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Public Statements

Entrepreneur Access to Capital Act

Floor Speech

By:
Date:
Location: Washington, DC

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Mr. BARROW. Madam Chair, I yield myself such time as I may consume.

Many of the small business owners that I've talked to back home tell me that the biggest barrier that they face in starting up a business is securing access to capital. When traditional lenders aren't lending, we need to find innovative ways to get startup and expansion money in the hands of small business job creators.

This bill uses the Internet to knock down some of the financial barriers that get between mom-and-pop startups and willing investors so they can get the money they need to grow their businesses and put more people to work. However, as with almost everything involving the Internet, new opportunities to do good bring new opportunities for mischief. We all agree that businesses and investors must understand the potential risks that come with these innovations. The bill requires that the SEC adopt regulations specifying the warnings and information that the issuer has to offer, but it leaves the content and the formatting of this information to rulemaking proceedings to be completed later, and it leaves open the possibility of inconsistent warnings and information for different investment opportunities.

My amendment takes the bill's basic approach one step further by requiring that the offering contain a link to a site maintained by the SEC where the SEC will post a comprehensive set of warnings and safety tips to anyone who is about to use the Internet to raise capital without all of the hassle and the safeguards of a regulated SEC offering. This would provide a consistent set of warnings and avoid the inconsistent, unclear, or misleading messages that investors might get from different Web sites.

Madam Chair, a word to the wise is sufficient, but too many words can obscure the information that folks really need. My amendment offers something better than a word--a link to the information that we all agree that investors should have available to them before they put their money down. Investors don't have to read it and they don't have to heed it, but it's there. And that's the least that we should do. Small businesses and the investment community stand to gain from this system, but only if everyone involved is on the same page about the potential benefits and the drawbacks. My amendment will help make sure that happens.

I want to thank my colleagues for their work on this bipartisan bill, and I ask for your support in passing this job-creating, investor-protecting amendment.

I reserve the balance of my time.

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Mr. BARROW. Well, I understand that our staffs have consulted with each other about the utility of this. I don't know how far they have gone with the SEC. But I can tell you the basic outline of this requirement is not to gum up the offering, not to require the issuer to put all kinds of stuff in the offering that can actually obscure the information that the offerer wants to put to the public and can allow the SEC basically to intrude into that offering, but to require one simple link where they can go and get all of the information that any wise investor needs.

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Mr. BARROW. Madam Chair, I yield myself such time as I may consume.

I understand the gentleman to be concerned about the distinction between this type of offering and a public offering, and I wish to remind him of what perhaps wasn't clearly understood. The point we're trying to make here is an exempt offering. That does not have all of the rigamarole and the hassle and the fine print and all of the safeguards that go along with a public offering.

It is because we're trying to provide the ease and convenience of an exempt offering while still providing the necessary information that folks have to have that we all are concerned about the investment warnings that the gentleman thinks we need to have in the bill. I agree with that. This is not a public offering. What we're trying to do, though, is to make sure that we don't exempt folks from having the information they might need to have before they make an investment in this entirely new and heretofore unregulated marketplace.

The gentleman is also concerned about the fact that there is yet another Web site. We're just talking about a page here that can be readily linked so the person looking at the information that the issuer wants to make available to the public, they can just hit on one link, and they can go someplace else immediately and get all the information that they need or the information they don't need. They can read it or not read it.

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Mr. BARROW. Yes, a site on the Internet, on the World Wide Web, can be just one page that can have all the information that you need.

Reclaiming my time, the main concern that I've got is that the investment protections the gentleman refers to in the bill suffer from the problem of being both overinclusive and underinclusive. On the one hand, it gives the SEC comprehensive authority to require that certain information be made available and the person be tested and answer questions on the information that the SEC requires that they demonstrate competence on. This could suffer from underinclusion if the SEC doesn't ask or insist that the person have the most minimal information. It could be incredibly overinclusive if the SEC wants to use the authority given by the bill, as written, to require that the investor demonstrate competence on a million things.

Just think of the terms and conditions in the typical software download program; and if someone's got to answer a question about every sentence in there, you can actually give the SEC the authority, and you're kind of inviting them to go into this offering and to require competence on all kinds of stuff the person doesn't need.

Oftentimes, as Emerson said, a glimpse reveals what the gaze obscures. What I think folks need to have is a direct link that takes them to the information that anybody ought to have, and they can read it or not read it. They can heed it or not heed it. But it won't gum up the offering. It won't get between what the issuer wants to make available in order to make the sale and the information a person needs to have in order to decide whether or not this is the right place for them to make this kind of investment.

With that, I reserve the balance of my time.

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Mr. BARROW. Madam Chair, I yield myself the balance of my time.

I thank the gentleman for his discussion and for his good-faith effort to try and reach an understanding as how we can make the investment information more meaningful. I'm concerned, too, about the stamp of approval, the so-called Good Housekeeping Seal of Approval someone might get from finding something that is heretofore highly regulated available now in a totally brand-new marketplace. I'm concerned about the opposite impact, that not having the right information in the hands of the investor can serve as a Good Housekeeping Seal of Approval, what's in front of them now.

As written, the bill allows the SEC to prescribe all kinds of information that the person has to demonstrate a competence in. My bill would do a lot better than that. It would get the SEC out of the conversation, provide a link where a person can go someplace else and see what it is they need to see if they want to see it without getting between the issuer and the customer.

With that, I yield back the balance of my time.

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