Jump Start Our Business Startups Act

Floor Speech

BREAK IN TRANSCRIPT

Mrs. MALONEY. I thank the gentleman.

I rise to support H.R. 3606, which would help start-ups and small businesses succeed and create jobs during this economic recovery.

I want to really congratulate and thank the ranking member for his leadership, along with the administration, during the worst recession after the Great Depression.

Christina Romer testified before this Congress that the economic shocks to our economy were three times greater than the Great Depression. We were shedding over 700,000 jobs a month when the President assumed office.

In a report by Chairman Bernanke, he showed a chart where we are digging our way out under his leadership. We have gained 3.7 million private sector jobs. This is an important step forward.

The financial reform bill that Ranking Member Barney Frank--we're going to miss you, BARNEY. You did a great job, and we all owe you a debt of gratitude for your leadership during this time.

But what we need now is a real jobs bill, not just a tweaking around the corners with a few words and a few changes in the securities law. What we should be debating today, which would have a huge impact on jobs, is the transportation bill or the President's American Jobs Act, which would create more than a half million jobs and move us forward.

This particular bill, the package is important, but it is not a comprehensive jobs bill or agenda which we need. There are some modest steps forward, but they are no substitute for a major job-creating highway bill or a passage of a full American Jobs Act.

These bills make only very modest changes for start-up companies, making it easier for them to raise capital through the Internet and the solicitation of accredited investors, and loosening certain filing and regulatory requirements for start-ups and small banks.

I support it, but it does not really do a great deal to create more jobs, which we need.

I must say that I have cosponsored parts of it, and all four of them have already passed this body overwhelmingly with over 300 votes. And I'd like to note that the administration supports the passage of this act, as Congress clearly has already done.

I do want to join the chairman in speaking in support of my colleagues, Mr. Himes and Mr. Schweikert, on the committee. They championed the provision of the bill that raises the shareholder threshold for having to register with the SEC, and this title passed this body on its own already by a 420 2 margin. That's quite an achievement for them.

But by putting another person's name on it, we have a clear example of the majority more interested in scoring points than in working in a bipartisan way for job development. I will place in the Record further comments on these bills and their importance and my work with Mr. McHenry on crowdfunding.

Summary of HR 3606, Jumpstart Our Business Startups Act

TITLE I ``REOPENING AMERICAN CAPITAL MARKETS TO EMERGING GROWTH COMPANIES ACT OF 2011'' (HR 3606, CARNEY-FINCHER)

HR 3606 creates an expanded on-ramp for newly public companies by exempting a new category ``emerging growth companies'' (companies with less than $1 billion in revenues or $700 million in public float) for up to five years from a variety of securities law requirements, including: say-on-pay votes; certain executive compensation reporting; requirements to provide 3-years of audited financials (would only need 2 years worth), SOx section 404(b) auditing of internal controls over financial reporting; and any future auditor rotation or other auditor requirements. HR 3606 also eases restrictions on communications and research related to an IPO. HR 3606 passed the Financial Services Committee by a vote of 54 1 on 2/16/12, has not previously come to the floor action.

TITLE II, ``ACCESS TO CAPITAL FOR JOB CREATORS ACT'' (HR 2940, MCCARTHY OF CA)

HR 2940 amends section 4(2) of the Securities Act of 1933 to permit use of public solicitation in connection with private securities offerings, provided that the issuer or underwriter verifies that all purchasers of the securities are accredited investors. In addition, the SEC would have to share offering materials and documentation with the states. HR 2940 passed the House 413 11 on 11/3/11.

TITLE III ``ENTREPRENEUR ACCESS TO CAPITAL ACT'' (HR 2930 MCHENRY)

HR 2930 creates a new exemption from registration under the Securities Act of 1933 for ``crowdfunding'' securities. HR 2930 permits a company to raise up to $2 million a year, with investors permitted to invest the lesser of $10,000 or 10% of his or her income annually in such companies. HR 2930 pre-empts the state regulators' registration authority for the exempt securities, but websites and issuers must register with and provide notice to the SEC, which would be shared with the states. HR 2930 passed House 407 17 on 11/3/11.

TITLE IV, THE ``SMALL COMPANY CAPITAL FORMATION ACT OF 2011'' (HR 1070, SCHWEIKERT)

HR 1070 requires the Securities and Exchange Commission (SEC) to create a new and larger exemption, effectively raising the limit from $5 million to $50 million for its Regulation A (``Reg A'') security offerings and permitting a more streamlined approach for smaller issuers. The current limit is $5 million, but the mechanism is little used due to the small size of issuances permitted. The bill would permit SEC to impose conditions on issuance under the rule, and would require periodic review of the limit. HR 1070 passed House 421 1 on 11/2/11.

TITLE V, ``PRIVATE COMPANY FLEXIBILITY AND GROWTH ACT'' (HR 2167, SCHWEIKERT)

HR 2167 allows companies to remain private longer, with no SEC filings, by raising the minimum shareholder threshold triggering public reporting for all companies from 500 to 1000 shareholders, and by excluding employees from the definition of a shareholder. HR 2167 passed the Financial Services Committee on voice vote 10/26/11, but has not previously come to the floor.

TITLE VI, ``CAPITAL EXPANSION'' (HR 4088, QUAYLE)

HR 4088 is identical to House-passed HR 1965 (Himes) except that HR 4088 removes a cost-benefit analysis study on raising the shareholder threshold for all companies (see Title V). HR 4088 allows banks and bank holding companies to remain private longer by raising the threshold triggering public reporting from 500 shareholders to 2000 shareholders. The bill also eases restrictions for discontinuing public reporting by increasing the minimum threshold from 300 shareholders to 1200 shareholders. The employee exclusion discussed in Title V also applies to banks and bank holding companies. HR 4088 has not been considered in the Financial Services Committee. However, HR 1965 passed the House 420 2 on 11/2/11.

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