[Congressional Record Volume 160, Number 135 (Friday, September 19, 2014)]
[Extensions of Remarks]
[Pages E1475-E1476]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     PROMOTING JOB CREATION AND REDUCING SMALL BUSINESS BURDENS ACT

                                 ______
                                 

                               speech of

                           HON. KEITH ELLISON

                              of minnesota

                    in the house of representatives

                       Monday, September 15, 2014

  Mr. ELLISON. Mr. Speaker, I oppose The Promoting Job Creation and 
Reducing Small Business Burdens Act, (H.R. 5405). This bill contains 11 
separate bills some of which I support and some I oppose. This 
legislation contains a number of potentially significant deregulatory 
measures, many of which are being addressed by regulatory action by the 
Securities and Exchange Commission and Commodities Futures Trading 
Commission. These bills stop those productive efforts replacing them 
with sweeping deregulation which I think is worse for investors and the 
economy.
  I specifically wish to draw attention to my concerns with The Small 
Company Disclosure Simplification Act (H.R. 4164)--Title VII of this 
bill. This bill would exempt nearly 60 percent of public companies from 
complying with the EXtensible Business Reporting Language (XBRL) 
requirement. XBRL is an improvement the Securities and Exchange 
Commission (SEC) started in 2009 to enable more efficient investing, 
especially investing in smaller firms. Instead of investors, the public 
and regulators

[[Page E1476]]

reading and analyzing reams of paper filings, the market would be 
brought into the 21st Century with a searchable electronic database. 
Clearly, a searchable electronic database on companies' financial 
statements is much more efficient than requiring investors read reams 
and reams of documents.
  When this bill came before the Financial Services Committee on March 
14, 2014, I voted yes on this bill. I was concerned that the SEC was 
not paying adequate attention to ensure the accuracy of the XBRL 
database. Since that vote, the SEC has started enforcing the accuracy 
of the XBRL data format. The SEC sent out letters in July, 2014, to 
many firms urging they correct inaccurate reporting. The SEC action and 
my own research into the need for accessible corporate financial 
information to grow companies has made me oppose this broad exemption.
  Congress should encourage, not discourage the move toward data-based 
financial reporting. An expansion of structured data enable investors 
to make better and faster decisions, especially related to smaller 
firms; strengthens the SEC's oversight ability and makes it easier to 
discover fraud and simplifies compliance responsibilities for firms.
  More progress is still needed at the SEC. The agency still collects 
the same financial statement from each public company twice--once as a 
document and again as XBRL data. And last July's letters were only a 
start. To make disclosures more useful to investors and less burdensome 
to companies, the agency must continue to improve data quality and must 
combine the two submissions into one. The Small Company Disclosure 
Simplification Act would prevent the SEC from ever taking these steps. 
If the agency is legally required to collect only documents, not XBRL 
data, from a majority of public companies, it will be unable to 
continue, and complete, the transformation that it began in 2009.
  I submit a blog post from the Data Transparency Coalition detailing 
the ramifications of H.R. 5405 on data transparency.

[From http://datacoalition.blogspot.com/2014/09/new-proposal-includes-
xbrl-exemption.html]

 New Proposal Includes XBRL Exemption--and Major Setback for Open Data

           (Data Transparency Coalition; September 10, 2014)

       The Data Transparency Coalition advocates on behalf of the 
     private sector and the public interest for the publication of 
     government information as standardized, machine-readable 
     data.


     UPDATE: On September 16, 2014, H.R. 5405 passed the House of 
                Representatives by a vote of 320 to 102.

       A major setback for open government data may be on the 
     agenda for the U.S. House of Representatives.
       Despite the opposition of the tech industry, Rep Robert 
     Hurt's proposal to direct the Securities and Exchange 
     Commission (SEC) to stop collecting financial data from most 
     public companies has been included as part of a new 
     legislative package--a new bill introduced on Monday, Sept. 
     8, by Rep. Mike Fitzpatrick and a number of other Republican 
     members.
       The new bill, H.R. 5405, brings together ten previous bills 
     into a single one. One of those ten is Rep. Hurt's previous 
     proposal, included in the new bill verbatim. Judging from the 
     urgency of the current House schedule, H.R. 5405 could see 
     action by the House of Representatives as early as next week.
       Nine out of the ten bills included in H.R. 5405 have 
     already been approved, as stand-alone bills, by bipartisan 
     majorities in either the Financial Services Committee or the 
     full House. (The Financial Services Committee passed Rep. 
     Hurt's original bill in March 2014.) So it seems clear that 
     the backers of H.R. 5405 want to craft a bill that will pass 
     the House easily, without serious opposition.
       H.R. 5405's introduction conveys that the bill is non-
     controversial by stating three innocuous purposes:
       To make technical corrections to the Dodd-Frank Wall Street 
     Reform and Consumer Protection Act, to enhance the ability of 
     small and emerging growth companies to access capital through 
     public and private markets, to reduce regulatory burdens . . 
     .
       But H.R. 5405, if approved by the House, introduced and 
     passed in the Senate, and signed into law by President Obama, 
     will dramatically restrict the availability of searchable 
     corporate financial data to investors--and to the tech 
     companies building investment tools.
       Supporters of open data in financial regulatory reporting 
     will remember that the SEC collects an open data version of 
     each financial statement in the eXtensible Business Reporting 
     Language (XBRL) structured data format, alongside the old-
     fashioned plain-text version, from every public company 
     registered in the United States. Investors, markets, and the 
     public can use the XBRL version of each financial statement 
     to create a fully searchable data set of all U.S. public 
     company databases. XBRL data supports free tools for 
     investors like RankandFiled.com. It is also used by 
     infomediaries like Morningstar and Thomson Reuters to enrich 
     the information they deliver to paying clients.
       Rep. Hurt's proposal, now incorporated into H.R. 5405, 
     would direct the SEC to exempt all public companies with 
     revenues below $250 million--a majority of public companies--
     from the obligation to file an open data version. Supporters 
     of the exemption claim that XBRL-formatted financial 
     statements cost ``tens of thousands of dollars'' to create, 
     but Financial Executive International found a median annual 
     cost of $2,000 for small companies (page 19) and some 
     providers offer XBRL preparation services at even lower 
     prices.
       Supporters of the exemption had one valid point last 
     spring: at that time, the SEC had not taken any steps to 
     ensure the quality of the XBRL filings. Without assurance 
     that the open data versions of financial statements were 
     reliable, investors were reluctant to use them, and relied on 
     the plain-text versions instead. But last summer, after a 
     year of advocacy from open data allies in Congress, the SEC 
     took its first public steps toward enforcing better data 
     quality. As quality improves, investors and the tech 
     companies serving them will make more use of the open data 
     financial statements.
       The companies themselves will benefit, too. Open, 
     structured data delivers information more efficiently to the 
     markets, which makes it easier for smaller companies to find 
     eager investors and brings down their capital costs.
       H.R. 5405 would cut off such progress by forcing the SEC to 
     use documents, not open data, to collect corporate financial 
     information.
       Fans of open data should make their opposition to this 
     portion of H.R. 5405 known.

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