more protection to small investors who might be subject to being
fooled by an Internet predator. And I would just say we should be
careful.
We should be careful when we are talking about retail investors, the
classic widows and orphans out there that are not necessarily
financially sophisticated. They are not the big financial players who
get labeled accredited investors or institutional investors and who,
frankly, have the capability to take care of themselves. Retail
investors who might be subject to the temptations of a deal that in
fact is too good to be true offered on the Internet ought to be a cause
of concern both for this body and for the regulators who ultimately
will write the rules around crowdfunding.
With that, I reserve the balance of my time.
[[Page H1591]]
Mr. BACHUS. At this time, I yield 1 minute to the chairman of the
Subcommittee on Financial Institutions, the gentlelady from West
Virginia (Mrs. Capito), who also worked very hard on this legislation.
Mrs. CAPITO. I want to thank the chairman. I really want to thank the
whole Financial Services Committee for working together on this bill,
the JOBS bill, Jumpstart Our Business Startups.
Our unemployment in this country is over 8 percent. We've got to find
and make every means available to create jobs and to give those great
ideas to be able to grow from small businesses to large businesses. We
want to make sure that our entrepreneurs are able to find the funding
to be able to grow those seeds of a business that then could flourish
and grow.
When we talk about some of the things that have started in this
country as start-ups most recently, we might look at something like AOL
or something like Apple or even FedEx when Fred Smith wrote that famous
paper in business school that I think didn't get a very good grade but
now has resulted in our FedEx. If they hadn't been able to find the
funding to begin, many of them I think today would say that because of
the regulatory structure, because of the inability to find funding,
that they wouldn't even be able to get started today and grow to the
thousands of jobs that they have.
This has great potential. It's bipartisan. I support the JOBS Act.
Mr. HIMES. I continue to reserve the balance of my time.
Mr. BACHUS. Madam Speaker, I would like to again inquire as to the
amount of time remaining on our side.
The SPEAKER pro tempore. The gentleman from Alabama has 9 minutes
remaining. The gentleman from Connecticut has 14\1/2\ minutes
remaining.
Mr. BACHUS. I yield 3 minutes to an outstanding freshman on our
committee, the gentleman from Tennessee (Mr. Fincher).
Everyone speaking on our side has worked very hard on these bills or
spent a lot of time, as have many of our Democratic colleagues.
{time} 1250
Mr. FINCHER. Madam Speaker, I thank the chairman for his leadership
and patience in working with us freshmen the last year, year and a
half. I'm pleased to be the lead cosponsor of H.R. 3606, the Jumpstart
Our Business Startups Act with Congressman John Carney from Delaware.
This bill has been a bipartisan effort from the beginning, and I want
to thank the gentleman from Delaware and his staff, Sam Hodas, for
working with us on this bill. I also want to thank the Financial
Services Committee staff, Kevin Edgar, Jason Goggins, Walton Liles and
Chris Russell, for their efforts on this legislation as well.
Small businesses and entrepreneurs are the backbone of our Nation and
our economy. This bill puts the focus on the private sector,
capitalism, and the free market, providing the jump-start our Nation's
entrepreneurs and small businesses need to grow and create jobs. This
is about certainty and removing government bureaucratic redtape. Our
Nation has seen a decline in small business start-ups over the last few
years, which means fewer jobs created for American workers. The best
thing our government can do right now to get our economy moving in the
right direction is to help create an environment where new ideas and
start-up companies have a chance to grow and succeed.
Title I of this bill is legislation I introduced with Congressman
Carney called the Reopening American Capital Markets to Emerging Growth
Companies Act. During the last 15 years, fewer and fewer start-up
companies have pursued initial public offerings because of burdensome
costs created by a series of one-size-fits-all laws and regulations.
This bill would help more small and mid-size companies go public by
creating a new category of issuers called ``emerging-growth companies''
that have less than $1 billion in annual revenues when they register
with the SEC and less than $700 million in public float after the IPO.
Emerging-growth companies will have as many as 5 years, depending on
revenue size, to transition to full compliance with a variety of new
regulations that are expensive and burdensome to new companies. This
``onramp'' status will allow small and mid-size companies the
opportunity to save on expensive compliance costs and create the cash
needed to successfully grow their businesses and create American jobs.
In addition, this bill would only require emerging-growth companies
to provide audited financial statements for the 2 years prior to
registration rather than 3 years, saving many companies millions of
dollars. It will also make it easier for potential investors to get
access to research and company information in advance of an IPO in
order to make informed decisions about investing. This is critical for
small and medium-size companies trying to raise capital that have less
visibility in the marketplace.
I urge my colleagues to support this bill again, send it to the
President to sign, and give our small businesses and entrepreneurs the
opportunity to create jobs for Americans.
Mr. HIMES. Madam Speaker, I yield myself such time as I may consume
and thank my friend from Tennessee for his hard work on this bill of
which, as I said in my previous statement, I'm very supportive.
I do want to take the opportunity, though, having heard from the
gentleman from Tennessee phrases that we hear all too often--phrases
like ``one-size-fits-all regulation'' and ``bound up in redtape''--I do
want to take this opportunity to remind the American people that those
are phrases that sound scary: ``regulation,'' ``redtape,'' and ``one
size fits all.'' But what we're talking about here is protection for
the American people.
In my previous statement, I made the point that we have to get the
balance right; but like everybody else in this Chamber, I woke up a
couple of years ago to learn that 11 men were dead on a deep-sea
drilling platform in the Gulf of Mexico and an ocean was poisoned,
devastating the economy of the gulf. We've all seen what happens when
you sell exploding mortgages to people who can't possibly repay them,
even though the people who sold those mortgages know that. I come from
a district which actually has some of the poorest air quality in the
country.
Why do I enumerate these things? Because they are all a failure to
regulate to provide a safe and good environment in which we can thrive.
Nobody wants to see 11 men die on a deep-sea drilling platform. Nobody
wants to see a return to the notion that anybody should buy an
interest-only, reverse-amortizing mortgage that the bankers don't
understand.
So I said it before, I'll say it again: the balance is key. And I
will oppose those who say that more regulation is always the right
idea, but I will also stand up, as I have now, and say there is a
balance. And the other side needs to recognize that that balance does
not come from opposing and labeling ``redtape'' and ``obstructionism''
and ``one size fits all.''
Mr. BACHUS. Would the gentleman yield?
Mr. HIMES. I yield to my friend from Alabama.
Mr. BACHUS. Let me say this. The gentleman from Connecticut mentioned
crowdfunding, and I think that was what gave us more concern than
anything else, some of the things he said about the Internet people
making an investment being subject to fraud. That is a concern, and the
Senate addressed those concerns. I'd like to stress what they amended
was a very small part of this bill that dealt with crowdfunding. It is
also important to know that all the antifraud protection, we didn't
take any of that away. But I think we're getting there. The Senate and
the House deliberated with the White House, and we will continue to
look at crowdfunding. We'll see how this goes.
With any investment, particularly a new company, a new venture, there
is a certain amount of risk. You can't take the risk out. If you take
the risk out, you take the reward. But what the gentleman says I fully
appreciate, and I think that's where our committee has come together,
and we tried to get it right for the good of the Americans in creating
these new jobs. So I appreciate the opportunity and thank you for
yielding.
Mr. HIMES. Thank you, Mr. Chairman. I reserve the balance of my time.
Mr. BACHUS. At this time, I yield 4 minutes to the gentleman from
North
[[Page H1592]]
Carolina (Mr. McHenry). Again, this is a bill that several Members
worked very hard on, and he is very knowledgeable on these bills.
Mr. McHENRY. I thank the chairman, and I appreciate the opportunity
to address the crowdfunding section of this bill.
One year ago, Oversight Chairman Darrell Issa sent a letter with 33
questions to the Securities and Exchange Commission asking them to
justify outdated securities laws that restrict capital formation and
stunted job growth. It was a letter that really challenged the
Commission's complacency and asked them about these 80-year-old
regulations that were modern at the time where the new invention was
the telephone and asked them if they had ways to update them.
One question specifically asked Chairman Schapiro if she had
considered creating an exemption to enable everyday investors to
invest, with reasonable limitations, in unregistered securities issued
by start-ups. This is known as ``crowdfunding.''
At the time, I was only familiar with crowdfunding--which is a hybrid
of microfinance and crowdsourcing--as a charitable method. It's done
around the world, with billions of dollars of moneys raised. For
example, a local brewery in my home State of North Carolina was able to
raise $44,000 on a platform called Kickstarter. Now, that's done on the
charitable side; but with crowdfunding, the success we see on the
charitable side can be brought over on the investor side, on the equity
side, of capital raising. We recognized the consequences of Dodd-Frank
that limit the ability to get lending through traditional means and as
a way to promote small business capital formation. Crowdfunding
relieves part of that pressure.
In September of last year, after countless meetings, conferences,
congressional hearings, and bipartisan negotiation, I introduced the
Entrepreneur Access to Capital Act. The bill was simple and direct. It
offered a means of capital formation that would forgo costly SEC and
State registration if issuers and investors operated within reasonable
limitations. Most importantly, the foundation of the legislation upheld
investor protections by empowering regulators to prosecute those who
participated in securities fraud or deceit. That is preserved.
In the Entrepreneur Access to Capital Act, our focus was on market
innovation and investor protection to attract both political parties
and well-known market participants to the table. As a result of that
bipartisan bill, we had over 400 Members on this floor vote for that
bill, the President said he would sign that bill, and we sent it over
to the Senate with thousands of market participants saying it was good.
This year, that same language was included as a provision within this
legislation, the JOBS Act. Regrettably, just before the House-passed
version of the JOBS Act received an up-or-down vote on the Senate
floor, a handful of Senators misunderstood the spirit and the promise
of crowdfunding, resulting in last-minute changes to the bill.
Our essential framework is preserved for crowdfunding. Rather than
recognizing that crowdfunding could create new markets and
opportunities for small businesses and start-ups, these misguided
Senators simply saw crowdfunding as unregulated activities. This
misperception caused them to design a crowdfunding title that is
riddled with burdens on issuers, investors, and intermediaries and
limits general solicitation and enhances SEC rulemaking authority.
{time} 1300
But, fortunately, as I said, the basic architecture of the
Entrepreneur Access to Capital Act, crowdfunding, that bipartisan
measure that we took through committee markup and House floor action,
is preserved. Although I'm disappointed by the ill-conceived and
burdensome changes within the crowdfunding title of this bill, I stand
committed to working across the aisle to make sure that we fix this
after the President signs it. That's what we intend to do.
I urge my colleagues to vote for this bill and move forward.
Mr. HIMES. Madam Speaker, I yield myself 1 minute.
I salute Mr. McHenry, my friend from North Carolina, for his work on
this bill.
I think it's probably worth talking a bit more about crowdfunding. I
appreciate the chairman's point of view, but let's be clear here that
we are talking about marketing done at retail investors, up to $10,000
more.
Mr. McHenry called the Senate activity ill-conceived and burdensome.
We are at the nexus here of potentially unsophisticated investors and
people who see an opportunity.
I would remind Mr. McHenry in citing a charitable background for this
bill, when you give to a charity, you know you're not getting your
money back. When you invest in a company, you hope you're getting your
money back. And we should be vigilant that that, in fact, occurs.
With that, I reserve the balance of my time.
Mr. BACHUS. Madam Speaker, we have the right to close. So I would ask
the gentleman from Connecticut to proceed. Could I inquire as to time.
The SPEAKER pro tempore. The gentleman from Alabama has 2 minutes
remaining, and the gentleman from Connecticut has 10 minutes remaining.
Mr. HIMES. Madam Speaker, in closing, let me again reiterate my
thanks to Chairman Bachus and to all of the members of the Financial
Services Committee who worked hard on this bill.
I think we've had a lot of good debate around very real and important
issues. Unusual for this institution is that we've actually managed to
keep the ideology and the barbs out of it. I'm very appreciative of
that, and I know that the American people are as well.
I appreciate coming, as I do, from a district and a State that will
rise or fall on our ability to innovate, to grow small businesses into
real world leaders, and to have a financial services sector which is
vibrant and innovative, but safe.
I very much appreciate the intent of this legislation. We had good
support from both sides of the aisle. The President is supportive. We
heard from industry associations that this was a good thing.
With that, I encourage all of the Members of this body to support
this legislation.
I thank again the chairman and the ranking member of the committee
and yield back the balance of my time.
Mr. BACHUS. Madam Speaker, I yield myself such time as I may consume.
Let me say this: during this debate, we focused on crowdfunding, but
I think we're all in agreement that this bill is a great improvement,
and we will revisit that. That shouldn't distract from the fact that
this is a major piece of legislation that will cause, I think, a great
deal of new competition, innovation of new products and services.
In my revised remarks, which I intend to submit in the next week, I
will highlight biomedical research, which we think has the potential to
address some diseases that are rare diseases or degenerative conditions
which would really receive a boost from this.
So I commend all of our Members. We've come together here, and we've
accomplished great things, along with the Senate, the House, and the
administration.
I yield to the gentlelady from Illinois.
Mrs. BIGGERT. Madam Speaker, the proposals contained in the JOBS Act
are not political or partisan, as has been mentioned. It comes from the
small business community in districts like mine where I meet regularly
with local employers who tell me that accessing capital is the hardest
part of enduring the current recession.
Many of these changes in this bill have bipartisan backing and have
been endorsed by members of the President's Council on Jobs and
Economic Competitiveness.
Today's legislation will enable America's start-up companies--the job
engines of our economy--to access the equity markets, not just the debt
market. This is a bill that will give investors and emerging growing
companies--perhaps a future Google, Apple, or Home Depot--the
opportunity to reach investors, cut through the red tape, and overcome
the financial barriers to success.
I ask my colleagues on both sides of the aisle to support the bill.
[[Page H1593]]
Mr. BACHUS. Madam Speaker, I yield back the balance of my time.
Mr. NADLER. Madam Speaker, I rise in opposition to the Motion to
Concur with the Senate Amendment to H.R. 3606, the Jumpstart Our
Business Startups, JOBS, Act.
Many of us agree with the general principle that we should modernize
the financial system to help small businesses raise capital, attract
investors, and contribute to our economic recovery. However, this must
be done in a balanced way that also protects those investors and the
public interest. I had hoped that the Senate would have an opportunity
to bolster the bill with key consumer- and investor-rights provisions--
provisions that had no chance of passage in this House. While the
Senate certainly strengthened the proposal, the Senate Amendment to
H.R. 3606 does not go far enough to ensure that investors will be
protected from unscrupulous actors.
Since the bill was introduced, numerous experts and organizations,
including the current and former chairmen of the Securities and
Exchange Commission, Americans for Financial Reform, AARP, and the
Consumer Federation of America, have raised significant concerns about
this legislation. According to the New York Times, many fear the bill
will allow companies to raise money without having to follow rules on
disclosure, accounting, auditing and other regulatory mainstays. The
deregulation measures in this bill could actually raise the cost of
capital by harming investors and impairing markets, making it harder
for legitimate companies to thrive. In addition, the bill will allow
certain companies to ignore, for the first five years that they are
public, certain regulations, such as the requirement to hire an
independent outside auditor to attest to a company's internal financial
controls. Also, recent experience clearly shows that arguments that the
market will have sufficient incentive to police itself have led to
disaster in the recent past and cannot be relied upon in the future. We
should have all learned a lesson when it comes to hasty deregulation of
financial markets. Even if there is a short term gain to be had, the
long term consequences can be quite costly.
In light of the fact that the Senate has not been able to add
adequate consumer and investor protections, and the growing information
about the potential long-term harm of these provisions, I must vote
``No.''
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Alabama (Mr. Bachus) that the House suspend the rules
and concur in the Senate amendment to the bill, H.R. 3606.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. BACHUS. Madam Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this question will be postponed.
____________________