[Congressional Record Volume 159, Number 171 (Wednesday, December 4, 2013)]
[House]
[Pages H7470-H7491]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         SMALL BUSINESS CAPITAL ACCESS AND JOB PRESERVATION ACT

  Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 429, I call 
up the bill (H.R. 1105) to amend the Investment Advisers Act of 1940 to 
provide a registration exemption for private equity fund advisers, and 
for other purposes, and ask for its immediate consideration in the 
House.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 429, an 
amendment in the nature of a substitute consisting of the text of Rules 
Committee Print 113-29 shall be considered as adopted, and the bill, as 
amended, shall be considered read.
  The text of the bill, as amended, is as follows:

                               H.R. 1105

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Small Business Capital 
     Access and Job Preservation Act''.

     SEC. 2. REGISTRATION AND REPORTING EXEMPTIONS RELATING TO 
                   PRIVATE EQUITY FUNDS ADVISORS.

       Section 203 of the Investment Advisers Act of 1940 (15 
     U.S.C. 80b-3) is amended by adding at the end the following:
       ``(o) Exemption of and Reporting Requirements by Private 
     Equity Funds Advisors.--
       ``(1) In general.--Except as provided in this subsection, 
     no investment adviser shall be subject to the registration or 
     reporting requirements of this title with respect to the 
     provision of investment advice relating to a private equity 
     fund or funds, provided that each such fund has not borrowed 
     and does not have outstanding a principal amount in excess of 
     twice its invested capital commitments.
       ``(2) Maintenance of records and access by commission.--Not 
     later than 6 months after the date of enactment of this 
     subsection, the Commission shall issue final rules--
       ``(A) to require investment advisers described in paragraph 
     (1) to maintain such records and provide to the Commission 
     such annual or other reports as the Commission taking into 
     account fund size, governance, investment strategy, risk, and 
     other factors, as the Commission determines necessary and 
     appropriate in the public interest and for the protection of 
     investors; and
       ``(B) to define the term `private equity fund' for purposes 
     of this subsection.''.

  The SPEAKER pro tempore. After 1 hour of debate on the bill, as 
amended, it shall be in order to consider the further amendment printed 
in part B of House Report 113-283, if offered by the gentlewoman from 
New York (Mrs. Maloney), or her designee, which shall be considered 
read and shall be separately debatable for 10 minutes equally divided 
and controlled by the proponent and an opponent.
  The gentleman from Texas (Mr. Hensarling) and the gentlewoman from 
California (Ms. Waters) each will control 30 minutes.
  The Chair recognizes the gentleman from Texas.


                             General Leave

  Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members 
have 5 legislative days within which to revise and extend their remarks 
and submit extraneous material for the Record on H.R. 1105, currently 
under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, since Congress was not in session last week, perhaps 
some of my colleagues missed the front page headline from The 
Washington Post. I read: ``Among American Workers, Poll

[[Page H7471]]

Finds Unprecedented Anxiety About Jobs and Economy.''
  According to the report, American workers are living with 
``unprecedented economic anxiety.'' More than six in 10 worry that they 
will lose their jobs. Nearly one in 3 say they worry a lot about losing 
their jobs.
  The article goes on to mention an American named John Stewart who 
wakes up every morning at 1:30 a.m. for a 2-hour commute to catch two 
different buses in Philadelphia so he can get to work on time. In the 
newspaper, he said: ``I can't save money to buy the things I need to 
live as a human being.''
  Mr. Speaker, we don't have to read The Washington Post. All we have 
to do is listen to our own constituents, since even today millions--
millions--of our fellow countrymen remain unemployed and underemployed.
  I hear these stories every week myself. Recently, I heard from Ida in 
Wills Point, Texas, in the Fifth Congressional District that I 
represent. She and her 79-year-old husband own a small trucking 
company. She wrote me that ``because of increasing regulations in taxes 
in the past 4 years, we have lost all but two of our trucks.'' She goes 
on to write me: ``My husband is the only driver right now because I can 
no longer drive. He drives full-time 3,500 miles a week most weeks 
because we can't live on his Social Security.'' She says: ``We are 
really stuck in a hole.''
  Millions, Mr. Speaker, are ``stuck in a hole.''
  Today, we have an opportunity, Mr. Speaker, to do something to help 
raise many of our fellow countrymen out of that hole of economic 
anxiety and economic hardship. Today, we have the opportunity to pass 
H.R. 1105, the Small Business Capital Access and Jobs Preservation Act.
  I want to commend the bipartisan group of Members--two Republicans 
and two Democrats--who introduced the bill: Mr. Hurt of Virginia, Mr. 
Himes of Connecticut, Mr. Garrett of New Jersey, and Mr. Cooper of 
Tennessee.
  As chairman of the Financial Services Committee, Mr. Speaker, I want 
to thank all the members of the committee who came together across 
party lines to approve the bill. Mr. Speaker, nearly one-third of the 
Democrats who sit on our committee joined with 30 Republicans in 
supporting H.R. 1105. In short, Mr. Speaker, this is, indeed, a 
bipartisan jobs bill.
  We know that small businesses face an incredible red tape burden. In 
fact, a recent survey of the National Federation of Independent 
Business said that ``government regulations and red tape are the single 
most important challenge that small businesses face in creating and 
preserving jobs.''
  Mr. Speaker, I heard from another small business person in Grand 
Saline, Texas, in my district. He said because of overregulation ``our 
business has devolved from one that provides a service for a customer 
into one that provides that same service as an afterthought while our 
real efforts go into paperwork.''

                              {time}  1445

  Mr. Speaker, we can debate the relative merits or demerits of the 
Dodd-Frank Act; but even the primary author himself, former Chairman 
Frank, admitted that perhaps not every aspect of Dodd-Frank achieved 
perfection. And many of us would argue on a bipartisan basis that the 
part of the act that requires small business investors who are private 
equity advisers to register with the SEC is perhaps one of those 
provisions that is in need of reform.
  This is a provision, Mr. Speaker, that many of us believe was aimed 
at Wall Street, but ends up hurting Main Street. Because of this 
provision embedded in Dodd-Frank, smaller firms that invest in 
entrepreneurs and in small businesses face yet one more significant 
regulatory cost, regulatory burden, more red tape.
  As one of the small business investors testified before our 
committee, it is going to cost his company $200,000 every year to 
comply with the regulation. He went on to say:

       While for some larger firms this is an insignificant cost, 
     for a medium-sized firm such as ours that offers capital to 
     small businesses, it is a significant expense.

  And pay attention to this, Mr. Speaker. He said:

       This money comes directly out of our funds intended for 
     investment into Main Street.

  In today's economy, to help pull these people out of this hole of 
economic anxiety, we need more private sector, more private equity 
investment into Main Street. Private equity equals small business jobs.
  In fact, Mr. Speaker, between 1995 and 2010, 23,000 different 
companies across our Nation benefited from private equity investment, 
employing 3 million different people, and the investments that are made 
by private equity historically have grown jobs at three times the rate 
of other companies.
  And so what does this look like? I have to tell you, Mr. Speaker, it 
look likes an outfit called New Mountain Capital that invested in a 
company named Inmar, a national coupon and reverse logistics processing 
company. By helping them update their IT with a $100 million 
investment, they now support 4,200 different employees.
  The face of private equity looks like Capital South Partners that 
invested in a North Carolina firm, Vita Nonwovens, and now they have 95 
employees in High Point, North Carolina, and I should add 
parenthetically, another 55 employees in my native Texas. This is the 
face of private equity. These are some of the small business jobs that 
are being created.
  Now, we may hear from some that this is needed to somehow battle Wall 
Street, but let me tell you what private equity is not. Private equity 
it is not Wall Street. It is not complex derivatives trading. It is not 
currency swaps. Mr. Speaker, it is not about systemic risk. That is not 
what this is about. And so, again, this was a provision aimed at Wall 
Street that, unfortunately, is hitting Main Street.
  It is time to make sure that Americans like John in Philadelphia can 
live like a human being. It is time to make sure that constituents like 
mine, Ida and her husband, don't have to drive 3,500 miles a week just 
so they can put food on the table.
  Mr. Speaker, it is time, again, for this institution to put jobs 
first, not regulators first, but jobs first. I urge all of my 
colleagues to adopt H.R. 1105.
  I reserve the balance of my time.
  Ms. WATERS. Mr. Speaker, I ask unanimous consent that the gentleman 
from Massachusetts (Mr. Lynch) manage the time at this time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from California?
  There was no objection.
  Mr. LYNCH. Mr. Speaker, I yield myself such time as I may consume.
  I rise today in opposition to H.R. 1105, which will create a gaping 
loophole for private equity fund advisers and deprive investors and 
regulators of important information about the risk these funds pose.
  The Dodd-Frank Act wisely required that advisers to all hedge funds, 
private equity funds, and other private funds register and file regular 
reports with the SEC. It did this for two reasons: one, to help 
regulators better understand the systemic risks that these funds pose 
to the overall financial system, and to provide investors in these 
funds with meaningful information about the funds' governance.
  This bill would exempt nearly every private equity fund adviser from 
these important disclosure requirements. Some of my colleagues who 
support this bill will argue that because private equity funds were not 
the cause of the last crisis, we should not subject them to these 
modest transparency and accountability requirements.
  But one of the most important lessons we did learn during the 
financial crisis is that systemic threats seem to always bubble up from 
the opaque and unregulated sectors of the market. Giving this exemption 
will allow threats to once again grow in the dark corners of our 
financial system, only showing themselves when it is too late to 
prevent serious harm to the American taxpayer.
  Supporters of this bill, while well-intended, will point to the 
provision that ensures advisers to private equity funds with leverage 
ratios over 2:1 will still have to register. This may sound attractive 
on its surface until you realize that every private equity fund is 
basically within that parameter. Private equity funds invest in 
companies, and it is these portfolio companies that

[[Page H7472]]

load up on leverage and that have the potential to take on outside 
risk, piling on the leverage while the private equity fund itself 
appears on its surface to be modestly leveraged. A private equity fund 
could have a leverage ratio well below 2:1, while its portfolio 
companies are leveraged in excess of 30:1 masking the actual risk that 
these funds pose. Nearly every private equity fund in existence today 
would come in below the 2:1 leverage cap. This is a hollow limitation 
that provides no protection to the funds' investors or to the American 
taxpayer.
  Mr. Speaker, we learned the hard way after the recent financial 
crisis that systemic risks grow in the dark corners of our financial 
markets and that the more information we can gather about how the 
markets work, the safer we will be. The registration and reporting 
requirements for private equity advisers are modest and narrowly 
tailored, but they provide investors and regulators with important 
information. Rolling back these reforms now moves us in the wrong 
direction. I urge my colleagues to oppose H.R. 1105.
  I reserve the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I am now privileged to yield 5 minutes 
to the gentleman from Virginia (Mr. Hurt), the primary author of this 
legislation, a real leader on our committee and in this Congress in 
creating jobs.
  Mr. HURT. Mr. Speaker, I rise in support of H.R. 1105, the Small 
Business Capital Access and Job Preservation Act, a bipartisan bill 
that our colleagues, Representatives Cooper, Himes, Garrett, and I 
introduced earlier this year. I thank all of them for their leadership 
on this issue.
  I would also like to thank Chairman Hensarling and again Chairman 
Garrett for their support and leadership on this bill, as we were able 
to achieve a bipartisan vote out of the Financial Services Committee.

  Every Member of this body can agree that with millions of Americans 
out of work, our top focus in Congress should be, and it must be, 
enacting policies to spur job creation throughout our Nation.
  Today, the House takes up another bill to encourage economic growth 
and job creation by increasing the flow of private capital to small 
businesses that are found on Main Streets all across America. At a time 
when the available avenues of capital and credit for small businesses 
continue to decrease, capital investments from private equity into our 
communities are more important than ever.
  Unfortunately, Dodd-Frank has placed a costly and unnecessary 
regulatory burden of SEC registration on advisers to private equity 
while exempting advisers to similar investment funds. These 
registration requirements do not improve the stability of our financial 
system, and they restrict the ability of private equity to invest 
capital in our small businesses to spur job growth.
  In Virginia's Fifth District, my district, there are literally 
thousands of jobs that exist because of the investment of private 
equity. These critical investments allow our small businesses to 
innovate, expand their operations, and create the jobs that our 
communities need. If enacted, the unnecessary burdens on advisers to 
private equity funds that do not have excessive leverage would be 
eliminated, and they would be given the same exemption from the SEC's 
registration requirements that venture capital advisers enjoy.
  These registration requirements, which do not make the financial 
system any more stable, impose an undue burden on small and mid-sized 
private equity firms, and decrease the ability of their investment to 
create jobs.
  During our Financial Services Committee hearing on the bill, 
witnesses discussed the cost these requirements have imposed on private 
equity firms. They force investment advisers to private equity to 
expend substantial resources that disproportionately affect small and 
mid-sized funds with costs of hundreds of thousands of dollars 
annually, or more, to comply with these requirements.
  It is important to note that most people, including SEC Chair Mary Jo 
White, concede that private equity funds did not cause the 2008 
financial crisis and are not a source of systemic risk, despite that 
argument being the impetus for the registration requirement under Dodd-
Frank. These funds are not highly interconnected with other financial 
market participants; and, therefore, the failure of a private equity 
fund would be highly unlikely to trigger cascading losses that would 
lead to a similar financial crisis. Additionally, these funds invest 
primarily in illiquid assets, including small Main Street businesses 
found across our country. These businesses are diversified across 
multiple industries and therefore lack concentrated exposure to any 
single sector.
  Furthermore, investors in private equity firms are all sophisticated 
investors who negotiate for the strongest investor protections. These 
sophisticated investors include public pension funds, university 
endowments, nonprofit foundations--many of whom are the primary 
beneficiaries of private equity successes. Those investors typically 
are represented by counsel and heavily negotiate fund terms in advance 
of investing, including reporting governance and conflicts of interest.
  It should also be noted that H.R. 1105 does nothing to change current 
Federal law with respect to common law and statutory fiduciary 
protections owed by investors to advisers to private equity funds. 
There are already existing significant investor protections available 
both contractually and in the form of State and Federal fiduciary 
duties and antifraud protections--investor protections that exist 
whether or not the advisers are registered with the SEC.
  In the end, the costs of unnecessary registration represent real 
capital that otherwise could be used to invest in companies such as 
Virginia Candle in our district--a company that, through private equity 
investment, expanded from a garage in Lynchburg, Virginia, to millions 
of homes across the world.
  Beyond Virginia Candle in Virginia, private equity-backed companies 
employ over 7.5 million people. Let me say that again: private equity-
backed companies employ over 7.5 million people nationwide in over 
17,000 U.S. companies. The impact of the registration requirements 
stand to diminish job creation in each of the congressional districts 
represented on this floor today.
  I ask all of my colleagues today to join me in voting ``yes'' on H.R. 
1105 and pass this bill from the House in order to increase the flow of 
private capital to our small businesses so that they can innovate, 
grow, and create jobs for the American people.

                             Small Business Investor Alliance,

                                                 December 3, 2013.
     Hon. John A. Boehner,
     Speaker, House of Representatives,
     Washington, DC.
     Hon. Nancy Pelosi,
     Democratic Leader, House of Representatives,
     Washington, DC.
       Dear Speaker Boehner and Democratic Leader Pelosi: On 
     behalf of the Small Business Investor Alliance (SBIA), the 
     premier organization of lower middle market private equity 
     funds and investors, we urge you to support passage of the 
     bipartisan Small Business Capital Access and Job Preservation 
     Act (H.R. 1105), sponsored by Representatives Robert Hurt 
     (VA-5), Jim Himes (CT-4), Scott Garrett (NJ-5), and Jim 
     Cooper (TN-5). Passage of H.R. 1105 would reduce expensive 
     regulatory costs for small business investors enabling 
     increased capital formation and job creation for growing 
     small businesses.
       Private equity funds are critical to the capital raising 
     process for many small businesses. In fact, a Pepperdine 
     University study found that private equity backed businesses 
     generated 129 percent more revenue growth and 257 percent 
     more employment growth than non-private equity backed 
     businesses. America needs more private equity small business 
     investing, not less.
       It is commonly overlooked that small business investors are 
     generally small businesses too. They are being held back by 
     expensive regulatory costs as a result of new expanded SEC 
     registration requirements put into place by the Dodd-Frank 
     Act. Investment Adviser registration is very costly in both 
     money and time, especially for smaller funds that do most of 
     the small business investing. Most of our private equity 
     funds do not have legal departments, compliance teams, and 
     other forms of overhead that are required by the new 
     regulatory system. Compliance costs are often $250,000 or 
     more per year--a heavy expense to a small business investment 
     fund. Many of the new burdens are caused by the fact that the 
     SEC rules are designed to deal with publicly traded 
     businesses and investing, not for investing in domestic, 
     privately-held small businesses. Small business investors are 
     not mutual funds, multi-national conglomerates, or giant 
     financial institutions and should not be treated as such.
       Private equity funds, particularly those supporting small 
     businesses, are not a systemic risk and did not contribute to 
     the financial crisis. H.R. 1105 would reduce regulatory 
     costs, but would still maintain record

[[Page H7473]]

     retention and information for regulators and thus maintain 
     investor safeguards.
       Congress can reduce unnecessary burdens for our private 
     equity funds and allow them to do what they do best--invest 
     in job creating small businesses to empower them to succeed, 
     create jobs, and grow the economy. SBIA strongly supports 
     passage of the bipartisan Small Business Capital Access and 
     Job Preservation Act.
           Sincerely,
                                                     Brett Palmer,
     President.
                                  ____

                                                  Small Business &


                                     Entrepreneurship Council,

                                                 December 2, 2013.
     Hon. Robert Hurt,
     House of Representatives,
     Washington, DC.
       Dear Congressman Hurt: On behalf of the Small Business & 
     Entrepreneurship Council (SBE Council), I am writing to 
     support H.R. 1105, the Small Business Capital Access and Job 
     Preservation Act. A late September 2013 survey by SBE Council 
     found a disturbingly large percentage of entrepreneurs (62%) 
     who said the outlook for their firms had not improved (or had 
     worsened) since the financial crisis more than five years 
     ago. For growth-oriented firms responding to the survey, 
     access to capital remains a worrisome issue. That is why SBE 
     Council continues to support initiatives such as H.R. 1105, 
     which will help improve U.S. capital formation and access for 
     small businesses.
       The overly broad Dodd-Frank law imposed SEC registration 
     and compliance rules on private equity when, quite simply, 
     none were needed. There was and is no evidence of pervasive 
     problems with private equity, or that it poses systemic risk 
     to the marketplace. Irrelevant and time-consuming procedures 
     as required by Dodd-Frank, only hamstring private equity's 
     role in efficiently serving the many small businesses that 
     benefit from the capital and expertise it provides.
       Lifting the redundant and burdensome Dodd-Frank regulations 
     on private equity--as H.R. 1105 proposes to do--will improve 
     capital markets efficiency, and therefore make a meaningful 
     difference for entrepreneurs. The (SEC) can also better meet 
     its core responsibility of protecting markets and retail 
     investors.
       Please let SBE Council know how we can help advance H.R. 
     1105 into law.
           Sincerely,
                                                   Karen Kerrigan,
     President & CEO.
                                  ____

                                        Chamber of Commerce of the


                                     United States of America,

                                 Washington, DC, December 2, 2013.
       To The Members of The U.S. House of Representatives: The 
     U.S. Chamber of Commerce, the world's largest business 
     federation representing the interests of more than three 
     million businesses of all sizes, sectors, and regions, as 
     well as state and local chambers and industry associations, 
     and dedicated to promoting, protecting, and defending 
     America's free enterprise system, supports H.R. 1105, the 
     ``Small Business Capital Access and Job Preservation Act.'' 
     This bill would amend the Investment Advisers Act of 1940 to 
     exempt private equity fund investment advisers from its 
     registration and reporting requirements, provided that each 
     private equity fund has not borrowed and does not have 
     outstanding a principal amount exceeding twice its invested 
     capital commitments. This bill would additionally enhance the 
     capital formation needed to build new businesses, expand 
     existing businesses, and create jobs.
       Businesses small and large, particularly new businesses, 
     need a mix of capital sources to meet short-term and long-
     term growth needs. This diversity of capital has provided the 
     liquidity needed for different sized firms to be able to have 
     the opportunity to achieve success. Congress recognized these 
     facts and the needs to increase diverse portals of capital 
     access in passing the bipartisan Jumpstart Our Business 
     Startups Act (``JOBS Act'') last year.
       Private equity financing is an important form of financing 
     for smaller businesses that are trying to grow. In fact, 
     between 1995 and 2010 over 23,000 businesses, employing 3 
     million people, were backed by private capital. These 
     businesses grew jobs at a rate of 64% compared to other 
     businesses which only grew jobs at a rate of 18%. It should 
     also be noted that private equity financing was not a cause 
     of the financial crisis and that under its business model 
     does not pose interconnected risk to the economy. Yet, the 
     Dodd-Frank Wall Street Reform and Consumer Protection Act 
     requires that private equity firms must register with the 
     Securities and Exchange Commission.
       These requirements are not only costly, but are also 
     designed for public company investors and not investors in 
     privately held companies. These requirements are a mismatch 
     for the investment model and the costs involved may be 
     prohibitive for smaller firms that specialize in investing in 
     the middle markets. Accordingly, the failure to pass this 
     bill could cut off funding sources for small businesses.
       Passage of H.R. 1105 would serve as an important step 
     forward towards promoting efficient capital markets conducive 
     to long-term economic growth and job creation. The Chamber 
     may consider including votes on, or in relation to, this bill 
     in our annual How They Voted scorecard.
           Sincerely,

                                              R. Bruce Josten,

                                         Executive Vice President,
     Government Affairs.
                                  ____

                                             Private Equity Growth


                                              Capital Council,

                                 Washington, DC, December 2, 2013.
     Hon. Robert Hurt,
     House of Representatives, Cannon House Office Building, 
         Washington, DC.
     Hon. Scott Garrett,
     House of Representatives, Rayburn House Office Building, 
         Washington, DC.
     Hon. Jim Himes,
     House of Representatives, Cannon House Office Building, 
         Washington, DC.
     Hon. Jim Cooper,
     House of Representatives, Longworth House Office Building, 
         Washington, DC.
       Dear Congressmen, Thank you for your leadership in 
     advancing H.R. 1105, The Small Business Capital Access and 
     Job Preservation Act. As you know, the bill is scheduled for 
     a Floor vote this week. The Private Equity Growth Capital 
     Council (PEGCC) strongly supports this legislation.
       Private equity and growth capital investment drives 
     economic activity and growth across the U.S. economy by 
     investing in promising companies looking to grow and those in 
     need of a turnaround. Last year alone, private equity and 
     growth capital invested $347 billion in more than 2,000 U.S.-
     based businesses located in all 50 states and every 
     congressional district. There are 17,700 companies based in 
     the U.S. that are backed by private equity investment, and 
     these companies employ more than 7.5 million people 
     worldwide.
       The stated goal of the Dodd-Frank Act is to reduce systemic 
     risk in the U.S. financial system. Private equity and growth 
     capital pose no systemic risk to the economy, did not 
     contribute the financial crisis and, therefore, should not be 
     subjected to enhanced SEC oversight. Choosing to increase 
     regulation on private equity and growth capital will require 
     a disproportionately large level of resources from the SEC's 
     budget and divert focus from protecting retail investors and 
     ensuring market integrity.
       Furthermore, registration does not provide additional 
     investor protections, and it significantly increases the cost 
     of compliance for private equity and growth capital firms. 
     These registration regulations treat private equity and 
     growth capital firms like investment advisers with retail 
     clients. In contrast, private equity works with 
     sophisticated, accredited investors who mostly consist of 
     pension funds, charitable foundations and university 
     endowments. These investors are typically represented by 
     legal counsel and heavily negotiate fund terms in advance of 
     investing in a fund. Negotiated items often include 
     reporting, governance and conflicts of interest. Investors 
     obtain little if any benefit from the added SEC registration 
     requirements, yet the time and resources needed to comply 
     with SEC registration distracts from private equity's core 
     mission of investing in, strengthening and growing great 
     companies.
       The private equity and growth capital industry strongly 
     supports the passage of H.R. 1105, The Small Business Capital 
     Access and Job Preservation Act. If you would like more 
     information about the positive impact of private equity in 
     your state, please visit www.PrivateEquityAtWork.com/state-
     by-state.
       Thank you, again, for advancing this legislation. We look 
     forward to working with you to get this proposal enacted.
           Sincerely,
                                                      Steve Judge,
     President & CEO.
                                  ____

                                           National Association of


                                         Investment Companies,

                                 Washington, DC, December 3, 2013.
     Hon. John A. Boehner,
     Speaker, House of Representatives, Washington, DC.
     Hon. Nancy Pelosi,
     Minority Leader, House of Representatives, Washington, DC.
       Dear Speaker Boehner and Minority Leader Pelosi: On behalf 
     of the National Association of Investment Companies (NAIC), 
     an advocacy association that represents private equity member 
     firms, including women and ethnic minorities who remain 
     significantly under-represented in private equity, we are 
     writing to support passage of the Small Business Capital 
     Access and Job Preservation Act (H.R. 1105). H.R. 1105 is 
     bipartisan legislation sponsored by Representatives Robert 
     Hurt (VA-5), Jim Nimes (CT-4), Scott Garrett (NJ-5), and Jim 
     Cooper (TN-5).
       The fastest growing sector of the U.S. economy is the $6 
     trillion annual market of minority consumers, who within 
     decades will comprise the majority of consumers. NAIC member 
     firms represent companies that invest in this growth sector 
     of the U.S. economy. Passage of H.R. 1105 reduces compliance 
     costs for private equity firms and would allow our member 
     firms to increase capital investment in areas of the economy 
     that are under-represented in their ability to access capital 
     to create jobs.
       The exorbitant cost of SEC registration can take resources 
     away from making investments in Women- and minority-owned 
     businesses. Annual SEC registration costs often run as high 
     as $250,000, as SEC registered fund must spend precious 
     resources on hiring compliance and legal services to be fully 
     compliant with SEC rules. H.R. 1105 would reduce these costs 
     by removing some of the inapplicable SEC investment adviser

[[Page H7474]]

     rules that are unworkable for private equity funds.
       NAIC strongly supports passage of the Small Business 
     Capital Access and Job Preservation Act and we urge your 
     support of this important bipartisan legislation.
           Sincerely,
                                                 Jennell F. Lynch,
     Vice President.
                                  ____



                             Association for Corporate Growth,

                                    Chicago, IL, December 2, 2013.
     RE Support the ``Small Business Capital and Job Preservation 
         Act of 2013'' (H.R. 1105).

     Hon. John A. Boehner,
     Speaker, House of Representatives, Washington, DC.
     Hon. Nancy Pelosi,
     Minority Leader, House of Representatives, Washington, DC.
       Dear Speaker Boehner and Minority Leader Pelosi: On behalf 
     of the Association for Corporate Growth (ACG) and our 14,500 
     members and the 26,000 ``Main Street'' businesses they 
     operate, we urge Members of the House of Representatives to 
     vote in favor of H.R. 1105, the Small Business Capital and 
     Job Preservation Act when it comes before the full body later 
     this week.
       Founded in 1954, ACG is an organization with 46 chapters in 
     the United States representing professionals from private 
     equity firms, corporations and lenders that invest in middle-
     market companies, as well as from law, accounting, investment 
     banking and other firms that provide advisory services. ACG 
     represents more private equity firms than any other 
     association in the United States--virtually all of which 
     invest in smaller and middle-market companies.
       It is important that the application of the Dodd-Frank Act 
     uphold the original spirit and intent of the legislation 
     without constraining capital. Yet, Dodd-Frank requires that 
     virtually all private equity firms must register with the 
     Securities and Exchange Commission (SEC) under the Investment 
     Advisers Act of 1940, despite the fact that private equity 
     funds are structured and operate almost identically to 
     venture capital funds, which under the Dodd-Frank Act are 
     exempted from having to register.
       This bipartisan legislation, introduced Representatives 
     Robert Hurt (R-VA), Jim Himes (D-CT), Jim Cooper (D-TN) and 
     Scott Garrett (R-NJ), would amend the Investment Advisers Act 
     of 1940 to exempt private equity fund investment advisers 
     from its registration and reporting requirements, so long as 
     the fund has not borrowed and does not have an outstanding 
     principal amount of debt exceeding twice its invested capital 
     obligations. Since private equity funds were not a cause of 
     the financial crisis and its business model does not pose any 
     interconnected risk to the economy, ACG believes H.R. 1105 is 
     a necessary piece of legislation that will help ensure the 
     continued flow of capital to businesses. H.R. 1105 strikes a 
     proper balance between access to capital and protection from 
     systemic risk. H.R. 1105 also re-establishes regulatory 
     parity between private equity and venture capital.
       Private capital can be found in every corner of our nation 
     and the bipartisan Small Business Capital Access and Job 
     Preservation Act will preserve private equity funding as a 
     pipeline of capital for growing businesses. ACG stands ready 
     to assist and serve as a resource to Members of the U.S. 
     House of Representatives as they aim to achieve sound 
     financial policies and enhancements of the Dodd-Frank Act 
     that accomplish continued growth in the middle-market.
       We thank Representatives Robert Hurt (R-VA), Jim Himes (D-
     CT), Jim Cooper (D-TN) and Scott Garrett (R-NJ) for their 
     leadership on this important issue. We urge all members of 
     Congress to support their efforts and vote in favor of H.R. 
     1105.
           Sincerely,
                                       Gary LaBranche, FASAE, CAE,
                                                President and CEO.

  Mr. LYNCH. Mr. Speaker, I yield myself 1 minute.
  I do want to respond to the gentleman's invoking of the SEC chair, 
Mary Jo White. Judging from the gentleman's remarks, you would think 
she might be in favor of this bill. Well, let me talk about what she 
says about this bill in particular:

       Our markets would not be well served by narrowing the scope 
     of the commission's jurisdiction in oversight of these 
     advisers.

  That is with respect to this bill. She also said:

       Private equity investors are in need of the same 
     protections as other private fund investors.

  Lastly, she has also said that the commission has brought enforcement 
actions, talking about the advisability of having oversight over 
advisers and having these disclosures made:

       The commission has brought enforcement actions against 
     private equity funds and their advisory personnel involving 
     unlawful pay-to-play schemes, insider trading, conflicts of 
     interest, valuation, and misappropriation of assets.

  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. LYNCH. I yield myself another 30 seconds.
  Now, when you think about the protections that are necessary for 
pension funds, especially where these workers have invested their whole 
lives in these pension funds, you understand the need for this 
disclosure.
  At this time I yield 3 minutes to the gentleman from Minnesota (Mr. 
Ellison).

                              {time}  1500

  Mr. ELLISON. Mr. Speaker, let me thank the gentleman from 
Massachusetts.
  Before I launch into the substantive critique of this bill and I urge 
Members to vote ``no,'' I would like to make a preliminary observation, 
and that is that when our chairman of our committee begins his 
presentation, making a broad-based critique and attack on regulation, 
Members should be very careful about this because good regulation is 
good for the American people. We need health and safety protections. We 
need to be protected from unsafe water, unsafe products. And investors 
need to be protected, as well. Any time a Member of Congress or anyone 
comes up and says regulations are bad, this is obviously wrong and the 
American people know it. Therefore, when you are being told to do 
something just because regulations are always bad, you should be very 
suspicious of what is going on and dig deeper into the situation.
  I urge Members to just consider how important good, solid, well-
tailored regulation is to benefit the American people, and I push back 
on anybody who just makes a frontal assault on all regulation, no 
matter how good or how bad and just regulation in general. This has 
been a theme around here, and I urge Members to be suspicious of it.
  It should also be considered that when this bill is in front of us, 
we should know that people have looked carefully at it. Members who are 
wondering what they want to do on this bill, they should consider that 
the Obama administration has strongly opposed this bill, with senior 
advisers recommending a veto. This is a bill that is not going to 
become law. There is no Senate companion. I just checked and have been 
advised that there is no Senate companion. So we are really here 
talking about a bill that is going to be a threatened veto by the 
President and has no Senate companion, but is also opposed by SEC Chair 
Mary Jo White and the Council of Institutional Investors, an 
organization which has investors' interests in mind as this bill is 
trying to make investor information more opaque, and Americans for 
Financial Reform, not to mention the Consumer Federation of America, 
the AFL-CIO, and State securities regulators.
  So the people who work with these regulations all the time don't 
think they are the right thing to do. Even if some Members might 
consider that maybe this might get capital to somebody who wouldn't 
otherwise get it, the people who regulate and use these regulations 
every day have carefully considered H.R. 1105 and have come to the 
conclusion that it is bad for investors, that it creates less 
transparency, not more, and, therefore, is, in fact, a risk to our 
financial well-being.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. LYNCH. I yield the gentleman an additional 1 minute.
  Mr. ELLISON. Americans are obviously looking for jobs. This is the 
big hook, the way to get anybody to vote for anything around here. It 
says it is going to create jobs. Of course, there has been no 
demonstration of how this is going to create jobs.
  The point is that it will create a situation where there is less 
information for investors who need it, and it is important for Members 
to know that the SEC has taken enforcement actions against private 
equity firms.
  For example, at Knelman Asset Management Group, the SEC found that 
registered private equity funds-to-funds adviser Knelman Asset 
Management Group, LLC, Irving Knelman, a managing director, chief 
executive officer and former CEO, violated the Advisers Act custody, 
antifraud compliance reporting, and books and records provisions. This 
is a case where you have the SEC using information to bring 
accountability in the private equity arena.
  The SPEAKER pro tempore. The time of the gentleman has again expired.
  Mr. LYNCH. I yield the gentleman an additional 20 seconds.

[[Page H7475]]

  Mr. ELLISON. Let me wrap up by saying that we urge Members to vote 
``no,'' to look out for advisers. Even private equity advisers need 
transparency, not less information. A ``no'' vote is urged here.
  Mr. HENSARLING. Mr. Speaker, at this time I am very happy to yield 4 
minutes to the gentleman from New Jersey (Mr. Garrett), a coauthor of 
the legislation and the chairman of the Capital Markets and GSE 
Subcommittee.
  Mr. GARRETT. Mr. Speaker, I thank the chair.
  Before I give my remarks, I just want to say in response that I 
believe the chairman said that he is not opposed to all regulations. I 
think he said he is in favor of regulation, but make sure that it is 
smart and appropriate regulation--at least, that is my position, as 
well.
  Understand, too, to the gentleman's point, that even when this 
legislation is passed, the SEC still will have significant authority, 
will still have its enforcement division, will still have its new asset 
management unit, which has recently recruited industry professionals 
with asset management experience to serve as specialists in this unit 
to do the investigations that the gentleman wants to have continue, and 
it will continue even after the passage of this legislation.
  With that said, I want to again thank the chairman. I want to thank 
the gentleman from Virginia (Mr. Hurt), and also the gentleman from 
Connecticut (Mr. Himes), as well, for their hard work on this very 
important legislation, as well as all our cosponsors on both sides of 
the aisle. For that reason, I am pleased to support H.R. 1105. And do 
make no mistake about it; this is bipartisan legislation, and it is all 
about helping small businesses and helping to create more jobs in this 
country.
  Today, more than 17,700 companies, backed by private equity employ 
over 7.5 million people. In my home State of New Jersey alone, 597 
private equity-backed companies support more than 377,000 workers, 
while the New Jersey Division of Pensions and Benefits has invested 
billions on behalf of retirees and private equity firms. Hopefully, all 
those facts give you the facts you need to know how important it is to 
the creation of jobs. Yet despite their long track record supporting 
small business nationwide, the Dodd-Frank Act has imposed enormous and 
numerous burdens on private equity firms, forcing most fund advisers to 
spend literally millions of dollars complying with new SEC registration 
and reporting requirements.
  While these burdensome regulations no doubt crimp the flow of much-
needed investment dollars to America's small businesses, there is 
little or no evidence that they are needed to promote the stability of 
our financial system or to protect investors. Unlike, say, Federal 
housing policy and the government-sponsored enterprises Fannie Mae and 
Freddie Mac, private equity did not cause the financial crisis and is 
not--and never has been--a source of systemic risk.
  As former SEC Chair Mary Schapiro admitted back in 2011: ``Private 
equity funds have less potential to pose systemic risk than any other 
type of private funds.'' Indeed, if the SEC is so concerned about the 
systemic risk of private equity funds, their recent examinations of 
private equity advisers certainly do not show it.
  As Chair White recently said: Neither the SEC's examinations staff 
nor the Division of Investment Management ``has conducted examinations 
of an adviser to a private fund based primarily on systemic risk 
concerns.''
  She also said: SEC examiners ``have not to date reviewed systemic 
risk issues as part of their examinations of private funds.''
  Thirdly: None of the advisers to private funds that withdrew their 
registration in 2012 ``had systemic market impact.''
  And so now we must ask ourselves this question: Do we really want the 
SEC, already saddled with a multitude of unfinished, nongermane Dodd-
Frank mandates expending valuable resources on risks that don't even 
exist? In addition, because only sophisticated investors may invest in 
these private equity funds, the need to protect investors in this case 
is more limited compared to other areas of the security market.
  While I wholeheartedly support the SEC's mission to protect 
investors, the agency with limited resources should be devoted, first 
and foremost, to protecting the less sophisticated, the retail mom-and-
pop investors. They need the most protection.
  It was Paul Kanjorski, who was in Congress when Dodd-Frank went 
through. He said:

       I, for one, could care less about high-wealth individuals 
     who want to contribute their money to a group of investors. 
     If they want to take the shot of losing it, it does not 
     really affect the rest of society.

  It also bears mentioning that this legislation in no way alters the 
many existing tools the SEC already has to prevent and punish fraud in 
the private equity industry for the benefit of sophisticated investors 
and the broader economy.
  I urge support of H.R. 1105 at a time when most small businesses 
continue to have difficulty getting credit and need to grow. Passing 
this bipartisan legislation, commonsense legislation, should be no a 
no-brainer.
  Mr. LYNCH. Mr. Speaker, I yield myself 1 minute to respond to some of 
these allegations.
  In respect to sophisticated investors, the Council of Institutional 
Investors, which is an association representing corporate, union, and 
public pensions, foundations and endowments, largely very sophisticated 
investors with combined assets of $3 trillion, opposes this bill. They 
oppose this bill because of the record of enforcement actions of the 
SEC to go after risks that do actually exist.
  I now yield 3 minutes to the gentleman from Connecticut (Mr. Himes), 
a cosponsor of the bill.
  Mr. HIMES. Mr. Speaker, I would like to thank my friend from 
Massachusetts for the time and Ranking Member Waters for being willing 
to hear different perspectives on this bill from our side.
  I want to start by saying that Dodd-Frank, which I think I can say I 
contributed more than my share to, was, on balance, a very good and 
very important thing. The dragging of derivatives into the light of 
day, trading on exchanges, clearing through clearinghouses, the 
creation of the CFPB, taking steps to eliminate too big to fail, there 
is lots of stuff in Dodd-Frank which is important and good.
  But not everything in Dodd-Frank is important and good. Like all 
other works of mortals, there are things in this that are probably 
unintended and perhaps overreaching. I happen to believe that the 
requirement that private equity funds register with the SEC is one of 
those areas.
  Why is that?
  First, private equity funds, as has been pointed out on the floor 
today, were a million miles from the bad mortgages from Fannie Mae, 
from Freddie Mac, from the subprime mortgages, from all of those things 
that caused the failures in 2008. They weren't anywhere close.
  Secondly, investor protection is important, but, by law, the only 
people who can invest in these funds are accredited investors or 
institutional investors who don't just sign up. They hire attorneys to 
negotiate partnership agreements. They negotiate with these private 
equity funds for disclosure, for the terms, and all of those sorts of 
things. So we are not talking about retail investors here.
  Finally, the issue of leverage. We have finally gotten to the point 
where people acknowledge that these are not large leverage funds. The 
point is made that the leverage is at the investment company level. 
That is true. Private equity firms do buy companies, invest in them, 
and then those companies take on leverage. The average leverage across 
the entire universe of private equity-sponsored companies is less than 
3 to 1. It is not 30 to 1, but 3 to 1. It is less than 3 to 1. By way 
of comparison, hedge funds, on average, are leveraged 15 to 1. Lehman 
Brothers, when it went down, was leveraged in excess of 30 to 1. We are 
talking about companies which are assuming the same kind of debt that 
any other small business assumes out there, less than 3 to 1.
  What we have happening right now is we have examiners and the 
intention and the resources of the SEC, which has terribly important 
missions around real estate and mortgages and derivatives and finding 
the next Bernie Madoff, going to $175 million funds and

[[Page H7476]]

examining these funds on behalf of the sophisticated investors. That 
does not make sense.
  Dodd-Frank exempted venture capital funds from this registration 
requirement. Venture capital funds do the exact same thing with the 
exact same investors that private equity funds do; they just do it in 
an earlier stage in the company's history. The only reason for that 
exemption is that we like venture capital funds more than we like 
private equity funds. They sound better. They make nice things in 
garages in Palo Alto. Private equity sounds more ominous; therefore, 
they have been subjected to registration.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. LYNCH. Mr. Speaker, I yield the gentleman an additional 1 minute.
  Mr. HIMES. Mr. Speaker, we exempted venture capital funds from the 
Advisers Act of 1940 registration. The same set of investors, same 
types of investing. Actually, a more risky asset class than private 
equity. We exempted them for no other reason than that we like venture 
capital better than we like private equity. That is fine. But in 
statute and in regulation, we should be consistent.
  So I think that you can argue that venture capitalists should be 
subject to the same kind of registration requirements that private 
equity is or you can argue, as I do, that probably both types of funds 
don't need to be registered under the Advisers Act of 1940, but you 
can't support Dodd-Frank and say venture capitalists are exempt and 
private equity is not and be consistent in policy.
  So I urge my colleagues, in the interest of balancing a very good 
piece of legislation, to support H.R. 1105.
  Mr. HENSARLING. Mr. Speaker, I am now pleased to yield 2 minutes to 
the gentleman from Illinois (Mr. Hultgren).

                              {time}  1515

  Mr. HULTGREN. Thank you, Chairman Hensarling.
  Mr. Speaker, what we are trying to do here today is to get small 
business jobs growing again, and private equity helps do that. The 
infusion of private investment helps these small businesses create jobs 
so we can get the economy moving again.
  Over the last 15 years, private capital has helped about 23,000 small 
businesses, employing approximately 3 million people. Businesses backed 
by private capital grew jobs 3.5 times faster than other businesses.
  We need to encourage this kind of growth by bringing more 
opportunity, not more regulation. Capital is better spent getting 
people back to work and growing our small businesses than it is tied up 
in compliance costs.
  In Illinois, my home State, more than $200 billion has been invested 
in local companies. Private equity is about skin in the game, and we 
need to keep these resources in the economy, not on the sidelines.
  I ask my colleagues to support H.R. 1105. I am a proud cosponsor and 
believe we should pass this important bill.
  Mr. LYNCH. Mr. Speaker, may I ask how much time is remaining for each 
side.
  The SPEAKER pro tempore. The gentleman from Massachusetts has 16\3/4\ 
minutes remaining. The gentleman from Texas has 12\1/2\ minutes 
remaining.
  Mr. LYNCH. Mr. Speaker, at this time I yield 3 minutes to the 
gentleman from Tennessee (Mr. Cooper).
  Mr. COOPER. I thank my friend, the gentleman from Massachusetts. We 
are seatmates on the Government Reform Committee, and it is a pleasure 
to serve with you. It is also a pleasure to support this bill.
  Mr. Speaker, I want to address my remarks particularly to the new 
Democrats and Blue Dog Democrats because not everyone in this body is 
an expert on private equity or venture capital. This sounds like a 
complicated topic. It sounds technical, but it is really all about 
jobs.
  There is nothing we are asked about more back home than about 
creating jobs. There is nothing we talk more about here than creating 
jobs. Passing this bill is a good way to do that.
  It is easy to get wound up in the details, but the bottom line is 
this: private equity creates jobs. These are funds that have wealthy 
investors investing in them, and they lend their money, they invest in 
growth companies that create jobs.
  My friend from New Jersey mentioned they have already helped create 
7.5 million jobs in America, some 17,000 individual companies. These 
are the companies we try to recruit to our districts. These are the 
companies that we try to grow back home so that more of our good people 
back home can have good jobs.
  The paperwork requirement that, unfortunately, and I think probably 
inadvertently, was put on them by the Dodd-Frank bill needs to be 
removed. SEC registration is not appropriate for these funds. It costs 
between three-quarters of a million dollars and $1 million a year for 
them just to do the paperwork. That is money taken away from job 
creation. That is money that is embalmed in red tape.
  So this is a chance, and we do need to make sure there is a Senate 
companion to this bill once it passes the House. I am proud of my 
colleagues for being involved in a bipartisan job-creation effort 
because folks who really understand venture capital and private equity 
know this is a great way to help create more jobs in this country, by 
removing a little bit of the red tape that probably shouldn't have been 
there to begin with.
  This bill passed the Financial Services Committee last session of 
Congress by voice vote. This shouldn't even be controversial. This year 
the vote was overwhelming, 38-18.
  So I hope my colleagues, particularly among new Democrats and Blue 
Dogs, will understand this is a job-creation issue. This is a 
bipartisan job-creation opportunity.
  H.R. 1105 should pass with overwhelming, bipartisan support. Let's 
get this through the Senate, and let's create more jobs in America.
  I thank the chairman for yielding time, and I hope all my colleagues 
will vote for H.R. 1105.
  Mr. HENSARLING. Mr. Speaker, I now yield 1\1/2\ minutes to the 
gentlewoman from Missouri (Mrs. Wagner).
  Mrs. WAGNER. Mr. Speaker, I want to thank Chairman Hensarling of our 
Financial Services Committee and also the gentleman from Virginia (Mr. 
Hurt), my friend, for their very hard work in bringing this important 
legislation to the floor today.
  Mr. Speaker, today I rise in support of H.R. 1105, the Small Business 
Capital Access and Job Preservation Act. This legislation addresses yet 
another misguided provision of the Dodd-Frank Act that will help ensure 
that private equity maintains its critical role in our economy.
  Private equity firms provide capital to Main Street businesses in 
Missouri and all across our country and, importantly, private equity 
often invests in companies when others are unwilling to do so. These 
investments support nearly 18,000 businesses in the United States that 
employ some 7.5 million workers.
  Unfortunately, the Dodd-Frank Act seeks to make it more difficult for 
private equity to maintain this important economic role. To my 
knowledge, no evidence has been produced which shows that private 
equity was the cause of the 2008 financial crisis, or that it presents 
a systemic risk to our financial system.
  It makes little sense, then, to impose unnecessary and costly red 
tape burdens on private equity investors which will only make it more 
difficult for them to invest in American businesses and create jobs.
  H.R. 1105 is, therefore, a necessary response to an overreach of the 
Dodd-Frank Act and will help support Main Street businesses and jobs 
all throughout our country.
  I am pleased to support this very bipartisan bill and urge my 
colleagues to vote in support of H.R. 1105.
  Mr. LYNCH. Mr. Speaker, I yield myself such time as I may consume.
  I do want to point out, in response to the gentleman from Tennessee's 
remarks about this bill going on voice vote in committee, I just want 
to remind the Members and the public that during that debate there was 
a need for further work on this bill.
  I think, in a moment of bipartisanship, we agreed, both Democrat and 
Republican, to allow the bill to go by voice vote with the promise to 
work on some of those issues going forward. So it was an agreement to 
try to continue to agree and to work on the bill. It was

[[Page H7477]]

not a vote in favor of any particular provisions within this bill.
  There has been a lot of talk here about the risks that don't exist, 
and I do want to just point out some of those. As a result of this 
bill, funds investing more than $300 billion a year, much of which is 
the retirement savings of workers like teachers, firefighters, police 
officers, they would no longer be required to provide basic investor 
protections.
  Specifically, H.R. 1105 would deprive investors of basic disclosures 
about an employee of a fund adviser who, for instance, violated 
securities law, or the adviser's businesses practices, its fees, any 
conflict of interest on the part of that adviser.
  It would also eliminate a compliance program and code of ethics 
within the bill, within Dodd-Frank, and would eliminate the need for a 
chief compliance officer for each fund manager.
  H.R. 1105, the bill under consideration here, would also prevent the 
SEC from conducting compliance exams of private equity fund adviser, 
even though SEC Chairman Mary Jo White notes that the Commission has 
already uncovered issues such as unlawful pay-to-play schemes, insider 
trading that we have all read about recently, conflicts of interest, 
valuation issues, and misappropriation of assets.
  I want to talk about some of these since there has been a complete 
dismissal of any risk here. I think the record speaks to the risk.
  The SEC has brought several enforcement actions against private 
equity firms. While the defendants do not necessarily represent all 
private equity firms, they do highlight the need for a strong police 
officer with the authority to examine all private equity advisers.
  Capital formation relies on investor confidence in the underlying 
assets; and without registration with the SEC, investors will no longer 
have a cop on the beat that can enforce the rule of law, reducing 
investor demand.
  In Knelman, for example here, there have been broad violations 
related to fraud, custody, compliance, and reporting. In Knelman Asset 
Management Group, the SEC found that registered private equity fund-of-
funds adviser Knelman Asset Management Group, LLC, and Irving P. 
Knelman, KAMG's managing director, chief executive officer, and former 
CCO, violated the Advisers Act's custody, antifraud, compliance, 
reporting, and books-and-records provisions.
  In insider trading enforcement, the Gowrish insider trading case 
involved an individual who allegedly stole confidential acquisition 
information, TPG Capital, and sold that information to two friends who 
made $500,000 in illicit trading profits.
  Valuation related enforcement actions, the Oppenheimer/Brian 
Williamson matters concern an investment adviser and portfolio manager 
who misrepresented material details about his valuation methodology to 
his investors.
  Recently, the Commission filed a case against Yorkville Advisors, 
where Yorkville allegedly inflated the values of certain liquid assets. 
While Yorkville managed hedge funds, the valuation issues are very 
similar to ones we see in private equity.
  Finally, the KCAP valuation case involved alleged overstatements of 
the value of certain debt securities and CLOs held in the investment 
portfolio, highlighting the division and AMU's emphasis on pursuing 
valuation cases.
  And in the Ranieri Partners case, the SEC also found that an 
investment manager knowingly used a sanctioned, unregistered broker-
dealer to solicit capital for a pooled investment vehicle.
  So all of these illegal activities would be made unavailable to 
private equity investors under this bill. That is what the risk is. 
That is not fiction. Those are actual cases that the SEC has introduced 
enforcement actions on. So there is real risk here for investors and 
for the markets themselves.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I yield myself 30 seconds to say that 
the gentleman from Massachusetts sets up a straw man and then knocks it 
down. The activities that he describes as illegal continue to be 
illegal, and I would say that private equity funds provide extensive 
reporting to investors, including audited annual financial statements.
  Private fund equity advisers are subject to the antifraud provisions 
of the Investment Advisors Act of 1940, whether they are registered or 
not, and fund offerings are subject to the antifraud provisions of the 
Securities Act of 1933.
  The real choice becomes, are we going to get even greater protections 
for millionaire investors, or are we going to help struggling single 
moms trying to find a job in this economy?
  Mr. Speaker, at this time I am happy to yield 2 minutes to the 
gentleman from Ohio (Mr. Stivers).
  Mr. STIVERS. Mr. Speaker, I would like to thank the gentleman from 
Texas for yielding time.
  The Small Business Capital Access and Job Preservation Act is an 
important bill that I believe will allow more capital to go and flow to 
small business so they can create jobs.
  You know, at a time when we have 7.3 percent unemployment, and 
underemployment over 10 percent, we have a need for more capital to 
flow into our businesses so they can create jobs.
  Meanwhile, the Dodd-Frank Act created burdensome new SEC registration 
on private equity firms but, as the gentleman from Connecticut said 
earlier, not on venture capital firms that do exactly the same thing. 
So, in fact, I would argue that venture capital firms have more risk 
than private equity.
  There already are important protections, consumer protections, around 
private equity. You have to be a sophisticated, accredited investor, 
and there is already important fraud detection and fraud enforcement 
actions that are available to the SEC in the cases of these investors 
being taken advantage of.
  So at a time when private equity is helping provide over 6 million 
jobs in America, we should be doing everything we can to actually 
encourage more activity by private equity, to encourage more jobs in 
America, not burdening them with big regulations.
  I want to just make four quick points. These middle-market private 
equity firms, like we have in towns like Columbus, Ohio, where I live, 
contribute a lot toward job creation, but not a lot toward systemic 
risk.
  And the compliance costs for these smaller firms in towns like 
Columbus, Ohio, will be especially high as a percentage; and it could 
drive many of them out of business.
  Many of these firms that manage both SBIC and non-SBIC funds already 
face multiple layers of regulation.
  And the fourth point is many of these investment adviser rules are 
not really pertinent to private equity funds.

                              {time}  1530

  So I stand in support of the Small Business Capital Access and Job 
Preservation Act. I want to thank the gentleman from Virginia, 
Representative Hurt, for his hard work on this. I think it is a win for 
job creation, and I urge all my colleagues to support it.
  Mr. LYNCH. Mr. Speaker, I yield myself 2 minutes.
  We need not worry about small firms in this. They are already exempt 
under this bill. They are already exempt. So the concerns about small 
firms being covered by this, they are already exempt, number one.
  Number two, the other scenario that has been posited here is that 
somehow, by allowing private equity firms the right to keep secret--or 
to refuse to disclose that their employees have been prosecuted for 
violating securities laws, by allowing that to remain undisclosed, that 
somehow that is going to help some single mom go to work, I don't think 
that is a rational assumption.
  Mr. Speaker, I will now enter into the Record letters from the 
following organizations who are all opposed to this bill: Americans for 
Financial Reform, the Council of Institutional Investors, the North 
American Securities Administrators Association, and a Statement of 
Administration Policy from the Obama administration.
  I reserve the balance of my time.

                                                     Americans for


                                             Financial Reform,

                                                   Washington, DC.
       Dear Representative: On behalf of Americans for Financial 
     Reform, we are writing to express our opposition to HR 1105. 
     Contrary to its title, this bill is not designed to benefit 
     small business. Instead, it would exempt private equity fund 
     advisers--who include some of the wealthiest and most 
     significant entities on Wall Street--from basic reporting 
     requirements designed to help regulators

[[Page H7478]]

     monitor systemic risk in the financial system and protect 
     investors and the public.
       Prior to the Dodd-Frank Act, hedge and private equity funds 
     received almost no regulatory monitoring, despite the fact 
     that combined they manage some $3 trillion in assets and 
     played a significant intermediary role in the financial 
     crisis. Section 404 of the Dodd-Frank Act created more 
     transparency for this previously dark portion of the markets, 
     by requiring advisers to hedge and private equity funds to 
     report basic financial information relevant to systemic risk 
     to the Securities and Exchange Commission (SEC). The 
     experience of the 2008 crisis--where risks emerged from parts 
     of the markets not being monitored by regulators--clearly 
     demonstrates the importance of ensuring that regulators can 
     track financial risks wherever they originate.
       The Section 404 reporting requirements as implemented by 
     the SEC are far from onerous. All advisers with below $150 
     million in assets under management are completely exempted, 
     and advisers with up to $1.5 billion in assets under 
     management must report only limited and basic information 
     once per year. Advisers to large private equity funds are 
     required to respond only once per year (advisers to other 
     large funds report quarterly).
       HR 1105 would exempt almost all private equity fund 
     advisers from reporting requirements to the Securities and 
     Exchange Commission. The sole requirement for the exemption 
     is that the fund must not have outstanding borrowings that 
     exceed twice the fund's invested capital. But this 
     requirement places little if any real limitation on the 
     exemption, since the great majority of borrowing connected 
     with private equity activity is conducted through portfolio 
     companies, not at the fund level. (That is, companies owned 
     by private equity funds borrow large amounts as the direction 
     of the fund, but the fund itself rarely borrows a great 
     deal).
       It is particularly distressing that Congress would consider 
     granting this exemption at a time when concern is growing 
     among regulators and market observers about risks created by 
     a possible bubble in the leveraged loan market, which is 
     dominated by loans sponsored by private equity firms. Several 
     warnings have been issued recently by regulators concerning 
     the risks being created in these markets. As Moody's 
     investor's service has stated:
       ``Private equity firms have been exploiting investors'' 
     willingness to lend to speculative-grade companies . . . 
     Higher yields are drawing investors to riskier structures at 
     a time when interest rates remain at historical lows.''
       Since leveraged loans are also being sold to small retail 
     investors, a bubble could impact both the stability of the 
     broader financial system and the retirement savings of retail 
     investors. The situation in the leveraged loan market clearly 
     demonstrates the connection between private equity activity 
     and important risks to financial stability and to investors.
       An additional source of concern is the danger that the 
     exemption granted in HR 1105 could too easily be exploited to 
     reach beyond private equity firms alone. The distinction 
     between a hedge fund and a private equity fund is not a 
     formal legal distinction, it is simply a differentiation 
     between general investment strategies. While HR 1105 grants 
     the SEC the ability to define more precisely what a private 
     equity fund is, if that definition is at all overbroad then 
     it could be taken advantage of by a wide range of hedge funds 
     in order to avoid oversight.
       Private equity funds already receive significant subsidies 
     through the tax system, as they are major beneficiaries of 
     the favorable treatment for `carried interest', as well as 
     the general tax subsidy to debt costs. It is totally 
     inappropriate to also grant such funds a blanket exemption 
     from even the limited and basic Dodd-Frank regulatory 
     reporting requirements. Such a blanket exemption would make 
     it more difficult for regulators to monitor systemic risk and 
     risks to investors, solely in order to exempt wealthy 
     managers of large private equity funds from a minor 
     administrative task. HR 1105 should be rejected.
       Thank you for your consideration. For more information 
     please contact AFR's Policy Director, Marcus Stanley.
           Sincerely,
                                   Americans for Financial Reform.

      Following Are the Partners of Americans for Financial Reform

       All the organizations support the overall principles of AFR 
     and are working for an accountable, fair and secure financial 
     system. Not all of these organizations work on all of the 
     issues covered by the coalition or have signed on to every 
     statement.;
       A New Way Forward; AFL-CIO; AFSCME; Alliance For Justice; 
     American Income Life Insurance; American Sustainable Business 
     Council; Americans for Democratic Action, Inc; Americans 
     United for Change; Campaign for America's Future; Campaign 
     Money; Center for Digital Democracy; Center for Economic and 
     Policy Research; Center for Economic Progress; Center for 
     Media and Democracy; Center for Responsible Lending; Center 
     for Justice and Democracy.
       Center of Concern; Center for Effective Government; Change 
     to Win; Clean Yield Asset Management; Coastal Enterprises 
     Inc.; Color of Change; Common Cause; Communications Workers 
     of America; Community Development Transportation Lending 
     Services; Consumer Action; Consumer Association Council; 
     Consumers for Auto Safety and Reliability; Consumer 
     Federation of America; Consumer Watchdog; Consumers Union.
       Corporation for Enterprise Development; CREDO Mobile; CTW 
     Investment Group; Demos; Economic Policy Institute; Essential 
     Action; Greenlining Institute; Good Business International; 
     HNMA Funding Company; Home Actions; Housing Counseling 
     Services; Home Defender's League; Information Press; 
     Institute for Global Communications; Institute for Policy 
     Studies: Global Economy Project.
       International Brotherhood of Teamsters; Institute of 
     Women's Policy Research; Krull & Company; Laborers' 
     International Union of North America; Lawyers' Committee for 
     Civil Rights Under Law; Main Street Alliance; Move On; NAACP; 
     NASCAT; National Association of Consumer Advocates; National 
     Association of Neighborhoods; National Community Reinvestment 
     Coalition; National Consumer Law Center (on behalf of its 
     low-income clients); National Consumers League; National 
     Council of La Raza.
       National Council of Women's Organizations; National Fair 
     Housing Alliance; National Federation of Community 
     Development Credit Unions; National Housing Resource Center; 
     National Housing Trust; National Housing Trust Community 
     Development Fund; National NeighborWorks Association; 
     National Nurses United; National People's Action; National 
     Urban League; Next Step; OpenTheGovernment.org; Opportunity 
     Finance Network; Partners for the Common Good; PICO National 
     Network.
       Progress Now Action; Progressive States Network; Poverty 
     and Race Research Action Council; Public Citizen; Sargent 
     Shriver Center on Poverty Law; SEIU; State Voices; Taxpayer's 
     for Common Sense; The Association for Housing and 
     Neighborhood Development; The Fuel Savers Club; The 
     Leadership Conference on Civil and Human Rights; The Seminal; 
     TICAS; U.S. Public Interest Research Group; UNITE HERE.
       United Food and Commercial Workers; United States Student 
     Association; USAction; Veris Wealth Partners; Western States 
     Center; We the People Now; Woodstock Institute; World Privacy 
     Forum; UNET; Union Plus; Unitarian Universalist for a Just 
     Economic Community.

                   List of State and Local Affiliates

       Alaska PIRG; Arizona PIRG; Arizona Advocacy Network; 
     Arizonans For Responsible Lending; Association for 
     Neighborhood and Housing Development NY; Audubon Partnership 
     for Economic Development LDC, New York NY; BAC Funding 
     Consortium Inc., Miami FL; Beech Capital Venture Corporation, 
     Philadelphia PA; California PIRG; California Reinvestment 
     Coalition; Century Housing Corporation, Culver City CA; 
     CHANGER NY; Chautauqua Home Rehabilitation and Improvement 
     Corporation (NY); Chicago Community Loan Fund, Chicago IL.
       Chicago Community Ventures, Chicago IL; Chicago Consumer 
     Coalition; Citizen Potawatomi CDC, Shawnee OK; Colorado PIRG; 
     Coalition on Homeless Housing in Ohio; Community Capital 
     Fund, Bridgeport CT; Community Capital of Maryland, Baltimore 
     MD; Community Development Financial Institution of the Tohono 
     O'odham Nation, Sells AZ; Community Redevelopment Loan and 
     Investment Fund, Atlanta GA; Community Reinvestment 
     Association of North Carolina; Community Resource Group, 
     Fayetteville A; Connecticut PIRG; Consumer Assistance 
     Council; Cooper Square Committee (NYC).
       Cooperative Fund of New England, Wilmington NC; Corporacion 
     de Desarrollo Economico de Ceiba, Ceiba PR; Delta Foundation, 
     Inc., Greenville MS; Economic Opportunity Fund (EOF), 
     Philadelphia PA; Empire Justice Center NY; Empowering and 
     Strengthening Ohio's People (ESOP), Cleveland OH; 
     Enterprises, Inc., Berea KY; Fair Housing Contact Service OH; 
     Federation of Appalachian Housing; Fitness and Praise Youth 
     Development, Inc., Baton Rouge LA; Florida Consumer Action 
     Network; Florida PIRG; Funding Partners for Housing 
     Solutions, Ft. Collins CO; Georgia PIRG.
       Grow Iowa Foundation, Greenfield IA; Homewise, Inc., Santa 
     Fe NM; Idaho Nevada CDFI, Pocatello ID; Idaho Chapter, 
     National Association of Social Workers; Illinois PIRG; Impact 
     Capital, Seattle WA; Indiana PIRG; Iowa PIRG; Iowa Citizens 
     for Community Improvement; JobStart Chautauqua, Inc., 
     Mayville NY; La Casa Federal Credit Union, Newark NJ; Low 
     Income Investment Fund, San Francisco CA; Long Island Housing 
     Services NY; MaineStream Finance, Bangor ME.
       Maryland PIRG; Massachusetts Consumers' Coalition; 
     MASSPIRG; Massachusetts Fair Housing Center; Michigan PIRG; 
     Midland Community Development Corporation, Midland TX; 
     Midwest Minnesota Community Development Corporation, Detroit 
     Lakes MN; Mile High Community Loan Fund, Denver CO; Missouri 
     PIRG; Mortgage Recovery Service Center of L.A.; Montana 
     Community Development Corporation, Missoula MT; Montana PIRG; 
     Neighborhood Economic Development Advocacy Project; New 
     Hampshire PIRG.
       New Jersey Community Capital, Trenton NJ; New Jersey 
     Citizen Action; New Jersey PIRG; New Mexico PIRG; New York 
     PIRG; New York City Aids Housing Network; New Yorkers for 
     Responsible Lending; NOAH Community Development Fund, Inc., 
     Boston MA; Nonprofit Finance Fund, New York NY; Nonprofits 
     Assistance Fund, Minneapolis M;

[[Page H7479]]

     North Carolina PIRG; Northside Community Development Fund, 
     Pittsburgh PA; Ohio Capital Corporation for Housing, Columbus 
     OH; Ohio PIRG.
       OligarchyUSA; Oregon State PIRG; Our Oregon; PennPIRG; 
     Piedmont Housing Alliance, Charlottesville VA; Michigan PIRG; 
     Rocky Mountain Peace and Justice Center, CO; Rhode Island 
     PIRG; Rural Community Assistance Corporation, West Sacramento 
     CA; Rural Organizing Project OR; San Francisco Municipal 
     Transportation Authority; Seattle Economic Development Fund; 
     Community Capital Development; TexPIRG.
       The Fair Housing Council of Central New York; The Loan 
     Fund, Albuquerque NM; Third Reconstruction Institute NC; 
     Vermont PIRG; Village Capital Corporation, Cleveland OH; 
     Virginia Citizens Consumer Council; Virginia Poverty Law 
     Center; War on Poverty--Florida; WashPIRG; Westchester 
     Residential Opportunities Inc.; Wigamig Owners Loan Fund, 
     Inc., Lac du Flambeau WI; WISPIRG.

                            Small Businesses

       Blu; Bowden-Gill Environmental; Community MedPAC; 
     Diversified Environmental Planning; Hayden & Craig, PLLC; Mid 
     City Animal Hospital, Pheonix AZ; The Holographic Repatteming 
     Institute at Austin; UNETO.
                                  ____

                                                        Council of


                                      Institutional Investors,

                                 Washington, DC, December 3, 2013.
     Hon. John Boehner,
     Speaker of the House, House of Representatives, Washington, 
         DC.
     Hon. Nancy Pelosi,
     House Minority Leader, House of Representatives, Washington, 
         DC.
       Dear Mr. Speaker and Minority Leader Pelosi: I am writing 
     on behalf of the Council of Institutional Investors 
     (Council), a nonprofit association of corporate, union, and 
     public pension funds, foundations, and endowments, with 
     combined assets that exceed $3 trillion. Most member funds 
     are major shareowner with a duty to protect the retirement 
     assets of millions of American workers. Significantly 
     affected by the financial crisis, Council member funds have a 
     strong interest in meaningful regulatory reform.
       The purpose of this letter is to share with you the 
     Council's views on The Small Business Capital Access and Job 
     Preservation Act (H.R. 1105) that the House of 
     Representatives is scheduled to consider in open session 
     tomorrow, December 4, 2013. Our views are in part informed by 
     the findings of the Investors' Working Group (IWG). The IWG 
     was an independent nonpartisan commission of industry experts 
     sponsored in 2009 by the CFA Institute and the Council to 
     provide an investor perspective on ways to improve U.S. 
     financial system regulation. As you may be aware, many of the 
     IWG's findings and recommendations were adopted by the 111th 
     Congress during the development of the Dodd-Frank Wall Street 
     Reform and Consumer Protection Act (Dodd-Frank Act).
       The Council opposes the Small Business Capital Access and 
     Job Preservation Act. We strongly believe that all private 
     equity advisors available to U.S. investors should be subject 
     to oversight and registration with the Securities and 
     Exchange Commission (SEC), and we concur with SEC Chairman 
     White's letter to the House Financial Services Committee 
     leadership in that ``our markets would not be well-served'' 
     by such a decrease in the SEC's authority.
       Private equity funds play a significant role in the economy 
     as a source of capital, as an investment vehicle, and as a 
     growing job provider. However, prior to the Dodd-Frank Act 
     many private equity fund advisors operated unchecked--exempt 
     from regulation, compliance examinations, disclosure 
     requirements, and unencumbered by leverage limits.
       By requiring private equity fund advisors to register with 
     the SEC and abide by disclosure requirements, the Dodd-Frank 
     Act adds a meaningful layer of protection for investors. 
     Registration ensures that investors have access to basic 
     information about the adviser's compensation, disciplinary 
     history, and investment strategies; it safeguards against the 
     possibility for an advisor's conflict of interest; it ensures 
     that advisers establish formal compliance programs and act in 
     the best interests of their clients; and it allows the SEC to 
     collect data and examine advisers for compliance weaknesses 
     and potential fraud. By eliminating the registration and 
     reporting requirements on private fund advisors, H.R. 1105 
     would deny investors in private equity funds these important 
     protections, and it would restrict the SEC from garnering 
     regulatory information critical for assessing systemic risk 
     in a comprehensive manner.
       Furthermore, H.R. 1105 does not define what constitutes a 
     ``private equity fund,'' but instead requires the SEC to 
     develop specific parameters for an otherwise ambiguous asset 
     class within a mere six months of passage. We believe it may 
     be imprudent to exempt a broad asset class without first 
     understanding the boundaries of such an exemption, especially 
     considering the notion widely held by many industry experts 
     that ``there is no fundamental legal distinction between 
     private equity funds, hedge funds and venture capital funds . 
     . . there is no telling how broad or narrow [the SEC's] 
     definition will be.''
       Finally, we note that the Dodd-Frank Act also creates a 
     special exemption from SEC registration for venture capital 
     funds under $150 million. H.R. 1105 attempts to create a 
     similar exemption for private equity funds, yet the Bill 
     fails to include size limits akin to those in place for 
     venture capital funds. It is similarly imprudent to exempt 
     large private equity funds from the protections typically 
     afforded to investors via SEC registration.
       Thank you for considering our members' views in connection 
     with this critical financial regulatory issue. We look 
     forward to continuing to work with you to restore confidence 
     in our economy by improving the transparency and oversight of 
     the U.S. financial system.
       If you have any questions, or would like additional 
     information regarding our views please feel free to contact 
     me. Additionally, General Counsel Jeff Mahoney is available.
           Sincerely,
     Jordan Lofaro.
                                  ____

                                         North American Securities


                             Administrators Association, Inc.,

                                 Washington, DC, December 4, 2013.
     Re The Small Business Capital Access and Job Preservation Act 
         (H.R. 1105).

     Hon. John Boehner,
     Speaker, House of Representatives, The Capitol, Washington, 
         DC.
     Hon. Nancy Pelosi,
     Minority Leader, House of Representatives, The Capitol, 
         Washington, DC.
       Dear Speaker Boehner and Leader Pelosi: On behalf of the 
     North American Securities Administrators Association (NASAA), 
     I'm writing to reiterate concerns the association previously 
     expressed regarding H.R. 1105, the ``Small Business Capital 
     Access and Job Preservation Act,'' which the House is 
     scheduled to consider later this week.
       Prior to enactment of the Dodd-Frank Wall Street Reform and 
     Consumer Protection Act (Dodd-Frank Act), investment advisers 
     to private funds with fewer than 15 clients were not required 
     to register with the U.S. Securities and Exchange Commission 
     (SEC) and precious little was known about the capital market 
     activities of these funds and other shadow banking actors.
       Title IV of the Dodd-Frank Act closed this regulatory gap 
     by requiring nearly all advisers to private funds with more 
     than $150 million in regulatory assets under management 
     (RAUM) within the United States to register with the SEC. 
     Advisers to private funds with less than $150 million in RAUM 
     were exempted from SEC registration but required to report 
     basic data and risk metrics on a confidential basis. The SEC 
     finalized the rules to implement the registration and 
     reporting requirements in November 2011 and, for the two 
     years since, advisers to private funds have been subject to 
     the regulatory oversight of the SEC.
       Private fund advisers wishing to return to the shadows of 
     the unregulated financial services industry have argued that 
     the new registration and reporting requirements are 
     burdensome and provide little benefit in monitoring systemic 
     risk within our financial markets. While any regulation 
     entails some measure of cost, the costs in this context are 
     specifically scaled to the size of the adviser-limited, basic 
     disclosure on the Form ADV for exempt reporting advisers and 
     scaled-down disclosure on the Form PF for certain registered 
     private equity fund advisers. Only private fund advisers 
     managing at least a billion dollars in specific asset class 
     funds are required to complete the more detailed sections of 
     Form PF. For those large firms handling billions of dollars, 
     which is the case for approximately a third of all private 
     equity funds, cost arguments become specious at best.
       In terms of systemic risk, private equity fund advisers 
     reported managing approximately $1.6 trillion as of May 2013. 
     While individual fund outcomes are not expected to cause 
     catastrophic loss, most would agree the market as a whole is 
     sizeable enough to warrant some oversight. Those in doubt 
     should consider a number of recent SEC enforcement actions 
     that illustrate the kinds of misconduct that were occurring 
     in the unregulated private equity space prior to the SEC 
     oversight before taking any steps to cloak that market in 
     darkness once more.
       Investor confidence in our markets is strengthened through 
     prudent regulations that bring transparency to the 
     marketplace and promote accountability. Any concerns 
     regarding the structure or costs associated with the SEC's 
     regulation of advisers to private equity firms is best 
     addressed to the SEC in rulemaking that can adjust the 
     reporting, registration, and examination requirements 
     accordingly.
       For the reasons advanced previously and set forth above, we 
     respectfully urge you to oppose H.R. 1105 in its present 
     form. Should you have any questions, please feel free to 
     contact me or Michael Canning, NASAA's Director of Policy.
           Sincerely,
                                                    Russ Iuculano,
     NASAA Executive Director.
                                  ____


                   Statement of Administration Policy


   H.R. 1105--Small Business Capital Access and Job Preservation Act

           (Rep. Hurt, R-VA, and 12 cosponsors, Dec. 3, 2013)

       The Administration strongly opposes passage of H.R. 1105, 
     which would amend the Investment Advisers Act of 1940 to 
     exempt nearly all private equity fund advisers from 
     registration. The legislation effectively provides a blanket 
     registration and reporting

[[Page H7480]]

     exemption for private equity funds, undermining advances in 
     investor protection and regulatory oversight implemented by 
     the Securities and Exchange Commission (SEC) under Title IV 
     of the Dodd-Frank Wall Street Reform and Consumer Protection 
     Act (Wall Street Reform).
       The Administration is committed to building a safer, more 
     stable financial system. H.R. 1105 represents a step 
     backwards from the progress made to date, given that private 
     equity fund advisers have been filing reports with the SEC 
     for over a year. The bill's passage would deny investors 
     access to important information intended to increase 
     transparency and accountability and to minimize conflicts of 
     interest. Moreover, H.R. 1105 would exempt private equity 
     funds from the disclosure requirements that the Congress laid 
     out in Wall Street Reform to allow regulators to assess 
     potential systemic risks.
       Private equity funds are already subject to less stringent 
     reporting requirements compared to other types of private 
     funds and to an annual, rather than quarterly, filing 
     requirement. In addition, private fund advisers with under 
     $150 million in assets under management are exempted from 
     registration and subject only to recordkeeping and reporting 
     requirements.
       If the President were presented with H.R. 1105, his senior 
     advisors would recommend that he veto the bill.

  Mr. HENSARLING. Mr. Speaker, I am very pleased now to yield 1 minute 
to the gentleman from Tennessee (Mr. Fincher).
  Mr. FINCHER. I thank the chairman for yielding.
  Mr. Speaker, strong job creation is the foundation for a healthy 
economy, while overregulation kills jobs. Private equity provides much-
needed capital and better investment returns to pension plans, 
university endowments, charitable foundations, and other investors than 
if they simply deposited their money in a bank. The various forms of 
capital provided by private equity in our economy result in more 
resources for companies to operate their firms, expand their 
facilities, and create more jobs.
  H.R. 1105, sponsored by my good friend from Virginia (Mr. Hurt), 
would help expand private equity by relieving certain advisers' private 
equity funds from the burdensome and unnecessary process of registering 
with the SEC. This bill would simply allow advisers and private equity 
firms to do what they do best: invest in promising companies in order 
to help them expand and create more jobs.
  Let's support job growth in this country by voting in favor of H.R. 
1105.
  Mr. LYNCH. Mr. Speaker, could I ask how much time remains on each 
side.
  The SPEAKER pro tempore. The gentleman from Massachusetts has 7\3/4\ 
minutes remaining, and the gentleman from Texas has 7\1/2\ minutes 
remaining.
  Mr. LYNCH. I yield 2 minutes to the gentlelady from New York (Mrs. 
Maloney).
  Mrs. CAROLYN B. MALONEY of New York. I thank the gentleman for 
yielding.
  Mr. Speaker, I would like to remind my colleagues that we are still 
recovering from a massive financial crisis that cost this country $16 
trillion, and I would venture to say that we should be more focused on 
protecting investors, not removing investor protections. And I would 
say that all investors deserve to be protected--sophisticated 
investors, retail investors, pension investors. All investors should be 
protected, which is why the Obama administration has come out so 
strongly in opposition to the underlying bill and why the Securities 
and Exchange Commission, whose mission is to protect investors, is so 
adamantly, strongly opposed to this bill.
  Now, I am sympathetic to the point that my colleagues have raised on 
the other side of the aisle and on this side of the aisle that some of 
the reporting and registration requirements are onerous. So let's 
address that. Let's direct the SEC to come forward with simplified 
forms, to do it quickly, within 6 months. Let's save money. Let's 
simplify the process. But let's not remove important investors' 
protections, such as the fiduciary duty to act in the client's best 
interest. What is wrong with that? I think that is a moral 
responsibility, such as the obligation to disclose conflicts of 
interest.
  Now, that is not onerous. How difficult is it to say, yes or no, I 
have not had any conflict of interest? Or if you are advising your 
client to invest in your business, then disclose your conflict of 
interest. What is so onerous about that? That is not onerous. That is 
easy.
  And what is wrong with the obligation to disclose fees? Everyone 
talks about transparency. That is why we are opposing this bill. We 
want it to be transparent, and we want to protect investors.
  The SPEAKER pro tempore. The time of the gentlewoman has expired.
  Mr. LYNCH. I yield the gentlewoman an additional 1 minute.
  Mrs. CAROLYN B. MALONEY of New York. I feel that there are many ways 
that we could address this that would come forward with a strong piece 
of legislation that President Obama could sign into law. Instead, he 
has got a lot of ink in his veto pen, and he has said right out front 
that he would veto this bill.
  Now, if they want to simplify disclosure and registration 
requirements, then let's do that. Let's require the SEC to come forward 
with it. Let's simplify the process and save the cost for small 
businesses. We want to save that cost.
  Honest private equity firms have grown jobs in this country, and it 
is important to grow jobs. It is important to support them in every 
single way. But removing all investor protections, according to the 
Obama administration, would literally assault the safety and soundness 
and the strong financial security that we are trying to build in this 
country.
  What is wrong with protecting investors? That is what we are saying. 
I have an amendment which would do just that, protect the investors but 
simplify the forms and maintain the cost.
  If their goal is to save money for the small firms, then let's do 
that, but let's not erase very important investor protections in the 
process.
  Mr. HENSARLING. Mr. Speaker, I yield myself 1 minute.
  Again, I want to address the gentleman from Massachusetts who, again, 
I believe, sets up a straw man only to knock it down.
  I would urge all Members to actually read the bill. I know that many 
of my Democratic colleagues now have buyer's remorse from not reading 
the 2,000-page ObamaCare bill, but, Mr. Speaker, this is a two-page 
bill, 36 lines.
  And I would say to my friend, the gentleman from Massachusetts, that 
on page 2, that the SEC can ``require investment advisers described in 
paragraph (1) to maintain such records and provide to the Commission 
such annual or other reports as the Commission taking into account fund 
size, governance, investment strategy, risk, and other factors, as the 
Commission determines necessary.''
  So to make the assertion that these records of foul play could never 
exist is simply not true.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. HENSARLING. I yield myself an additional 30 seconds.
  I would say to my friend, the gentlelady from New York who made the 
assertion that the SEC is opposed to this bill, that the SEC has not 
opposed this bill. One member, Mary Jo White, has issued an opinion 
that she does not support the legislation, but the SEC has taken no 
official position.
  With respect to a threatened veto, I don't recall that when my 
Democratic colleagues had the majority here that they refused to pass 
bills simply because President Bush threatened to veto. But I must 
admit, our committee has produced, I believe it is, at least 10 or 11 
bipartisan bills which all received veto threats from a President who 
says he wants to work on a bipartisan basis. This is most regrettable.
  Mr. LYNCH. I yield myself 2 minutes.
  Mr. Speaker, I would now like to enter into the Record statements 
from the following organizations which all oppose H.R. 1105: the AFL-
CIO, California Public Employees' Retirement System, and North American 
Securities Administrators Association.
  And regarding reading the bill, I certainly did read the bill, and my 
point is that the bill does not require public disclosure of those 
matters, as the gentleman points out. It just goes to the Commission. 
So it doesn't go to the public. The public doesn't get the information. 
It stays within the custody of the Commission.
  Mr. HENSARLING. Will the gentleman yield?
  Mr. LYNCH. I yield to the gentleman from Texas.
  Mr. HENSARLING. By definition, it is private equity. It is not a 
public fund.

[[Page H7481]]

  Mr. LYNCH. Reclaiming my time, that is right. But those are public 
investors. They are the ones that need the information.
  Mr. Speaker, I yield the balance of my time to the gentlelady from 
California (Ms. Waters), our ranking member and a real champion of 
America's working families.

 Legislative Proposals to Relieve the Red Tape Burden on Investors and 
                              Job Creators

United States House of Representatives Committee on Financial Services 
  Subcommittee on Capital Markets and Government Sponsored Enterprises

   (Statement of Anne Simpson Senior Portfolio Manager, Investments 
 Director of Global Governance California Public Employees' Retirement 
                         System, May 23, 2013)

       Chairman Garrett, Ranking Member Maloney, and Members of 
     the Committee, on behalf of the California Public Employees' 
     Retirement System (CalPERS), we thank you for convening this 
     hearing. CalPERS is pleased to submit testimony for the 
     record to reassert our strong support for efficient and 
     effective financial regulation, as enacted by the Dodd-Frank 
     Wall Street Reform and Consumer Protection Act (``Dodd-
     Frank'').
       This statement includes a brief overview of CalPERS, 
     including how we benefit from effective financial markets 
     regulation and the role that shareowner rights and corporate 
     governance play in building investor confidence. It also 
     includes a discussion of our views on HR 1135, HR 1105, and 
     HR 1564.


                       Some Background on CalPERS

       CalPERS is the largest public pension fund in the United 
     States with approximately $266 billion in global assets and 
     equity holdings in over 9,000 companies. CalPERS pays out 
     over $14 billion annually in retirement benefits to more than 
     1.6 million public employees, retirees, their families and 
     beneficiaries. This is not only an important source of daily 
     income for those individuals; it also provides a positive 
     economic multiplier to the local economy. We fully understand 
     the virtuous circle between savings, investment and economic 
     growth. That is at the heart of the CalPERS agenda.
       As a significant institutional investor with a long-term 
     investment time horizon, CalPERS fundamentally relies upon 
     the integrity and efficiency of the capital markets. For 
     every dollar that we pay in benefits to our members, 64 cents 
     are generated by investment returns. The financial crisis hit 
     us hard with $70 billion wiped from CalPERS assets. While we 
     are pleased that we have been able to recover these losses 
     over the last several years, we simply cannot afford another 
     drawdown on our fund.
       We rely upon the safety and soundness of capital markets, 
     and more broadly, sustainable economic growth, to provide the 
     long term returns that allow us to meet our liabilities. 
     However, there is still much to be done to bring about smart 
     regulation.
       In our view, smart regulation should be structured as 
     follows:
       First, regulation needs to be complete and coordinated. 
     Innovation in financial markets has led to the development of 
     new financial instruments and pools. Regulation needs to keep 
     pace with financial innovation and the attendant risks in 
     order to be relevant. (Derivatives are an example of that 
     innovation, but it is innovation that has been outside the 
     reach of regulation historically.)
       Second, regulation needs to allow market players to 
     exercise their proper role and responsibilities. Capitalism 
     was designed to allow the providers of finance a market role 
     in allocating investment, and then holding boards accountable 
     for their stewardship of those funds. This is why shareowner 
     rights are vital to the functioning of markets, including the 
     ability of investors to propose candidates to boards of 
     directors (known in short as `proxy access') and to remove 
     directors who fail.
       Third, regulation needs to ensure transparency, so that 
     markets can play their vital role in pricing risk. Timely, 
     relevant and reliable information is the currency of risk 
     management. Those agencies which have a role in channeling 
     that information need to be fit for that purpose. (Credit 
     ratings agencies were found wanting in this regard.)
       Fourth, regulation needs to address conflicts of interest 
     and perverse incentives which can undermine the market's 
     ability to allocate capital effectively. (Short term, risk-
     free compensation for executives has fueled poor decision 
     taking, as one example of this).
       Fifth, regulation needs to ensure it does not prevent 
     institutional investors from financing legitimate strategies, 
     and taking advantage of new opportunities. Regulation is not 
     there to prevent risk taking, it is there to ensure that 
     risks are disclosed, and can be managed.
       Finally, regulation needs to be proportionate. For CalPERS, 
     we balance the additional costs that are required with the 
     potential for financial ruin. To those who question whether 
     we can afford to invest in smart regulation, we reply, how 
     can we afford not to? The financial crisis dealt a crippling 
     blow to many investors, and the underlying sub-prime mortgage 
     scandal triggered widespread loss for ordinary people 
     throughout the country. The devastating impact on the real 
     economy is still with us. The costs of regulation need to be 
     weighed against this loss.
       We see smart regulation as an investment in safety and 
     soundness of financial markets which generate the vast bulk 
     of the returns to our fund. Smart regulation is an investment 
     in the effective functioning of capital markets, which is 
     critical not just to our fund, but to the recovery of the 
     wider economy.


                               H.R. 1135

       It is widely acknowledged that the 2008 financial crisis 
     represented a massive failure of oversight. Too many CEOs 
     pursued excessively risky strategies or investments that 
     bankrupted their companies or weakened them financially for 
     years to come. Boards of directors were often complacent, 
     failing to challenge or rein in reckless senior executives 
     who threw caution to the wind. And too many boards approved 
     executive compensation plans that rewarded excessive risk 
     taking.
       Accountability is critical to motivating people to do a 
     better job in any organization or activity. An effective 
     board of directors can help every business understand and 
     control its risks, thereby encouraging safety and stability 
     in our financial system and reducing the pressure on 
     regulators, who, even if adequately funded, will be unlikely 
     to find and correct every problem. Unfortunately, long-
     standing inadequacies in investor protection have limited 
     shareowners' ability to hold boards accountable.
       Fortunately, Dodd-Frank contains a number of reforms that 
     when fully implemented and effectively enforced will provide 
     long-term investors like CalPERS with better tools, including 
     better information, to hold directors more accountable going 
     forward. These included a provision that requires additional 
     disclosure involving the ratio between the CEO's total 
     compensation and the median total compensation for all the 
     other company employees. To be clear, section 953(b) as 
     currently enacted is unartful and its critics properly 
     identify a number of potential ambiguities. However, we 
     strongly support the spirit of the disclosure and believe 
     that the SEC has the regulatory flexibility to provide 
     companies with guidance on how to comply with this section.
       However, if Congress believes the SEC is unable to 
     implement section 953(b) as currently written, we would 
     encourage Congress to amend the section and retain the 
     requirement. HR 1135 seeks only to repeal this requirement 
     and for the reasons discussed above, we would strongly 
     discourage the committee from advancing this bill.


                               H.R. 1105

       Prior to the enactment of Dodd-Frank, we testified that the 
     fundamental risk posed by private pools of capital is that 
     they can choose to operate outside the regulatory structure 
     of the United States. CalPERS Chief Investment Officer Joe 
     Dear warned the Senate Securities Subcommittee of the overall 
     risks to the financial system ``when these entities operate 
     in the shadows of the financial system'' and when 
     ``regulatory authorities lack basic information about 
     exposures, leverage ratios, counterparty risks and other 
     information.'' Less than three years after the enactment of 
     Dodd-Frank, these risks have been mitigated by the 
     requirement for private fund advisors to register and be 
     subject to reasonable regulation.
       Although HR 1105 would only exempt funds with low leverage 
     ratios, it would constitute a large step away from the 
     comprehensive regulation of market participants that Dodd-
     Frank sought to impose. Dodd-Frank has already provided small 
     private fund advisors an exemption to registration and 
     regulation, and we believe it is therefore unnecessary for 
     large, albeit unleveraged, fund advisors.


                               H.R. 1564

       The issues surrounding auditor independence and audit firm 
     rotation are of great importance to CalPERS.
       Clearly, auditors play a vital role in the integrity of 
     financial reporting and the efficiency of the capital 
     markets. As a long-term investor, and a strong advocate of 
     reform we believe independence of an auditor is critical to 
     investor confidence and the stability and effective 
     functioning of the capital markets. It is the important role 
     of auditors that brings standardization and discipline to 
     corporate accounting which in turn enhances investor 
     confidence.
       CalPERS Global Principles of Accountable Corporate 
     Governance (Principles) highlight the importance of auditor 
     independence requiring audit committees to assess the 
     independence of their external auditor on an annual basis. 
     Also, as part of the engagement we recommend that audit 
     committees require written disclosure from the external 
     auditor of:
       all relationships between the registered public accounting 
     firm or any affiliates of the firm and the potential audit 
     clients or persons in a financial reporting oversight role 
     that may have a bearing on independence;
       the potential effects of these relationships on the 
     independence in both appearance and fact of the registered 
     public accounting firm; and
       the substance of the registered accounting firm's 
     discussion with the audit committee.
       CalPERS expressly supported mandatory rotation in the wake 
     of the scandals which led to the Sarbanes-Oxley Act of 2002. 
     CalPERS communicated its view to the European Parliament 
     Committee on Legal Affairs, that ``mandatory auditor rotation 
     is an effective means of increasing auditor independence''. 
     CalPERS Principles state that

[[Page H7482]]

     ``Audit Committees should promote the rotation of the auditor 
     to ensure a fresh perspective and review of the financial 
     reporting framework.''
       We believe that audit committees should endorse expanding 
     the pool of auditors for the annual audit to help improve 
     market competition and minimize the concentration of audit 
     firms from which to engage for audit services. We support 
     audit committees having the ability to determine audit 
     independence by requiring auditors to provide 3 prior years 
     of activities, relationships and services (including tax 
     services) with the company, affiliate of the company and 
     persons in financial reporting oversight roles that may 
     impact the independence of the audit firm.
       Additionally, we would note that the Public Company 
     Accounting Oversight Board's (PCAOB) Investor Advisory Group 
     (IAG), of which I am a member, urged the agency to consider 
     firm rotation in the context of lessons learned from the 
     financial crisis. The PCAOB IAG indicated that the purpose of 
     an audit is to provide confidence to investors that an 
     independent set of eyes have looked at the numbers reported 
     by management and objectively without bias determined they 
     can indeed be relied upon. If investors' confidence in this 
     process is diminished or lost, the benefits of the audit and 
     its costs may be questioned.
       Over the last two years, the PCAOB has thoughtfully 
     reviewed auditor independence and mandatory rotation, holding 
     a series of roundtables on the issues. We note the issue of 
     mandatory rotation has been addressed by the European 
     Commission (EC). The EC has voted to draft law to open up the 
     European Union audit services market and improve audit 
     quality and transparency including mandatory rotation of the 
     auditor whereby an auditor may inspect a company's books for 
     a maximum of 14 years. We believe that it is essential and 
     beneficial for the PCAOB to collaborate with non-U.S. 
     regulators and standard-setters on this matter.
       Ultimately, we believe that audit committees are in the 
     best position to select the auditor. However, we are strong 
     supporters of the PCAOB and have faith in their thoughtful 
     approach to the regulation of the audit profession. If they 
     ultimately conclude that mandatory rotation is appropriate, 
     we will support this judgment consistent with our support for 
     the position taken by the EC. Accordingly, because HR 1564 
     would eliminate the PCAOB's discretion in this area, we 
     cannot support the measure.


                       Regulatory Agency Funding

       Finally, although the hearing has not focused directly on 
     the funding for the SEC, we would be remiss if we didn't 
     highlight the vital role of the SEC and PCAOB in fostering 
     capital formation and protecting investors in financial 
     markets. CalPERS has long recognized that for financial 
     regulators to achieve their stated objectives, they must be 
     well-managed, well-staffed and that means they must be well-
     funded. Rules without enforcement are little better than 
     useless. In 2001, CalPERS testified in support of legislation 
     that would put SEC staff salaries on par with other financial 
     regulators and was pleased that pay-parity provisions were 
     enacted into law that year. More recently, we called for 
     lawmakers to provide the SEC and U.S. Commodity Futures 
     Trading Commission (CFTC) with stable, independent funding. 
     Although no such mechanisms were included in Dodd-Frank, it 
     remains imperative that the SEC and CFTC be given sufficient 
     resources to effectively police the U.S. capital and futures 
     markets.
       We believe the SEC FY2014 funding request reflects the 
     importance of their traditional core responsibility, as well 
     as the new authority granted it in Dodd-Frank, and we urge 
     you to support their funding requests.
       Thank you in advance for considering the views of a long-
     term investor like CalPERS when you decide on how to proceed 
     with these important issues.
                                  ____

                                         North American Securities


                             Administrators Association, Inc.,

                                    Washington, DC, June 18, 2013.
     Re H.R. 1105, the Small Business Capital and Job Preservation 
         Act.

     Hon. Jeb Hensarling,
     Chairman, House Committee on Financial Services, Rayburn 
         House Office Building, Washington DC.
     Hon. Maxine Waters,
     Ranking Member, House Committee on Financial Services, 
         Rayburn House Office Building, Washington DC.
       Dear Chairman Hensarling and Ranking Member Waters: On 
     behalf of the North American Securities Administrators 
     Association (NASAA), I'm writing to express concerns with 
     H.R. 1105, the Small Business Capital and Job Preservation 
     Act. NASAA appreciates and shares the desire of the Committee 
     to facilitate job creation. Investor confidence in our 
     markets is strengthened through efforts that are designed to 
     bring transparency to the marketplace and promote 
     accountability. Unfortunately, H.R. 1105 could frustrate this 
     goal by establishing an exemption from the registration 
     requirements in federal law designed to promote transparency 
     and accountability. Moreover, while NASAA considers the 
     inclusion of fund leverage limits in the bill to be an 
     improvement, we believe Congress would be remiss to ignore 
     the question of the size of funds, in terms of assets, in 
     making determinations about which private equity firms should 
     be subject to the registration exemption.
       The Dodd-Frank Act provided exemptions for advisers who 
     solely advise ``venture capital funds'' as defined by the SEC 
     and for advisers who solely advise private funds and have 
     assets under management in the United States of less than 
     $150 million; however, in each case such exempted advisers 
     remain subject to SEC recordkeeping and reporting 
     requirements. H.R. 1105 would insert an additional exemption 
     for private equity fund advisers from registration or 
     reporting requirements. Unlike the exemptions contained in 
     Dodd-Frank, H.R. 1105 does not limit the exemption to 
     advisers solely to private funds nor does it contain a cap 
     that would limit the exemption to smaller advisers.
       Furthermore, at least two fundamental components of the 
     proposed legislation are so vague that they undermine any 
     benefits the bill purports to confer on small business.
       First, the bill is unclear as to what, if any, reporting 
     requirements are required for private equity fund advisers. 
     Section 2 provides that an adviser to a ``private equity 
     fund,'' regardless of assets under management, would be 
     exempt from both registration and reporting requirements. 
     This proposed exemption from all registration and reporting 
     requirements would seem to run contrary to the basic and 
     obvious interest of investors in private equity funds, since 
     registration under the Investment Advisers Act serves to 
     protect investors from conflicts of interest and other risks 
     associated with entrusting their assets to advisers. The 
     exemption would to have the unintended consequence of 
     depriving the SEC of important regulatory information 
     critical for assessing systemic risk and protecting 
     investors. The registration regimes long in place for 
     advisers, and recently the reporting regimes established 
     under Dodd-Frank for certain private fund advisers, are 
     designed to help insure that regulators and investors have 
     access to important information. The inclusion of fund 
     leverage limits in the bill attenuate NASAA's concerns with 
     respect to systemic risk, and we understand that private 
     equity funds were not a catalyst of the financial crisis of 
     2008; however, this information is nevertheless critical to 
     regulators and investors alike. Specifically, regulators use 
     the information to measure risk and assess compliance; 
     investors use the information to guide choices in picking 
     advisers and understanding their operations.
       Second, even if the language in H. R. 1105 were clarified, 
     the legislation would remain significantly ambiguous as to 
     the type and size of adviser to which it would apply. This is 
     because the legislation does not define ``private equity 
     fund'' but rather delegates this task to the SEC, which would 
     be given six months to promulgate rules necessary to 
     establish the record keeping and reporting obligations of 
     these advisers. Though the bill appears to treat advisers to 
     ``private equity funds'' similar to advisers to venture 
     capital funds for the purposes of exemption, it fails to 
     include the limits currently applicable to the exemption for 
     advisers to venture capital funds. Without more specificity 
     and a clear definition of what constitutes a ``private equity 
     fund'', it is unknown what types of entities are covered by 
     the exemption. This is problematic because without statutory 
     clarification of the universe of ``private equity,'' any 
     assessment of risk to financial stability posed by such 
     capital investment would be invalid. Moreover, it seems 
     unwise to establish an exemption before defining what is 
     covered by the exemption; as AFL-CIO Policy Director Damon 
     Silver testified to the Committee on May 23rd:
       ``There is no fundamental legal distinction between private 
     equity funds, hedge funds and venture capital funds. These 
     are terms that describe broad investment strategies, not 
     legal structures. So the bill directs the SEC to define what 
     a private equity fund is. And there is no telling how broad 
     or narrow, or gameable, such a definition will be.''
       Moreover, the enactment of the JOBS Act and the removal of 
     the long-standing prohibition on general solicitation and 
     advertising in Regulation D, Rule 506 offerings reinforces 
     NASAA's belief that, as a general matter, the risk to 
     investors and regulators that would accompany the exemptions 
     contemplated by H.R. 1105 far exceed the bill's potential 
     benefits as a tool for capital formation and job creation.
       Thank you for your consideration of these concerns. We look 
     forward to working with you as these bills move through the 
     legislative process. If you have questions, or if NASAA can 
     be of assistance, please contact me or Michael Canning, 
     NASAA's Director of Policy.
           Sincerely,

                                             A. Heath Abshure,

                                               NASAA President and
     Arkansas Securities Commissioner.
                                  ____

         American Federation of Labor and Congress of Industrial 
           Organizations,
                                    Washington, DC, June 19, 2013.
     LEGISLATIVE ALERT

     Hon. Jeb Hensarling,
     Chairman, House Financial Services Committee, Rayburn House 
         Office Building, Washington, DC.
     Hon. Maxine Waters,
     Ranking Minority Member, House Financial Services Committee, 
         Rayburn House Office Building, Washington, DC.
       Dear Chairman Hensarling and Ranking Minority Member 
     Waters: The AFL-CIO, a labor federation of 57 unions 
     representing 12 million working men and women with over

[[Page H7483]]

     $4 trillion in assets in benefit plans, opposes the Small 
     Business Capital Access and Job Preservation Act (H.R. 1105); 
     the Burdensome Data Collection Relief Act (H.R. 1135); the 
     Audit Integrity and Job Protection Act (H.R. 1564); and the 
     Retail Investor Protection Act (H.R. 2374) scheduled for 
     markup in committee this week. The AFL-CIO testified in May 
     before this Committee in opposition to these bills and we 
     reiterate, in brief, below our continued opposition. This 
     package of bills is a clear indication that some in Congress 
     have every intention to take us down the road of 
     deregulation, yet again.
       Since 1980, the United States has gone through several 
     cycles of financial deregulation. The first of these episodes 
     led to the savings and loan fiasco of the early 1990's, the 
     second to the tech bubble collapse in 2000 and the wave of 
     corporate scandals and bankruptcies that began with Enron in 
     2001. And the third, and by far the most devastating, was the 
     residential real estate bubble driven by a deregulated 
     banking sector through the use of mortgage backed securities, 
     and the subsequent collapse of that bubble starting in 2007. 
     Surely members of the Committee don't want to be associated 
     with arguably the next and fourth devastating round of 
     deregulation.


 ``The Small Business Capital Access and Job Preservation Act.'' (H.R. 
                                 1105)

       Despite its title, H.R. 1105 has nothing to do with small 
     business and everything to do with ensuring some of the 
     richest and most powerful, and most tax subsidized, Wall 
     Street firms are allowed to continue to operate, and build up 
     system-wide leverage, in secret. Specifically, H.R. 1105 
     would exempt all private equity fund advisers from the 
     registration and reporting requirements in the Dodd-Frank 
     Act, unless each fund has outstanding borrowings that exceed 
     two times the fund's invested capital commitments.
       The impact of H.R. 1105 would be to prevent the SEC from 
     collecting the information necessary to monitor a significant 
     source of systemic risk. Section 404 of the Dodd-Frank Act 
     gave the Securities and Exchange Commission (SEC) authority 
     to establish recordkeeping and reporting requirements ``as 
     necessary and appropriate in the public interest and for the 
     protection of investors, or for the assessment of systemic 
     risk by the Financial Stability Oversight Council. H.R. 1105 
     would exempt private equity funds from this recordkeeping and 
     reporting framework and direct the SEC to replace it with one 
     that omits consideration of potential systemic risks and is 
     exclusively for use by the SEC. The AFL-CIO continues to 
     oppose any bill that weakens investor protections and 
     increases systemic risk.


       ``The Burdensome Data Collection Relief Act'' (H.R. 1135)

       H.R. 1135 seeks to keep secret the relationship between CEO 
     pay and the median pay of other employees at public 
     companies, by repealing section 953(b) of the Dodd-Frank Act, 
     which requires such disclosure. It is a bill designed to hide 
     material information from investors and boards which 
     ultimately becomes detrimental in efforts to fight income 
     inequality.
       Investors have long had multiple concerns about CEO pay--
     starting with the raw numbers that come out of investors' 
     'pockets. Top executives at large public companies now keep 
     for themselves an average of 10% of their companies' net 
     profits, approximately double the rate in the early 1990s. 
     The disclosure requirements of 953(b) would help reveal the 
     true nature of disparities between CEO's and their employees 
     enabling investors and boards to also consider and take 
     action accordingly. As such, the AFL-CIO strongly opposes 
     H.R. 1135 and the repeal of 953(b) disclosure requirements.


     ``The Auditor Integrity and Job Protection Act.'' (H.R. 1564)

       H.R. 1564 seeks to prevent the Public Company Accounting 
     Oversight Board (PCAOB) from placing limits on the length of 
     time a public company can use the same audit firm, referred 
     to as auditor rotation. H.R. 1564 amends Sarbanes-Oxley by 
     adding a limitation on PCAOB authority which states, ``The 
     Board shall have no authority under this title to require 
     that audits conducted for a particular issuer in accordance 
     with the standards set forth under this section be conducted 
     by specific auditors, or that such audits be conducted for an 
     issuer by different auditors on a rotating basis.''
       H.R. 1564 both substantively weakens the ability of the 
     PCAOB to play its role in protecting our economy against 
     systemic risk, and it weakens the independence of auditor 
     regulation. Both results are contrary to the public interest, 
     and consequently the AFL-CIO opposes this bill.


           ``The Retail Investor Protection Act'' (H.R. 2374)

       H.R. 2374 would require the SEC to identify whether the 
     different standards of conduct that apply to broker-dealers 
     and investment advisers result in harm to retail investors. 
     In addition, the bill requires the SEC's Chief Economist to 
     conduct a cost benefit analysis of such a change. make a 
     formal finding that the rule would reduce investor confusion, 
     and coordinate with other federal regulators. Finally, the 
     bill would prohibit the SEC from proposing rules applicable 
     to broker-dealers' standard of conduct without simultaneously 
     proposing rules that would ``address any harm to retail 
     customers resulting from differences in the registration, 
     supervision, and examination requirements applicable to 
     brokers, dealers, and investment advisers.''
       H.R. 2374 suggests these changes despite the fact that the 
     SEC is currently collecting data to support an economic 
     analysis before any rulemaking is undertaken. The bill would 
     significantly delay and perhaps derail these long overdue 
     efforts of the SEC to raise the standard of conduct that 
     applies to brokers when they give advice to retail investors 
     and accordingly the AFL-CIO opposes H.R. 2374.
       For the above reasons we urge you to vote against this 
     cluster of bills that seek to undo much needed reforms 
     enacted in the Dodd-Frank Act.
           Sincerely,

                                               William Samuel,

     Director Government Affairs Department.
                                  ____



                               Consumer Federation of America,

                                                    June 18, 2013.
     Hon. Jeb Hensarling,
     Chairman, Financial Services Committee, House of 
         Representatives.
     Hon. Maxine Waters,
     Ranking Member, Financial Services Committee, House of 
         Representatives.
       Dear Chairman Hensarling, Ranking Member Waters and Members 
     of the Committee: The Financial Services Committee is 
     scheduled to mark-up yet another set of bills this week that 
     would weaken investor protection and undermine the 
     transparency and integrity of our capital markets. I am 
     writing on behalf of the Consumer Federation of America to 
     urge you to oppose these bills. While CFA opposes each of the 
     bills scheduled for mark-up for reasons described briefly 
     below, our primary focus is the cynically titled ``Retail 
     Investor Protection Act,'' which would undermine the ability 
     of federal agencies to ensure that Americans receive 
     appropriate protections in their dealings with financial/
     professionals who purport to offer investment advice.


    Oppose Bill (H.R. 2374) to Undermine Protections for Vulnerable 
                               Investors

       H.R. 2374 launches a two-stage attack on federal 
     regulators' attempts to improve protections for average, 
     unsophisticated investors in their dealings with predatory 
     and self-dealing investment professionals. First, it would 
     throw new roadblocks in the way of the Securities and 
     Exchange Commission (SEC) as it attempts to close a gaping 
     regulatory loophole that permits broker-dealers to provide 
     investment ``advice'' to retail investors that is not 
     designed to serve the best interests of those investors. 
     Second, it would inappropriately tie the ability of the 
     Department of Labor (DOL) to update its fiduciary definition 
     under ERISA to the SEC's successful completion of its 
     separate rulemaking under the securities laws.
       Over the years, brokers have been permitted to call 
     themselves financial advisers and offer extensive advisory 
     services without having to meet the best interest standard 
     included as part of the fiduciary duty that applies to all 
     other investment advisers. As a result, many investors are 
     deceived into believing they are dealing with a trusted 
     adviser when, in fact, they are dealing with a salesperson--a 
     salesperson, moreover, who is free to put his or her own 
     financial interests ahead of the interests of the investor 
     and often receives financial incentives to encourage such 
     practices. Investors who place their trust in these salesmen 
     in advisers' clothing can end up paying excessively high 
     costs for higher risk or poorly performing investments that 
     satisfy a suitability standard, but not a fiduciary duty. 
     That is money most middle income investors can ill afford to 
     waste.
       This legislation would make it more difficult for the SEC 
     to address this problem by requiring further study of an 
     issue that has already been studied extensively. Indeed, the 
     SEC has been studying the issue of the standard of conduct 
     that should apply to brokers' investment advice for over a 
     decade. In the process, it has conducted focus group testing 
     of disclosures designed (without success) to clarify the 
     differing legal standards that apply to brokerage and 
     advisory accounts, commissioned a comprehensive independent 
     study intended to lay the foundation for further rulemaking, 
     and conducted a staff study of the issues to be addressed by 
     rulemaking. Over the years, the SEC has collected reams of 
     comment from all interested parties with a stake in the 
     issue, and it has recently issued an additional Request for 
     Information to form the basis of a thorough economic analysis 
     to accompany any rulemaking it might decide to undertake.
       Clearly, the additional cost-benefit analysis requirements 
     in H.R. 2374 are not designed to address any shortcomings in 
     the SEC approach to economic analysis of this issue. Instead, 
     their primary effect would be to create additional grounds 
     for legal challenge by fringe industry groups that oppose any 
     rulemaking that might force them to abandon predatory 
     practices that allow them to profit at their customers' 
     expense. The best outcome, if this legislation were adopted, 
     would be further delay of a rule that is already years 
     overdue. More likely is that the legislation would inhibit 
     SEC rulemaking altogether or result in a rule so weak as to 
     be entirely devoid of meaningful. new protections for 
     investors. Middle income investors who need to make every 
     dollar count would be the ultimate victims of these 
     bureaucratic games.
       But retail investors would not be the only victims of this 
     legislation. Working Americans attempting to prepare for a 
     secure retirement would also be denied appropriate 
     protections, perhaps indefinitely. Loopholes

[[Page H7484]]

     in the definition of investment advice under ERISA make DOL's 
     fiduciary standard all but unenforceable. This bill would 
     prevent DOL from acting to address that problem until after 
     the SEC completes an entirely separate fiduciary rulemaking 
     under the securities laws. It would impede DOL action despite 
     repeated assurances that the SEC and DOL are coordinating 
     their efforts and that any rules adopted will not conflict. 
     DOL has responded to criticism of its original approach by 
     withdrawing that proposal in order to conduct a thorough 
     economic analysis, redraft the proposal, and clarify how the 
     revised definition would interact with prohibited transaction 
     exemptions. DOL deserves to have the resulting reproposal 
     judged on its merits, not halted based on unsubstantiated 
     fears about the form that rulemaking might take. For all 
     these reasons, we urge you to vote NO on H.R. 2374.


    Oppose Anti-Investor Bills to Undermine Market Transparency and 
                               Integrity

       The Committee is also scheduled to mark up three other 
     bills, each of which would in its own way undermine market 
     transparency and integrity.
       H.R. 1564, the ``Audit Integrity and Job Protection Act,'' 
     would prevent the Public Company Accounting Oversight Board 
     (PCAOB) from adopting a rule to require rotation of auditors 
     at public companies even if it determines, based on a 
     thorough review of the evidence, that doing so is necessary 
     to address the persistent lack of independence and 
     professional skepticism in the audits of public companies. 
     The PCAOB has not yet decided on a regulatory approach and is 
     instead engaged in carefully weighing the evidence. In 
     contrast to the PCAOB's balanced and thoughtful approach, 
     this legislation would decide the issue without any 
     consideration of the evidence on audit failures tied to lack 
     of auditor independence, a problem that has been highlighted 
     by regulators both here and abroad. We urge you to protect 
     the independence of the PCAOB and the audit process by voting 
     NO on H.R. 1564.
       H.R. 1105, the Small Business Capital Access and Job 
     Preservation Act, would exempt a large swath of ``private 
     equity'' funds from registration with the SEC without showing 
     any reason why such an exemption is necessary or appropriate. 
     The bill would leave it to the agency to define the scope of 
     funds that might qualify for the exemption, setting up an 
     inevitable regulatory race to the bottom as funds pressure 
     the agency to write as expansive an exemption as possible. As 
     such, the bill would limit the ability of the agency to 
     provide effective oversight of a portion of the securities 
     business with a proven capacity to spread risk through the 
     financial system. We urge you to vote NO on H.R. 1105, which 
     would undermine efforts to protect the financial system from 
     systemic threats.
       H.R. 1135, the ``Burdensome Data Collection Relief Act,'' 
     would undermine market transparency by denying investors 
     information about the relationship between CEO and worker pay 
     at the companies in which they invest. Not only would this 
     bill hide material information from the owners of public 
     companies, but it would also undermine efforts to rein in 
     out-of-control CEO pay. Opposition to this disclosure is 
     clearly based not on any excessive costs or insurmountable 
     burdens associated with making the disclosure, but on the 
     fact that the information is likely to be embarrassing to 
     many companies and could provide the impetus for reform. We 
     urge you to stand up for market transparency and economic 
     equality by voting NO on H.R. 1135.
       Taken together, these bills would reduce oversight of 
     potentially risky market segments (H.R. 1105), tie the hands 
     of regulators seeking to address a persistent market failure 
     (H.R. 1564), deprive investors of information that could 
     provide a check on excessive CEO pay (H.R. 1135), and impede 
     the ability of federal regulators to act to protect 
     unsophisticated investors from predatory industry practices 
     (H.R. 2374). We urge you to vote NO on each of these bills. 
     Thank you for your attention to our concerns. You may contact 
     me if you have any questions about our position on the 
     issues.
           Respectfully submitted,
                                                    Barbara Roper,
     Director of Investor Protection.
                                  ____

                                          United States Securities


                                      and Exchange Commission,

                                    Washington, DC, June 18, 2013.
     Hon. Jeb Hensarling,
     Chairman, Committee on Financial Services, House of 
         Representatives, Rayburn House Office Building, 
         Washington, DC.
     Hon. Maxine Waters,
     Ranking Member, Committee on Financial Services, House of 
         Representatives, Rayburn House Office Building, 
         Washington, DC.
       Dear Chairman Hensarling and Ranking Member Waters: I 
     understand that the House Committee on Financial Services is 
     scheduled this week to consider several bills pending before 
     it, including H.R. 1105 and H.R. 2374. I write to briefly 
     express my views on these two bills. The views expressed in 
     this letter are my own and do not necessarily reflect the 
     views of the full Commission or any Commissioner.
       The Small Business Capital Access and Job Preservation Act 
     (H.R. 1105) would amend the Investment Advisers Act of 1940 
     (Investment Advisers Act) to generally exempt investment 
     advisers to private equity funds from the registration 
     requirements of the Investment Advisers Act, unless such 
     funds have borrowed and have outstanding principal amounts in 
     excess of twice their invested capital commitments. The 
     Retail Investor Protection Act (H.R. 2374) would impose new 
     restrictions on the Commission's ability to adopt a uniform 
     fiduciary standard of conduct for investment advisers and 
     broker-dealers.


                registration of private equity advisers

       Regarding H.R. 1105, registration under the Investment 
     Advisers Act serves to protect investors from conflicts of 
     interest and other risks associated with investors' 
     entrusting their assets to advisers. Title IV of the Dodd-
     Frank Wall Street Reform and Consumer Protection Act (Dodd-
     Frank Act) mandated that advisers to private equity funds 
     with assets under management above $150 million register with 
     the Commission. Although private equity funds were not an 
     underlying cause of the recent financial crisis, private 
     equity fund advisers represent a significant and influential 
     part of the financial landscape. In my view, our markets 
     would not be well-served by narrowing the scope of the 
     Commission's jurisdiction and oversight of these advisers.
       Private equity fund investors are in need of the same 
     protections as other private fund investors. As with other 
     types of funds and advisers, the Commission has brought 
     enforcement actions against private equity funds and their 
     advisory personnel involving unlawful pay to play schemes, 
     insider trading, conflicts of interest, valuation, and 
     misappropriation of assets. Registration provides the 
     Commission with tools to discover and prevent fraud and other 
     violations of the securities laws, enhancing confidence in 
     our capital markets and promoting fair dealing. It is 
     important, therefore, that the Commission, as a capital 
     markets regulator, have an appropriate level of oversight of 
     these entities, for both investor protection and market 
     efficiency purposes.
       Beyond this, to base exemptions from registration on 
     investment strategy or leverage would result in the 
     securities laws generally favoring or disfavoring particular 
     strategies, which should be avoided when the objective is a 
     fair and level playing field.


                 Uniform fiduciary standard of conduct

       Section 913 of the Dodd-Frank Act added new express 
     authority for the Commission to adopt a uniform fiduciary 
     standard of conduct and to consider other potential options 
     for the harmonization of the regulation of broker-dealers and 
     investment advisers. Although there are differing views on 
     this issue, many investor advocates and industry participants 
     support the establishment of a uniform fiduciary standard of 
     conduct. The new restrictions on the Commission's authority 
     that would be imposed under H.R. 2374, however, would make it 
     difficult for the Commission to adopt such a rule should it 
     determine to do so.
       The Commission has pursued the consideration of possible 
     rulemaking under section 913 with care and diligence. Section 
     913 required the Commission to conduct a study regarding 
     obligations of broker-dealers and investment advisers. That 
     study, published in 2011, contained two primary 
     recommendations from Commission staff--one in favor of a 
     uniform fiduciary standard of conduct and another calling for 
     enhanced harmonization of the regulatory requirements for 
     broker-dealers and investment advisers. Following publication 
     of the study, Commissioners and Commission staff have met 
     with relevant parties and maintained an open dialogue with 
     those interested in these issues. To further its review, the 
     Commission in March 2013 published a request for additional 
     data and other information, in particular quantitative data 
     and economic analysis. Any rulemaking under section 913 would 
     include a rigorous economic analysis.
       If, after such fact-finding and deliberations, the 
     Commission should determine to propose a uniform fiduciary 
     standard of conduct, H.R. 2374 would layer on new statutory 
     requirements for the Commission to satisfy before finalizing 
     any such rules, which could impede this investor-focused 
     initiative in what already has been a multi-year process.
       I hope that this information is helpful to you and to the 
     other members of the Committee. Please do not hesitate to 
     contact me or have your staff contact Tim Henseler, Acting 
     Director of the Office of Legislative and Intergovernmental 
     Affairs, if I can be of further assistance.
           Sincerely,
                                                    Mary Jo White,
                                                            Chair.

  Ms. WATERS. I thank the gentleman from Massachusetts for managing in 
my absence.
  Mr. Speaker, I am pleased to have the opportunity to come back to the 
floor to add a few comments.
  Prior to leaving, the chairman of this committee talked about this 
being a job creation bill. He wrapped this bill in jobs creation. And I 
must say that I don't think that the gentleman has much else he could 
say about why they are trying to exempt all of these private equity 
funds from registering with the SEC.
  Wrapping it in this notion of they are creating all of these jobs and 
we should all be very appreciative is one way to deflect attention from 
the fact that here we have private equity funds. $180

[[Page H7485]]

million from the smaller private equity funds have been exempted 
already. Those firms that have $180 million in those funds or less are 
already exempted. That was done in the Dodd-Frank legislation. Now they 
are coming back and they are saying exempt everybody.
  What is it you are trying to hide? Why is it you do not want these 
firms to register?
  Well, first of all, they are registered at this point. The SEC is 
given the oversight and the regulation that they need, and they are 
finding that it is very important for them to do so because they are 
finding that there are unlawful pay-to-play schemes, insider trading, 
conflicts of interest, and misappropriations of assets, et cetera. That 
is not to say that all private equity funds are doing these things, but 
weeding out the bad actors is extremely important.
  The SEC is our cop on the block. They are there to protect the 
investors. This is their number one responsibility, and we want them to 
do this. Just as you have CalPERS from California, which is against 
this bill, they should be against this bill. They have the retirement 
funds of policemen and firemen and all of the middle class people that 
make up the basis of this economy.
  Well, let me just add to the ones that were mentioned by my friend 
from Massachusetts. We also have Americans for Financial Reform. We 
also have the Consumer Federation and all of the State regulators who 
are against this bill. And the President's advisers have said they are 
recommending a veto.
  What do you have to hide? Why don't you want registration? That is 
the question that must be asked. That is the question that has really 
not been answered.
  Mr. Speaker and Members, I would ask for a ``no'' vote on this bill 
because we endanger the investors that they claim they want to protect 
because they claim they want them to produce all of these jobs, and 
certainly that will never happen if we allow the kinds of situations to 
continue to happen that were described in the discussion about Bain 
Capital in the Presidential election debates.
  Further, let me just say that we have worked very, very hard to try 
to make sure that we have protection. That is the role of the SEC. And 
again, they already have these registered private equity firms that 
they are taking a look at, and they are learning things about them. And 
this information will be used to make sure that we have the kind of 
private equity funds that can do the kind of jobs that we want them to 
do.
  Yes, we appreciate investment. Yes, we want job creation. But why 
should we have private equity funds that somehow have no oversight, 
that don't have anybody scrutinizing what they are doing? Why is it we 
don't want any regulatory agencies looking at them? That just doesn't 
make good sense.
  And I would say to my friends, you have to oppose this bill. There 
will be an amendment coming up that was mentioned by the gentlewoman 
from New York (Mrs. Maloney) that makes good sense. And if they had 
gone to that simply as a way of trying to help out in this area, they 
could have gotten a lot of support, but they have stepped way over the 
line when they say no oversight, no scrutiny by the SEC or anybody 
else.
  The SPEAKER pro tempore. The time of the gentlewoman has expired.

                              {time}  1545

  Mr. HENSARLING. Mr. Speaker, I am very happy to yield 2 minutes to 
the gentleman from New Jersey (Mr. Garrett), a coauthor of the 
legislation and the chairman of our Capital Markets and GSE 
Subcommittee.
  Mr. GARRETT. I thank the chairman for yielding.
  Mr. Speaker, let's step back for a moment and just see where we may 
agree on certain points.
  I guess at the 30,000-foot level we agree on the fact that we want to 
work together on legislation that will try to prevent the next 
financial crisis. We agree that we want to try to protect investors.
  It is after that level, however, when we get into the details that we 
disagree.
  As far as protecting and trying to make sure the next financial 
crisis does not occur, there has been no evidence either today on the 
floor or in the committee process during the discussion of this debate 
or in any of the debates when we discussed Dodd-Frank that the origin 
of the last financial crisis was from private equity. No evidence. Or 
from hedge funds. No evidence. Or from venture capital. No evidence 
whatever. So to say that we need to have extensive, overbearing, 
overlapping, extraneous regulation on private equity to prevent the 
next one, they have no evidence to say that was the cause in the past.
  We say, just as the gentleman from Connecticut said before, venture 
capital is excluded from it. Why not private equity as well? And that 
is why we have come together in a bipartisan manner to make sure the 
next crisis doesn't occur in an area such as this.
  In the second area, the point was made as far as the cost. The 
gentleman from Massachusetts said, Well, we're talking about the larger 
funds here. If he was at the hearing last night in the Rules Committee, 
he would have heard one of his colleagues, Mr. Polis from Colorado, 
refute that point.
  Why is that? This is what he said. When you are talking about firms, 
$150 million, $200 million sounds like large firms, right? But that is 
just how much money is under management. The actual money they are 
actually spending in the company is just a fraction of it. A little 
tiny fraction, as he pointed out. It is around 2 percent.
  So if you are talking about a $150 million fund under management, it 
sounds big. Actually, that is around a $3 million business. And now you 
are asking that $3 million business to have to pay upwards of half a 
million dollars each year for all their compliance costs and the 
examination, which goes to the last point by the gentlelady from New 
York.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. HENSARLING. I yield the gentleman an additional 30 seconds.
  Mr. GARRETT. We would love to try to find some common ground on her 
amendment, but her amendment simply goes to the first point and the 
initial filing of the forms and what have you. After that, there is the 
extraneous additional examinations and all the other costs that are so 
overly burdensome that we have found both in a bipartisan manner, as 
Mr. Himes from Connecticut has already pointed out, is overly 
burdensome and unnecessary.
  If there was some other way to pull this together in a bipartisan 
manner more so than we have already done, I would do so, but I am glad 
that the gentleman from Virginia and also the gentleman from 
Connecticut have been able to come together on all the points to come 
to a final bill in a bipartisan manner. And I support the legislation.
  Mr. HENSARLING. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, listening to some of my colleagues on the other side of 
the aisle, it is hard not to conclude that some of them have never met 
a regulation that they didn't like, regardless of what it does to the 
hopes, dreams, and aspirations of the unemployed and underemployed in 
America.
  As I look over your chair, Mr. Speaker, and see the words, ``In God 
We Trust,'' I sometimes question whether some Members would like to 
take down the word ``God'' and replace it with ``regulators'': In 
Regulators We Trust.
  The question has never been, Mr. Speaker, the question between 
regulation and deregulation. The question is between smart regulation 
and dumb regulation; and in order to make that determination, one needs 
to see what cost is being imposed, again, on the hopes and dreams and 
aspirations of the unemployed and the underemployed.
  Why does this underlying regulation need to be there in the first 
place? Is it systemic risk? Well, even the chairman of the SEC has 
admitted that private equity played no role in the financial crisis.
  We know in terms of the economy, private equity may represent 
somewhere on the order of 1.5 to 2 percent of GDP. There is no evidence 
of interconnectedness, which many maintain is at the root of systemic 
risk.
  So what are they trying to protect? Well, investor protection. This 
is all about giving additional protection to millionaire investors at 
the expense of single moms trying to make ends meet. I am not really 
sure that meets the test of smart regulation.

[[Page H7486]]

  We know already that private equity fund advisers are subject, as 
they well should be, to the antifraud provisions of the Investment 
Advisers Act of 1940, whether they are registered or not. Fund 
offerings are subject to the antifraud provisions of the Securities Act 
of 1933. The SEC still has the ability to ensure that proper 
documentation is maintained.
  No, we do not want to see any investor, regardless of sophistication 
or income, be subject to coercion or fraud. But, at the same time, we 
don't want to deny small businesses--the job engine in America--the 
funding they need to put America back to work.
  There are many companies today that we recognize--Dunkin' Donuts, 
Baskin-Robbins, Petco, Skype, J.Crew--that all have benefited from 
private equity. Where would the tens of thousands, if not hundreds of 
thousands, of jobs they represent be today if private equity had to 
face yet another burden that is going to cost these small investment 
firms half a million dollars, a million dollars?
  Today, we haven't really heard that much about company likes Entrust 
or Universal Smart Comp, but maybe they are tomorrow's Petco or 
tomorrow's Toys ``R'' Us.
  And so it really comes down to this, Mr. Speaker, again: Are there 
going to be additional protections for multimillionaire investors, or 
are there going to be additional protections and opportunities for 
unemployed single moms trying to make ends meet?
  Our side of the aisle said, Let's help the single mom. Let's pass 
H.R. 1105, and put America back to work.
  I yield back the balance of my time.
  Mr. STUTZMAN. Mr. Speaker, I rise today in support of H.R. 1105, the 
Small Business Capital Access and Job Preservation Act. Washington 
can't regulate its way to the top while red tape puts American jobs at 
risk.
  Too often big-government builds barriers to success but men and women 
in the real economy know how to get the job done. In nearly every 
sector of our economy, thousands of companies are backed by private 
equity and employ millions of hardworking Americans.
  Unfortunately, Dodd-Frank places unnecessary and burdensome 
regulations on private firms that invest hundreds of billions of 
dollars each year to open doors for new opportunities. Instead of 
creating jobs, these requirements increase costs, divert capital, and 
consume time.
  Private equity is critical to a strong recovery and works best when 
advisers look ahead for new opportunities, not when they're constantly 
forced to worry about red tape. Today, we have an opportunity to reduce 
Dodd-Frank's unfair burdens on responsible investment advisors.
  It's time to pass this common-sense legislation and unleash new 
opportunities for job growth.
  I thank my colleague Representative Hurt for his work on this issue 
and Chairman Hensarling for his leadership. I urge my colleagues to 
vote yes.
  Mr. VAN HOLLEN. Mr. Speaker, today's legislation would amend the 
Investment Advisors Act of 1940 to generally exempt private equity fund 
investment advisors from its registration and reporting requirements, 
subject to certain conditions.
  Proponents of this legislation argue that private equity funds were 
not the source of systemic risk during the most recent financial crisis 
and therefore that their investment advisors should not be subject to 
registration and reporting requirements under current law. While 
private equity funds can play an important role in capital formation, 
and I would agree that private equity funds were not the principal 
source of systemic risk during the last financial crisis, that does not 
mean it would be impossible for private equity firms to become a source 
of systemic risk at some point in the future.
  Moreover, as Securities and Exchange Commission Chair Mary Jo White 
has pointed out, registration and reporting requirements are not used 
solely for systemic risk prevention. Just as importantly, they are also 
used for investor protection. In that regard, it is worth noting that 
the SEC has brought enforcement actions against unscrupulous private 
equity funds involving unlawful pay to play schemes, insider trading, 
conflicts of interest, valuation issues and misappropriation of assets. 
This investor protection function will become even more important once 
the SEC finalizes implementation of a provision in the recently enacted 
Jumpstart Our Business Startups (JOBS) Act permitting the general 
solicitation and advertising of private equity funds and private 
securities.
  For these reasons, I will be opposing this bill.
  The SPEAKER pro tempore. All time for debate has expired.


 Amendment No. 1 Printed in Part B of House Report 113-283 Offered by 
                  Mrs. Carolyn B. Maloney of New York

  Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I have an amendment 
at the desk.
  The SPEAKER pro tempore. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 1, strike line 10 and all that follows through page 2, 
     line 17, and insert the following:
       ``(o) Simplified Registration and Disclosure for Small 
     Private Equity Fund Advisers.--
       ``(1) In general.--Subject to paragraph (2), the Commission 
     shall promulgate rules providing for a simplified procedure 
     for registration and disclosure under this section for any 
     investment adviser acting as an investment adviser to a 
     private equity fund or funds that, in the aggregate, have 
     assets under management in the United States of between 
     $150,000,000 and $1,000,000,000.
       ``(2) Tailored application.--The rules promulgated under 
     paragraph (1) shall take into account compliance costs, fund 
     size, governance, and any other factors that the Commission 
     determines necessary.
       ``(3) Private equity fund defined.--Not later than 6 months 
     after the date of enactment of this subsection, the 
     Commission shall issue final rules to define the term 
     `private equity fund' for purposes of this subsection.''.

  The SPEAKER pro tempore. Pursuant to House Resolution 429, the 
gentlewoman from New York (Mrs. Carolyn B. Maloney) and a Member 
opposed each will control 5 minutes.
  The Chair recognizes the gentlewoman from New York.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I first want to 
commend the chairman and the ranking member for their hard and 
dedicated work on the Financial Services Committee.
  I would also like to commend the vice-chairman, Congressman Hurt, for 
his work on this bill. I agree with him that private equity funds did 
not cause the financial crisis.
  I also agree that many private equity funds--and especially the small 
private equity funds that invest in middle-market businesses--support 
jobs across our country. I also agree that for many small equity funds, 
the cost of complying with every single requirement in the Investment 
Advisers Act can be burdensome and costly.
  However, while I share the goal of reducing unnecessary regulatory 
burdens on small private equity funds with under $1 billion in assets, 
I believe that there are better ways to accomplish this goal to reduce 
the burden, to reduce costs without eliminating important investor 
protections.
  I would say that we should have equality in this country--and 
equality of treatment for everyone, including investors. If you are a 
small investor, a large investor, a teacher, an unemployed worker, and 
you have invested, whoever you are, you should have protections. Aren't 
we a country of laws and equality of treatment? So my amendment would 
direct the SEC to create a simplified disclosure form for fund advisers 
between $150 million and $1 billion, while also retaining important 
investor protections.
  We would reduce the burden, reduce the reporting, reduce the 
disclosure, simplify the forms, make it easier, but protect the 
fiduciary duty to act in a client's best interest. Isn't that the 
moral, right thing to do?
  There is the obligation to disclose conflicts of interest and the 
obligation to disclose fees. I thought we all supported transparency. 
Well, let's have transparency in these investment funds, too.
  I would ask my colleagues on the other side of the aisle who are 
objecting to this amendment how much of a burden is it to disclose 
whether or not you have a conflict of interest. You just have to check 
yes or no, I have a conflict of interest. Then maybe you have to 
disclose what that conflict is. But that is the fair and right thing to 
do.
  How burdensome is it to disclose fees? Tell people what you are 
charging them. And how burdensome is it to have the necessary fiduciary 
duty to act in the client's best interest? Most people think that you 
are acting in their best interest. I think they would be horrified to 
know that some Members of this body want to roll back that protection 
for them.
  I would also like to note that in August the SEC did provide relief 
for

[[Page H7487]]

smaller private equity funds from what the industry tells me is one of 
the most burdensome aspects of registration--the so-called custody 
rule--which requires that the funds use independent custodians for 
stocks that don't even trade. So private equity funds have already 
gotten relief, and I applaud the SEC for this commonsense decision.
  The reforms in my amendment would build on this relief and would 
direct the SEC to act quickly on simplified forms--within 6 months--and 
save these small businesses money so that money can go out into the 
community.
  The underlying bill grants a complete exemption to private equity 
fund advisers with under 2 to 1 leverage, which is pretty much the 
entire industry, because the funds themselves are not leveraged. It is 
the companies the funds invest in that are leveraged.
  The underlying bill is opposed by the Securities and Exchange 
Commission, whose prime mission is to protect investors, and by 
President Obama's administration. He has even threatened a veto.
  If the problem is the high cost of registry at the SEC and preparing 
the required disclosures, then the solution is to simplify the 
registration and disclosures for small equity funds. That is what my 
bill does. But it also protects investors.
  It does not exempt the entire industry from investor protection, 
which is what the underlying bill does, and I do not believe that that 
is the intent of my colleagues on either side of the aisle.
  So my amendment accomplishes the express goal of saving money and 
simplifying, but protects the integrity of our financial system and 
investors.
  I urge everyone to support my amendment, and I yield back the balance 
of my time.
  Mr. HENSARLING. Mr. Speaker, I rise in opposition to the amendment.
  The SPEAKER pro tempore. The gentleman from Texas is recognized for 5 
minutes.
  Mr. HENSARLING. I yield myself such time as I may consume.
  Mr. Speaker, the amendment, regardless of how well-intentioned it may 
be, functionally guts the bill and is essentially redundant of current 
law in Dodd-Frank.
  And I grant the gentlelady, who is a very senior and thoughtful 
member of our committee, that her provision is perhaps more articulate 
than the underlying law, but section 408(n) of Dodd-Frank already says:

       In prescribing regulations to carry out the requirements of 
     this section with respect to investment advisers acting as 
     investment advisers to mid-sized private funds, the 
     Commission shall take into account the size, governance, 
     investment strategy of such funds.

  It goes on to say:

       The Commission shall provide for registration and 
     examination procedures with respect to the investment 
     advisers of such funds which reflect the level of systemic 
     risk.

  So, again, it is essentially redundant of what is already in current 
law.
  According to the Private Equity Growth Council, on average it is 
taking $1.8 million for the initial Dodd-Frank compliance cost and an 
additional $1.3 million each year in Dodd-Frank compliance costs. All 
for what? We already have underlying investor protections in place.
  There is no evidence presented whatsoever that this has anything to 
do with systemic risk, all at the cost of jobs, at a time when, again, 
Mr. Speaker, tens of millions of our countrymen are struggling. They 
are underemployed, unemployed.

                              {time}  1600

  Again, who are we going to help? Are we going to help regulators? Are 
we going to help millionaire investors? Are we going to help struggling 
Americans trying to pay the bills? We should oppose this amendment, Mr. 
Speaker.
  At this time, I would be very happy to yield 2 minutes to the 
gentleman from Virginia (Mr. Hurt), again, the author of H.R. 1105.
  Mr. HURT. I thank the chairman.
  Mr. Speaker, I rise in opposition to the gentlelady's amendment.
  I appreciate her work and interest on this important issue; but with 
all due respect, this amendment would defeat the entire purpose of the 
bill.
  If adopted, all advisers to private equity who are currently 
undergoing the burdensome and unnecessary registration process would 
still be required to do so. Additionally, it would establish an 
entirely subjective, so-called ``simplified'' compliance standard that 
would have to be defined by the Securities and Exchange Commission. 
There is no reason to believe that such a so-called simplified standard 
would provide any meaningful relief for those private equity companies 
investing in small companies across this country.
  As has been stated, small and mid-sized private equity firms are 
expending hundreds of thousands of dollars in annual compliance costs 
and would still have to be registered with the SEC. Instead of 
addressing this problem, this amendment, if adopted, would continue to 
restrict the ability of small and mid-sized private equity firms to 
invest in small businesses.
  As Members of both parties have pointed out, there are not persuasive 
arguments that private equity generates systemic risk; and, indeed, to 
the extent that leverage at the fund level could potentially trigger 
such risk, we have already adopted a standard proposed by Mr. Himes in 
committee that would require registration for advisers to firms with 
leverage that exceeds 2 to 1.
  I know that the gentlelady understands that access to private capital 
is the lifeblood for small business. The current SEC registration 
requirements are unnecessary. They produce a significant burden on 
private equity firms and, therefore, restrict the flow of private 
capital to small businesses across the country.
  I urge this body to defeat this amendment and to vote in favor of the 
underlying bill.
  Mr. HENSARLING. Mr. Speaker, how much time do I have remaining?
  The SPEAKER pro tempore. The gentleman from Texas has 1\1/2\ minutes 
remaining.
  Mr. HENSARLING. I yield myself the balance of my time.
  Mr. Speaker, again, historically, private equity has invested in tens 
of thousands of small businesses, and it has helped create millions of 
jobs in America.
  The question today is: Are we going to put a roadblock in place of 
private equity--the small business investment engines--so that we can 
somehow help regulators?
  With all due respect to our regulators--and there are many good ones 
and many great ones at the SEC--I have never met a regulator who turned 
down the opportunity to regulate more. I have never met him.
  So the question is: Are we going to grant an even greater ability to 
take funds away from small businesses to create a work product that 
doesn't meet the commonsense test, the jobs test, the smell test--or 
any other test--at a time when people are still suffering and wondering 
how are they going to put gas in the tank; how are they going to take 
their kids to school; how are they going to afford their health care 
bills since, clearly, they cannot keep their health insurance even if 
they want to.
  How are they going to do this?
  We need private equity to fund small business to get America back to 
work. We need to defeat this amendment. We need to pass the underlying 
bill. It is time to be pro-jobs.
  With that, Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. All time for debate has expired.
  Pursuant to the rule, the previous question is ordered on the bill, 
as amended, and on the amendment offered by the gentlewoman from New 
York (Mrs. Carolyn B. Maloney).
  The question is on the amendment by the gentlewoman from New York 
(Mrs. Carolyn B. Maloney).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, on that I demand 
the yeas and nays.
  The yeas and nays were ordered.
  The vote was taken by electronic device, and there were--yeas 186, 
nays 225, not voting 20, as follows:

                             [Roll No. 620]

                               YEAS--186

     Andrews
     Barber
     Bass
     Beatty
     Becerra
     Bera (CA)
     Bishop (NY)
     Blumenauer
     Bonamici
     Brady (PA)
     Braley (IA)
     Brown (FL)
     Brownley (CA)
     Bustos
     Butterfield
     Capps
     Capuano
     Cardenas
     Carney
     Carson (IN)
     Cartwright
     Castor (FL)
     Castro (TX)
     Chu
     Cicilline
     Clarke
     Clay

[[Page H7488]]


     Cleaver
     Clyburn
     Cohen
     Connolly
     Conyers
     Courtney
     Crowley
     Cummings
     Davis (CA)
     Davis, Danny
     DeFazio
     DeGette
     Delaney
     DeLauro
     DelBene
     Deutch
     Dingell
     Doggett
     Doyle
     Duckworth
     Edwards
     Ellison
     Engel
     Eshoo
     Esty
     Farr
     Fattah
     Foster
     Frankel (FL)
     Fudge
     Gabbard
     Gallego
     Garamendi
     Garcia
     Gibson
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hahn
     Hanabusa
     Hastings (FL)
     Heck (WA)
     Higgins
     Himes
     Hinojosa
     Holt
     Honda
     Horsford
     Hoyer
     Huffman
     Israel
     Jackson Lee
     Jeffries
     Johnson (GA)
     Johnson, E. B.
     Jones
     Kaptur
     Keating
     Kelly (IL)
     Kennedy
     Kildee
     Kilmer
     Kind
     Kirkpatrick
     Kuster
     Langevin
     Larsen (WA)
     Larson (CT)
     Lee (CA)
     Levin
     Lewis
     Lipinski
     Loebsack
     Lofgren
     Lowenthal
     Lowey
     Lujan Grisham (NM)
     Lujan, Ben Ray (NM)
     Lynch
     Maffei
     Maloney, Carolyn
     Maloney, Sean
     Matsui
     McCollum
     McDermott
     McGovern
     McNerney
     Meeks
     Meng
     Michaud
     Miller, George
     Moore
     Moran
     Murphy (FL)
     Nadler
     Napolitano
     Neal
     Negrete McLeod
     Nolan
     O'Rourke
     Owens
     Pallone
     Pascrell
     Pastor (AZ)
     Payne
     Pelosi
     Perlmutter
     Peters (CA)
     Peters (MI)
     Pingree (ME)
     Pocan
     Price (NC)
     Quigley
     Rahall
     Rangel
     Richmond
     Roybal-Allard
     Ruiz
     Ruppersberger
     Ryan (OH)
     Sanchez, Linda T.
     Sanchez, Loretta
     Sarbanes
     Schakowsky
     Schiff
     Schneider
     Schwartz
     Scott (VA)
     Scott, David
     Serrano
     Sewell (AL)
     Shea-Porter
     Sherman
     Sinema
     Slaughter
     Smith (WA)
     Speier
     Swalwell (CA)
     Takano
     Thompson (CA)
     Thompson (MS)
     Tierney
     Titus
     Tonko
     Tsongas
     Van Hollen
     Veasey
     Vela
     Velazquez
     Visclosky
     Walz
     Wasserman Schultz
     Waters
     Watt
     Waxman
     Welch
     Wilson (FL)
     Yarmuth

                               NAYS--225

     Aderholt
     Amash
     Amodei
     Bachmann
     Bachus
     Barletta
     Barr
     Barrow (GA)
     Barton
     Benishek
     Bentivolio
     Bilirakis
     Bishop (UT)
     Black
     Blackburn
     Boustany
     Brady (TX)
     Bridenstine
     Brooks (AL)
     Brooks (IN)
     Broun (GA)
     Buchanan
     Bucshon
     Burgess
     Calvert
     Camp
     Capito
     Carter
     Cassidy
     Chabot
     Chaffetz
     Coble
     Coffman
     Cole
     Collins (GA)
     Collins (NY)
     Conaway
     Cook
     Cooper
     Costa
     Cotton
     Crawford
     Crenshaw
     Cuellar
     Daines
     Davis, Rodney
     Denham
     Dent
     DeSantis
     DesJarlais
     Diaz-Balart
     Duffy
     Duncan (SC)
     Duncan (TN)
     Ellmers
     Farenthold
     Fincher
     Fitzpatrick
     Fleischmann
     Fleming
     Flores
     Forbes
     Fortenberry
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gardner
     Garrett
     Gerlach
     Gibbs
     Gohmert
     Goodlatte
     Gosar
     Gowdy
     Granger
     Graves (GA)
     Griffin (AR)
     Griffith (VA)
     Grimm
     Guthrie
     Hall
     Hanna
     Harper
     Harris
     Hartzler
     Hastings (WA)
     Heck (NV)
     Hensarling
     Holding
     Hudson
     Huelskamp
     Huizenga (MI)
     Hultgren
     Hunter
     Hurt
     Issa
     Jenkins
     Johnson (OH)
     Johnson, Sam
     Jordan
     Joyce
     Kelly (PA)
     King (IA)
     King (NY)
     Kingston
     Kinzinger (IL)
     Kline
     Labrador
     LaMalfa
     Lamborn
     Lance
     Lankford
     Latham
     Latta
     LoBiondo
     Long
     Lucas
     Luetkemeyer
     Marchant
     Marino
     Massie
     Matheson
     McAllister
     McCarthy (CA)
     McCaul
     McClintock
     McHenry
     McIntyre
     McKeon
     McKinley
     Meadows
     Meehan
     Messer
     Mica
     Miller (FL)
     Miller (MI)
     Mullin
     Mulvaney
     Murphy (PA)
     Neugebauer
     Noem
     Nugent
     Nunes
     Nunnelee
     Olson
     Palazzo
     Paulsen
     Pearce
     Perry
     Peterson
     Petri
     Pittenger
     Pitts
     Poe (TX)
     Polis
     Pompeo
     Posey
     Price (GA)
     Reichert
     Renacci
     Ribble
     Rice (SC)
     Rigell
     Roby
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Rokita
     Rooney
     Ros-Lehtinen
     Roskam
     Ross
     Rothfus
     Royce
     Runyan
     Ryan (WI)
     Salmon
     Sanford
     Scalise
     Schock
     Schrader
     Schweikert
     Scott, Austin
     Sensenbrenner
     Sessions
     Shimkus
     Shuster
     Simpson
     Smith (MO)
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Southerland
     Stewart
     Stivers
     Stutzman
     Terry
     Thompson (PA)
     Thornberry
     Tiberi
     Tipton
     Turner
     Upton
     Valadao
     Wagner
     Walberg
     Walden
     Walorski
     Weber (TX)
     Webster (FL)
     Wenstrup
     Westmoreland
     Whitfield
     Williams
     Wilson (SC)
     Wittman
     Wolf
     Womack
     Woodall
     Yoder
     Yoho
     Young (AK)
     Young (IN)

                             NOT VOTING--20

     Bishop (GA)
     Campbell
     Cantor
     Cramer
     Culberson
     Enyart
     Gingrey (GA)
     Graves (MO)
     Grayson
     Herrera Beutler
     Lummis
     McCarthy (NY)
     McMorris Rodgers
     Miller, Gary
     Radel
     Reed
     Rush
     Sires
     Stockman
     Vargas

                              {time}  1631

  Messrs. NEUGEBAUER, GRIFFITH of Virginia, DUFFY, SAM JOHNSON of 
Texas, HUELSKAMP, GRIFFIN of Arkansas, BACHUS, RYAN of Wisconsin, and 
COSTA changed their vote from ``yea'' to ``nay.''
  Mrs. CAPPS, Mr. McDERMOTT, Ms. SLAUGHTER, Messrs. ELLISON, RAHALL, 
and KIND changed their vote from ``nay'' to ``yea.''
  So the amendment was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore (Mr. Heck of Nevada). The question is on the 
engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


                           Motion to Recommit

  Mr. HORSFORD. Mr. Speaker, I have a motion to recommit at the desk.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. HORSFORD. I am opposed in its current form.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:

       Mr. Horsford moves to recommit the bill H.R. 1105 to the 
     Committee on Financial Services with instructions to report 
     the same back to the House forthwith with the following 
     amendment:
       Page 2, line 17, strike the quotation marks and final 
     period and insert after such line the following:
       ``(3) Protecting american jobs.--The exemption described 
     under paragraph (1) shall only apply to an investment adviser 
     providing investment advice to a fund that--
       ``(A) does not own a controlling interest in a company that 
     outsources American jobs to other countries; and
       ``(B) publicly reports on a quarterly basis the number of 
     jobs eliminated at each company owned and controlled by the 
     fund.''.

  Mr. HURT (during the reading). Mr. Speaker, I ask unanimous consent 
that the reading of the motion be dispensed with.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Virginia?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Nevada is recognized for 5 minutes in support of his motion.
  Mr. HORSFORD. Mr. Speaker, this is the final amendment to the bill 
which will not kill the bill or send it back to committee. If adopted, 
the bill will immediately proceed to final passage, as amended.
  The underlying bill would exempt almost every private equity fund 
from registration and reporting requirements under Dodd-Frank. It is 
another attempt by House Republicans to turn back the clock on progress 
that we have made to make sure Wall Street is helping Main Street.
  This bill, despite being titled the Small Business Capital Access and 
Job Preservation Act, has nothing to do with small business or creating 
jobs, and everything to do with chipping away at the safeguards put in 
place when Congress passed financial sector reform.
  Wall Street reform has made the financial system more transparent, 
reduced risk, and protected against systemic failure. Private equity 
fund advisers have been filing reports with the SEC for over a year 
now. We shouldn't be trying to gut the system of accountability and 
oversight, we should be building it up. We should be working together 
to make the reforms work and make them stronger.
  H.R. 1105 would roll back the progress by providing blanket 
registration and reporting exemptions, seriously hampering oversight.
  The motion to recommit I am offering would amend the underlying bill 
so that investment funds are only eligible if they do not own a 
controlling interest in companies that outsource American jobs to other 
countries. We would also require reporting about any downsizing at each 
company owned and controlled by the fund.
  Instead of decreasing transparency by Wall Street, we should be 
demanding greater public disclosure to protect consumers. We should not 
be encouraging outsourcing of American jobs overseas. We should be 
incentivizing companies to keep jobs right here in America, or to bring 
them back. And we should not be encouraging downsizing or the 
elimination of jobs, but incentivizing companies to hire employees and 
to get the American public back to work.
  Now, when I go home to my district in Nevada and meet with 
constituents, they want to know what Congress is doing to create jobs. 
They aren't asking me to roll back reforms that make

[[Page H7489]]

financial markets more stable. They aren't asking me to make life 
easier for Wall Street. They want this Congress focused on one street, 
Main Street, and on creating middle class jobs to help grow the economy 
and put Americans back to work.
  And so it is telling that for this Congress, with so few legislative 
days remaining in this year, we are focusing our precious time on 
private equity fund advisers. This bill focuses the attention of 
Congress on the policy desires of an elite group that is doing just 
fine. They are asking for more secrecy. Why? That is not what we should 
be spending our time on.
  Instead of bringing an infrastructure bill to the floor that would 
create middle class jobs, instead of passing comprehensive immigration 
reform, Mr. Speaker, to fix our broken system and to grow the economy, 
instead of passing workplace protections that prevent Americans from 
being fired because of who they love, instead of working to reduce food 
insecurity, instead of replacing the harmful sequester that is hurting 
everything from military contractors to economic activity for all 
Americans, instead of doing any of that, of doing what the American 
people are demanding of this Congress, the House GOP, through H.R. 
1105, are focusing their energy on gutting Wall Street reform.
  So we have serious business that this body could be focused on, 
business that many of our constituents on both sides of the aisle say 
they want us to address. But, instead, we have H.R. 1105, a focus to 
gut Wall Street reform; and it is a quiet, but concerted, effort to 
once again turn back the clock on the American people. Not to mention, 
the underlying bill is also a futile attempt because the President has 
already said he would veto the legislation.
  I urge my colleagues to vote ``yes'' on the motion to recommit and 
for the House of Representatives to do the people's business, and I 
yield back the balance of my time.
  Mr. HURT. Mr. Speaker, I rise in opposition to the motion to 
recommit.
  The SPEAKER pro tempore. The gentleman from Virginia is recognized 
for 5 minutes.
  Mr. HURT. Mr. Speaker, with all due respect to the gentleman from 
Nevada, the problem with his motion to recommit is that it would punish 
a company like Vitamin Shoppe. Vitamin Shoppe is a leading U.S.-based 
vitamin and supplements distributor. Earlier this year, Vitamin Shoppe 
went global, opening its first international franchise in Panama City, 
Panama. By partnering with a private equity fund, Vitamin Shoppe grew 
its business from a Northeast-based specialty retailer to a national 
chain, adding more than 400 stores and 2,500 new jobs.
  With all due respect, this bill is not about overseas jobs. This bill 
is not about Wall Street. This bill is about Main Street American jobs 
to the tune of 7.5 million jobs working in 17,000 U.S. companies. This 
bill is about encouraging private capital investment in those Main 
Street jobs. This bill is about not adding $500,000 in compliance costs 
to Main Street job creation.
  To put this in perspective, I dare say, of every congressional 
district represented on this floor, this bill is about a window 
manufacturer in Rocky Mount, Virginia, in Virginia's Fifth District, 
our district, which has operated there for the last 70 years. It has 
provided good jobs in our community. It has provided jobs for 
generations of people living in Franklin County, Virginia, and for 
families who have worked there for generations. In the last 10-20 years 
in Rocky Mount, Virginia, just like all across southside Virginia and 
so many congressional districts across this country, we have seen hard 
times because of the loss of thousands of manufacturing jobs. We have 
seen over the last 10-20 years double digit unemployment.

                              {time}  1645

  This window manufacturing plant was able to survive because of 
private equity investment, and now that window manufacturing company 
boasts 1,000 employees. Those jobs still exist today because of a 
private equity investment.
  Last night we had a meeting of the Rules Committee, and one member of 
the committee asked a question. He said: If a big PE firm has to pay an 
extra $500,000 for compliance costs, what is the big deal?
  It seems to me that it would be better, perhaps, to ask that question 
to an employee at that windows manufacturing firm in Rocky Mount. If 
asked, I suspect he would say, you know: I have a good job. I love my 
job. I work 60 hours a week to be able to pay my mortgage, to pay my 
bills and take care of my family. He would say, Please, to all of you 
in Washington, do everything that you can to make sure that 1 year from 
now I still have my job and make sure that my neighbor has a job, too.
  That is a big deal, and that is what this bill is about. I urge the 
defeat of this motion to recommit, I urge the adoption of this good 
jobs bill, and I ask for your vote for H.R. 1105.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.


                             Recorded Vote

  Mr. HORSFORD. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair 
will reduce to 5 minutes the minimum time for any electronic vote on 
the question of passage.
  The vote was taken by electronic device, and there were--ayes 185, 
noes 227, not voting 19, as follows:

                             [Roll No. 621]

                               AYES--185

     Andrews
     Barber
     Barrow (GA)
     Bass
     Beatty
     Becerra
     Bera (CA)
     Bishop (NY)
     Blumenauer
     Bonamici
     Brady (PA)
     Braley (IA)
     Brown (FL)
     Brownley (CA)
     Bustos
     Butterfield
     Capps
     Capuano
     Cardenas
     Carney
     Carson (IN)
     Cartwright
     Castor (FL)
     Castro (TX)
     Chu
     Cicilline
     Clarke
     Clay
     Cleaver
     Clyburn
     Cohen
     Connolly
     Conyers
     Costa
     Courtney
     Crowley
     Cuellar
     Cummings
     Davis (CA)
     Davis, Danny
     DeFazio
     DeGette
     DeLauro
     DelBene
     Deutch
     Dingell
     Doggett
     Doyle
     Duckworth
     Duncan (TN)
     Edwards
     Ellison
     Engel
     Eshoo
     Esty
     Farr
     Fattah
     Frankel (FL)
     Fudge
     Gabbard
     Gallego
     Garcia
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hahn
     Hanabusa
     Hastings (FL)
     Heck (WA)
     Higgins
     Hinojosa
     Holt
     Honda
     Horsford
     Hoyer
     Huffman
     Israel
     Jackson Lee
     Jeffries
     Johnson (GA)
     Johnson, E. B.
     Jones
     Kaptur
     Keating
     Kelly (IL)
     Kennedy
     Kildee
     Kilmer
     Kind
     Kirkpatrick
     Kuster
     Langevin
     Larsen (WA)
     Larson (CT)
     Lee (CA)
     Levin
     Lewis
     Lipinski
     Loebsack
     Lofgren
     Lowenthal
     Lowey
     Lujan Grisham (NM)
     Lujan, Ben Ray (NM)
     Lynch
     Maloney, Carolyn
     Maloney, Sean
     Matsui
     McCollum
     McDermott
     McGovern
     McIntyre
     McNerney
     Meeks
     Meng
     Michaud
     Miller, George
     Moore
     Moran
     Nadler
     Napolitano
     Neal
     Negrete McLeod
     Nolan
     O'Rourke
     Owens
     Pallone
     Pascrell
     Pastor (AZ)
     Payne
     Pelosi
     Perlmutter
     Peters (CA)
     Peters (MI)
     Pingree (ME)
     Pocan
     Price (NC)
     Quigley
     Rahall
     Rangel
     Richmond
     Roybal-Allard
     Ruiz
     Ruppersberger
     Ryan (OH)
     Sanchez, Linda T.
     Sanchez, Loretta
     Sarbanes
     Schakowsky
     Schiff
     Schneider
     Schwartz
     Scott (VA)
     Scott, David
     Serrano
     Sewell (AL)
     Shea-Porter
     Sherman
     Sinema
     Slaughter
     Smith (WA)
     Speier
     Swalwell (CA)
     Takano
     Thompson (CA)
     Thompson (MS)
     Tierney
     Titus
     Tonko
     Tsongas
     Van Hollen
     Vargas
     Veasey
     Vela
     Velazquez
     Visclosky
     Walz
     Wasserman Schultz
     Waters
     Watt
     Waxman
     Welch
     Wilson (FL)
     Yarmuth

                               NOES--227

     Aderholt
     Amash
     Amodei
     Bachmann
     Bachus
     Barletta
     Barr
     Barton
     Benishek
     Bentivolio
     Bilirakis
     Bishop (UT)
     Black
     Blackburn
     Boustany
     Brady (TX)
     Bridenstine
     Brooks (AL)
     Brooks (IN)
     Broun (GA)
     Buchanan
     Bucshon
     Burgess
     Calvert
     Camp
     Capito
     Carter
     Cassidy
     Chabot
     Chaffetz
     Coble
     Coffman
     Cole
     Collins (GA)
     Collins (NY)
     Conaway
     Cook
     Cooper
     Cotton
     Cramer
     Crawford
     Crenshaw
     Daines
     Davis, Rodney
     Delaney
     Denham
     Dent
     DeSantis
     DesJarlais
     Diaz-Balart
     Duffy
     Duncan (SC)
     Ellmers
     Farenthold
     Fincher
     Fitzpatrick
     Fleischmann
     Fleming
     Flores
     Forbes
     Fortenberry
     Foster
     Foxx
     Franks (AZ)
     Frelinghuysen
     Garamendi
     Gardner
     Garrett
     Gerlach
     Gibbs
     Gibson
     Gohmert
     Goodlatte
     Gosar
     Gowdy
     Granger
     Graves (GA)
     Griffin (AR)

[[Page H7490]]


     Griffith (VA)
     Grimm
     Guthrie
     Hall
     Hanna
     Harper
     Harris
     Hartzler
     Hastings (WA)
     Heck (NV)
     Hensarling
     Himes
     Holding
     Hudson
     Huelskamp
     Huizenga (MI)
     Hultgren
     Hunter
     Hurt
     Issa
     Jenkins
     Johnson (OH)
     Johnson, Sam
     Jordan
     Joyce
     Kelly (PA)
     King (IA)
     King (NY)
     Kingston
     Kinzinger (IL)
     Kline
     Labrador
     LaMalfa
     Lamborn
     Lance
     Lankford
     Latham
     Latta
     LoBiondo
     Long
     Lucas
     Luetkemeyer
     Maffei
     Marchant
     Marino
     Massie
     Matheson
     McAllister
     McCarthy (CA)
     McCaul
     McClintock
     McHenry
     McKeon
     McKinley
     Meadows
     Meehan
     Messer
     Mica
     Miller (FL)
     Miller (MI)
     Mullin
     Mulvaney
     Murphy (FL)
     Murphy (PA)
     Neugebauer
     Noem
     Nugent
     Nunes
     Nunnelee
     Olson
     Palazzo
     Paulsen
     Pearce
     Perry
     Peterson
     Petri
     Pittenger
     Pitts
     Poe (TX)
     Polis
     Pompeo
     Posey
     Price (GA)
     Reichert
     Renacci
     Ribble
     Rice (SC)
     Rigell
     Roby
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Rokita
     Rooney
     Ros-Lehtinen
     Roskam
     Ross
     Rothfus
     Royce
     Runyan
     Ryan (WI)
     Salmon
     Sanford
     Scalise
     Schock
     Schrader
     Schweikert
     Scott, Austin
     Sensenbrenner
     Sessions
     Shimkus
     Shuster
     Simpson
     Smith (MO)
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Southerland
     Stewart
     Stivers
     Stutzman
     Terry
     Thompson (PA)
     Thornberry
     Tiberi
     Tipton
     Turner
     Upton
     Valadao
     Wagner
     Walberg
     Walden
     Walorski
     Weber (TX)
     Wenstrup
     Westmoreland
     Whitfield
     Williams
     Wilson (SC)
     Wittman
     Wolf
     Womack
     Woodall
     Yoder
     Yoho
     Young (AK)
     Young (IN)

                             NOT VOTING--19

     Bishop (GA)
     Campbell
     Cantor
     Culberson
     Enyart
     Gingrey (GA)
     Graves (MO)
     Grayson
     Herrera Beutler
     Lummis
     McCarthy (NY)
     McMorris Rodgers
     Miller, Gary
     Radel
     Reed
     Rush
     Sires
     Stockman
     Webster (FL)

                              {time}  1653

  Mr. JONES changed his vote from ``no'' to ``aye.''
  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Ms. WATERS. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This is a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 254, 
noes 159, not voting 18, as follows:

                             [Roll No. 622]

                               AYES--254

     Aderholt
     Amash
     Amodei
     Bachmann
     Bachus
     Barber
     Barletta
     Barr
     Barrow (GA)
     Barton
     Benishek
     Bentivolio
     Bera (CA)
     Bilirakis
     Bishop (UT)
     Black
     Blackburn
     Boustany
     Brady (TX)
     Bridenstine
     Brooks (AL)
     Brooks (IN)
     Broun (GA)
     Buchanan
     Bucshon
     Burgess
     Butterfield
     Calvert
     Camp
     Capito
     Cardenas
     Carney
     Carter
     Cassidy
     Chabot
     Chaffetz
     Coble
     Coffman
     Cole
     Collins (GA)
     Collins (NY)
     Conaway
     Cook
     Cooper
     Costa
     Cotton
     Cramer
     Crawford
     Crenshaw
     Cuellar
     Daines
     Davis, Rodney
     Denham
     Dent
     DeSantis
     DesJarlais
     Diaz-Balart
     Duckworth
     Duffy
     Duncan (SC)
     Duncan (TN)
     Ellmers
     Esty
     Farenthold
     Fincher
     Fitzpatrick
     Fleischmann
     Fleming
     Flores
     Forbes
     Fortenberry
     Foxx
     Franks (AZ)
     Frelinghuysen
     Gallego
     Garcia
     Gardner
     Garrett
     Gerlach
     Gibbs
     Gibson
     Gohmert
     Goodlatte
     Gosar
     Gowdy
     Granger
     Graves (GA)
     Griffin (AR)
     Griffith (VA)
     Grimm
     Guthrie
     Hall
     Hanna
     Harper
     Harris
     Hartzler
     Hastings (WA)
     Heck (NV)
     Hensarling
     Himes
     Holding
     Hudson
     Huelskamp
     Huizenga (MI)
     Hultgren
     Hunter
     Hurt
     Israel
     Issa
     Jackson Lee
     Jenkins
     Johnson (OH)
     Johnson, Sam
     Jordan
     Joyce
     Kelly (PA)
     Kind
     King (IA)
     King (NY)
     Kingston
     Kinzinger (IL)
     Kirkpatrick
     Kline
     Labrador
     LaMalfa
     Lamborn
     Lance
     Lankford
     Latham
     Latta
     LoBiondo
     Long
     Lucas
     Luetkemeyer
     Maffei
     Maloney, Sean
     Marchant
     Marino
     Massie
     Matheson
     McAllister
     McCarthy (CA)
     McCaul
     McClintock
     McHenry
     McIntyre
     McKeon
     McKinley
     Meadows
     Meehan
     Meeks
     Messer
     Mica
     Miller (FL)
     Miller (MI)
     Mullin
     Mulvaney
     Murphy (FL)
     Murphy (PA)
     Neugebauer
     Noem
     Nugent
     Nunes
     Nunnelee
     Olson
     Owens
     Palazzo
     Paulsen
     Pearce
     Perry
     Peterson
     Petri
     Pittenger
     Pitts
     Poe (TX)
     Polis
     Pompeo
     Posey
     Price (GA)
     Quigley
     Rahall
     Reichert
     Renacci
     Ribble
     Rice (SC)
     Rigell
     Roby
     Roe (TN)
     Rogers (AL)
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Rokita
     Rooney
     Ros-Lehtinen
     Roskam
     Ross
     Rothfus
     Royce
     Ruiz
     Runyan
     Ryan (WI)
     Salmon
     Sanford
     Scalise
     Schneider
     Schock
     Schrader
     Schweikert
     Scott, Austin
     Sensenbrenner
     Sessions
     Sewell (AL)
     Shimkus
     Shuster
     Simpson
     Sinema
     Smith (MO)
     Smith (NE)
     Smith (NJ)
     Smith (TX)
     Southerland
     Stewart
     Stivers
     Stutzman
     Terry
     Thompson (PA)
     Thornberry
     Tiberi
     Tipton
     Turner
     Upton
     Valadao
     Vargas
     Veasey
     Wagner
     Walberg
     Walden
     Walorski
     Weber (TX)
     Webster (FL)
     Wenstrup
     Westmoreland
     Whitfield
     Williams
     Wilson (SC)
     Wittman
     Wolf
     Womack
     Woodall
     Yoder
     Yoho
     Young (AK)
     Young (IN)

                               NOES--159

     Andrews
     Bass
     Beatty
     Becerra
     Bishop (NY)
     Blumenauer
     Bonamici
     Brady (PA)
     Braley (IA)
     Brown (FL)
     Brownley (CA)
     Bustos
     Capps
     Capuano
     Carson (IN)
     Cartwright
     Castor (FL)
     Castro (TX)
     Chu
     Cicilline
     Clarke
     Clay
     Cleaver
     Clyburn
     Cohen
     Connolly
     Conyers
     Courtney
     Crowley
     Cummings
     Davis (CA)
     Davis, Danny
     DeFazio
     DeGette
     Delaney
     DeLauro
     DelBene
     Deutch
     Dingell
     Doggett
     Doyle
     Edwards
     Ellison
     Engel
     Eshoo
     Farr
     Fattah
     Foster
     Frankel (FL)
     Fudge
     Gabbard
     Garamendi
     Green, Al
     Green, Gene
     Grijalva
     Gutierrez
     Hahn
     Hanabusa
     Hastings (FL)
     Heck (WA)
     Higgins
     Hinojosa
     Holt
     Honda
     Horsford
     Hoyer
     Huffman
     Jeffries
     Johnson (GA)
     Johnson, E. B.
     Jones
     Kaptur
     Keating
     Kelly (IL)
     Kennedy
     Kildee
     Kilmer
     Kuster
     Langevin
     Larsen (WA)
     Larson (CT)
     Lee (CA)
     Levin
     Lewis
     Lipinski
     Loebsack
     Lofgren
     Lowenthal
     Lowey
     Lujan Grisham (NM)
     Lujan, Ben Ray (NM)
     Lynch
     Maloney, Carolyn
     Matsui
     McCollum
     McDermott
     McGovern
     McNerney
     Meng
     Michaud
     Miller, George
     Moore
     Moran
     Nadler
     Napolitano
     Neal
     Negrete McLeod
     Nolan
     O'Rourke
     Pallone
     Pascrell
     Pastor (AZ)
     Payne
     Pelosi
     Perlmutter
     Peters (CA)
     Peters (MI)
     Pingree (ME)
     Pocan
     Price (NC)
     Rangel
     Richmond
     Roybal-Allard
     Ruppersberger
     Ryan (OH)
     Sanchez, Linda T.
     Sanchez, Loretta
     Sarbanes
     Schakowsky
     Schiff
     Schwartz
     Scott (VA)
     Scott, David
     Serrano
     Shea-Porter
     Sherman
     Slaughter
     Smith (WA)
     Speier
     Swalwell (CA)
     Takano
     Thompson (CA)
     Thompson (MS)
     Tierney
     Titus
     Tonko
     Tsongas
     Van Hollen
     Vela
     Velazquez
     Visclosky
     Walz
     Wasserman Schultz
     Waters
     Watt
     Waxman
     Welch
     Wilson (FL)
     Yarmuth

                             NOT VOTING--18

     Bishop (GA)
     Campbell
     Cantor
     Culberson
     Enyart
     Gingrey (GA)
     Graves (MO)
     Grayson
     Herrera Beutler
     Lummis
     McCarthy (NY)
     McMorris Rodgers
     Miller, Gary
     Radel
     Reed
     Rush
     Sires
     Stockman

                              {time}  1700

  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.


                          personal explanation

  Mr. GINGREY of Georgia. Mr. Speaker, on rollcall No. 620 on the 
Maloney Amendment to H.R. 1105--the Small Business Capital Access and 
Job Preservation Act, I am not recorded due to a death in the family. 
Had I been present, I would have voted ``no.''
  Mr. Speaker, on rollcall No. 621 on the Motion to Recommit to H.R. 
1105--the Small Business Capital Access and Job Preservation Act--
offered by Mr. Horsford of Nevada, I am not recorded due to a death in 
the family. Had I been present, I would have voted ``no.''
  Mr. Speaker on rollcall No. 622 on Final Passage of H.R. 1105--the 
Small Business Capital Access and Job Preservation Act, I am not 
recorded due to a death in the family. Had I been present, I would have 
voted ``yea.''


                          personal explanation

  Mrs. McMORRIS RODGERS. Mr. Speaker, on rollcall No. 618 on Ordering 
the Previous Question, H. Res. 429, A resolution providing for the 
consideration of H.R. 1105--Small Business Capital Access and Jobs 
Preservation Act and H.R. 3309--Innovation Act, I am not recorded 
because I was absent due to the birth of my daughter. Had I been 
present, I would have voted ``yea.''
  Mr. Speaker, on rollcall No. 619 on Agreeing to the Resolution, H. 
Res. 429, A resolution providing for the consideration of H.R. 1105--
Small Business Capital Access and Jobs Preservation Act and H.R. 3309--
Innovation Act, I am not recorded because I was absent due to the birth 
of my daughter. Had I been present, I would have voted ``yea.''

[[Page H7491]]

  Mr. Speaker, on rollcall No. 620 on H.R. 1105, on Agreeing to the 
Amendment offered by Mrs. Maloney of New York, I am not recorded 
because I was absent due to the birth of my daughter. Had I been 
present, I would have voted ``nay.''
  Mr. Speaker, on rollcall No. 621 on H.R. 1105, on Motion to Recommit 
with Instructions, the Small Business Capital Access and Jobs 
Preservation Act, I am not recorded because I was absent due to the 
birth of my daughter. Had I been present, I would have voted ``nay.''
  Mr. Speaker, on rollcall No. 622 on H.R. 1105, on Passage, the Small 
Business Capital Access and Jobs Preservation Act, I am not recorded 
because I was absent due to the birth of my daughter. Had I been 
present, I would have voted ``yea.''

                          ____________________