Hearing of the Capital Markets and Government Sponsored Enterprises Subcommittee of the House Committee on Financial Services - "The JOBS Act at Four: Examining Its Impact and Proposals to Further Enhance Capital Formation" Garrett Opening Statement

Hearing

Capital Markets and Government-Sponsored Enterprises Subcommittee Chairman Scott Garrett (NJ-05), delivered the following remarks at a hearing entitled "The JOBS Act at Four: Examining Its Impact and Proposals to Further Enhance Capital Formation":

Congressman Scott Garrett's opening remarks as prepared for delivery:

It's not very often that Congress can look back at a major piece of legislation and be able to measure the tangible, positive impact it is having on peoples' lives and on our economy

Too often, we find ourselves -- particularly on this Committee -- counting up the costs of misguided Washington mandates and comparing them with the phantom benefits promised by the bureaucratic class

Fortunately, that is not the case today

The Jumpstart our Business Startups - or "JOBS" Act -- signed into law four years ago this month has by most measures been a resounding success for our economy and the future of innovation in America

The JOBS Act did this not by creating new federal mandates or spending taxpayer money on wasteful programs, but by empowering entrepreneurs and innovators who were struggling under a regulatory regime that was better suited for 1934 than it was for 2016

Just consider some of the following:

The JOBS Act has led to a resurgence in the initial public offering (IPO) market, with some 85% of IPO's since April 2012 coming from emerging growth companies

Companies have raised some $50 billion under the new Reg D provision that allows business to solicit an offering to the general public;

While the newly modernized "Reg A+" is only a year old, business are already beginning to issue securities under this exemption

And recent reports indicate that the SEC has already received up to 30 applications for portals under the new crowdfunding rules, which are set to go live next month

So while it's clear that many parts of the JOBS Act are working as intended, the point of this hearing is not to pat ourselves on the back and say "job well done"

For starters, because the Senate tried its best back in 2012 to neuter the crowdfunding title and the SEC has taken some liberties with other rulemakings, the JOBS Act needs some "fixing"

So I want to thank the gentleman from North Carolina, Mr. McHenry, for putting forward the "Fix Crowdfunding Act" which makes some necessary changes to help ensure Title III reaches its full potential

Additionally, I have put forward a bill -- the Private Placement Improvement Act -- that will prohibit the SEC from implementing burdensome new rules for Reg D issuers that were uncalled for by the JOBS Act

We'll also consider two other bills today

Mr. Emmer has introduced an innovative bill that would create a safe harbor for so-called "micro offerings", and Mr. McHenry has another bill which would raise the threshold for when venture capital funds would have to register with the SEC

In addition to these targeted fixes, I'm also interested in hearing from our witnesses about further areas that Congress should be addressing in order to maintain the competitiveness of our capital markets

For example, we should be exploring the cumulative burdens that come with being a public company -- including, unfortunately, some of the ridiculous disclosure requirements of Dodd-Frank as well as the outsized influence that proxy advisory firms have in the corporate governance arena

It's also time to think more about the lack of research and liquidity that exists for certain public companies, and whether the equity research Global Settlement of 2003 swung the pendulum too far and has led to a dearth of research for small cap stocks

These are all important questions, and I look forward to hearing from our witnesses today.

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