Encouraging Employee Ownership Act of 2015

Floor Speech

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Mr. HURT of Virginia. Mr. Chairman, I join the chairman of the Committee on Financial Services in my respect for the proponent of this amendment. I certainly appreciate his efforts in attempting to make this title better, but I would point out a couple of things.

The first thing I would say, as the chairman of the Committee on Financial Services has said, this is a voluntary exemption. It is a temporary exemption. We heard in the committee this Congress and in previous Congresses that the XBRL format that has been required by the SEC since 2009 has not been reliable. A Columbia study that was done in 2012 indicated at that time that only 10 percent of investors actually used, found XBRL format useful in doing analysis of public companies.

It is for those reasons that we believe that this temporary, voluntary option for smaller companies not submitting to the SEC in this format makes sense.

I would submit to you that what this amendment does is it would require all companies that are currently submitting in this form to continue. What it would do is exempt future companies. Well, it strikes me like this. If this XBRL format and process is not ready for prime time, if it is not ready for prime time for future users, then we also ought to give relief for those who are currently having to do it and would like not to do it.

I believe that we should allow all emerging growth companies and smaller issuers to take advantage of this voluntary exemption while the SEC is getting this format ready for prime time.

This amendment goes to the very essence of the underlying measure and would not substantively provide any relief to the small companies who are currently being negatively impacted by this failed XBRL system.

I urge my colleagues to oppose this amendment and ask for the support of the underlying bill.

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Mr. HURT of Virginia. Mr. Chairman, I rise in opposition to this amendment.

The first amendment that we heard about from the gentleman from California was certainly couched as a friendly amendment. This amendment, to be sure, is not a friendly amendment because what it does is strike title IV altogether. I certainly appreciate the comments made by the gentleman and the gentlewoman in support of the amendment, but I would suggest to you that this amendment is not a constructive approach.

There have been a lot of misstatements about what this title does, but the fact is this: If the SEC were ready to effectively implement XBRL, we wouldn't be having this conversation, but the SEC is not. Smaller and emerging growth companies are wasting valuable resources on a system that is not ready for prime time.

One of the things that was said earlier was that this exemption would affect 60 percent of the companies that are regulated. The truth of it is and the perspective that needs to be remembered is this:

Number one, among those 60 percent of companies, we are talking about only less than 7 percent of the market value of all public companies. So, in the grand scheme of things, we are talking about companies that are small.

The second thing we know about them is they are our most dynamic job creators, period; and the purpose of this bill, the purpose of this title, is to support those that are actually creating jobs in an economy where we need jobs desperately.

The other point that I would make is to reiterate again what the chairman said, and that is that title IV is voluntary. It is optional. If it is good for the company, then the company can choose to continue to submit this information in that format. If a company doesn't believe that it is in its best interest and there is not value to it and to potential investors, then it is something they should not have to waste time on.

The second point is that it is completely temporary. It is a completely temporary exemption that will expire in 5 years.

I agree with where we want to go in terms of the technology, but asking these small companies who are our Nation's most dynamic job creators to waste their resources on a system that is not yet useful to them or to their investors is something that we should not stand for.

With that, I ask my colleagues to oppose this amendment.

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