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The Reopening American Capital Markets to Emerging Growth Companies Act of 2011

Floor Speech

Location: Washington, DC

Mr. FINCHER. Mr. Speaker, unemployed Americans are crying out for more jobs and urging Congress to review rules and regulations that stifle innovation, economic growth, and job creation. I am introducing the Reopening American Capital Markets to Emerging Growth Companies Act of 2011 for one reason: to increase job creation on Main Street. Burdensome costs are discouraging companies from going public, which deprives firms of the capital needed to expand their businesses and hire more American workers.

During the last fifteen years, fewer and fewer start-up companies have pursued Initial Public Offerings (IPOs) to access the capital needed to expand their businesses, develop innovative products, and hire new employees. The number of IPOs in the United States is slipping behind the rest of the world in terms of growing our markets. Other markets are growing or holding steady, while the United States continues to decline. This is especially true in the Asian markets, which have seen an explosion of new public companies in recent years.

Since 2010, the Asian markets have had nearly 700 new IPOs compared to less than 300 in the United States during the same time-frame. Unfortunately, federal regulatory burdens are a major contributing factor in the steep drop of IPOs in the United States.

This decline is of concern because going public provides opportunities for companies to raise badly needed capital in order to expand, reinvest, and create jobs. From 2008-2010, 21 percent of the United States GDP was generated by venture capital-backed start-up companies. In addition, an August 2011 survey of CEOs conducted by the IPO Task Force found that over 90 percent of job growth occurs after a company goes public.

Unfortunately, a series of ``one-size-fits-all'' laws and regulations have changed the nature of the United States' capital markets and had a disproportionate cost on smaller American public companies. Washington's regulatory oversteps have harmed American workers by eliminating jobs that are created when a start-up company decides to go public. Instead, to avoid costly regulatory requirements, many companies decide to merge with others, which usually results in job cuts.

To help solve this problem, my bill would create a new category of issuers, called ``Emerging Growth Companies'' that have less than $1 billion in annual revenues when they register with the SEC and less than $700 million in public float after the IPO. These companies will have as many as five years to transition to full compliance with a variety of federal regulations that are expensive and burdensome to new companies. This ``on-ramp'' status will allow small and midsize companies the opportunity to save on expensive compliance costs and create cash needed to successfully grow their businesses and create new American jobs.

I am proud to have Mr. CARNEY from Delaware and 26 additional co-sponsors from both sides of the aisle join me in introducing this bill today. With unemployment holding steady just under 9 percent, this bill would help bring investments back to the United States and help our best job creators put Americans back to work.

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