Rep. Scott Garrett (R-NJ), Chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, delivered the following opening statement today at a hearing to review legislation to promote small business capital formation:
"Welcome to our witnesses. I look forward to your testimony today on a number of proposals that will encourage capital formation and job creation at small companies all across the country.
"A couple weeks ago, as part of his jobs plan that he outlined in a speech to a joint session of Congress, the President included some ideas that, in the case of Congressman Schweikert's bill on Reg A, we have passed out of this committee already, and in some other cases are similar to proposals that we are considering here today.
"So I am pleased that we have some bipartisan momentum behind efforts to tap into the potential of American entrepreneurs to build companies and create jobs.
"Many of the existing rules and regulations in the area of capital formation were well-intentioned at the time they were first established, but have sometimes been in place for decades and overdue for review.
"And while the President did not end up including any capital formation proposals in the actual legislative language he sent up to Capitol Hill, we have five specific bills that we will be considering at today's hearing that can help jump-start our economy.
"H.R. 2167, the Private Company Flexibility and Growth Act, introduced by my Vice-Chairman David Schweikert, would raise the threshold for mandatory registration with the SEC from 500 shareholders to 1,000, and if signed into law, would be the first time the shareholder threshold has been adjusted since it was adopted in 1964.
"We will also consider a similar proposal today from Congressman Himes that pertains to smaller banks.
"Congressman Patrick McHenry has a proposal under consideration today, the Entrepreneur Access to Capital Act, which enhances the President's proposal on encouraging so-called "crowdfunding,' an innovative phenomenon that can tap into social networking tools where many investors are able to pool smaller investments together without having to grapple with SEC registration costs and constraints.
"Congressman Kevin McCarthy's "Access to Capital for Job Creators Act" will also be on the docket today. A former small business owner, himself, Mr. McCarthy is no stranger to the challenges they face. His legislation would provide more flexibility in soliciting accredited investors for private offerings.
"And finally, the newest member of this Committee, Mr. Fincher, has a draft proposal for consideration today that I am particularly fond of. During the consideration of the Dodd-Frank Act, I worked closely on a bipartisan basis with my late colleague and friend, John Adler, on a proposal that was ultimately included in the final bill to permanently exempt smaller public companies from having to comply with the costly burdens imposed under section 404(b) of the Sarbanes-Oxley Act.
"Mr. Fincher's proposal would raise the market capitalization threshold for companies fully exempt from 404(b) compliance from $75 million to $500 million and provides further flexibility in 404(b) compliance for companies in the $500 million to $1 billion range.
"All of these proposals are common-sense efforts to remove unnecessary regulatory burdens from the shoulders of America's small businesses while unleashing American entrepreneurs to do what they do best -- create jobs and grow our economy. And as I mentioned earlier, it is my hope and belief that most, if not all, of these bills will receive strong bipartisan support."