NTU urges all Representatives to vote “YES” on H.R. 2357, the “Accelerating Access to Capital Act.” This legislation would ease and streamline the compliance burden of small firms seeking access to capital markets.
Securities regulations are exceedingly complicated and expensive to comply with, especially for smaller issuers. H.R. 2357 would help alleviate some of this costly burden for small firms by making a number of positive changes in the law.
Title I of H.R. 2357 eases the burden that Securities and Exchange Commission (SEC) regulations pose on small businesses. By simplifying and eliminating certain unnecessary SEC’s registration requirements, the bill would lower compliance costs for small businesses.
H.R. 2357 also contains two other common-sense proposals. The first is the Micro Offering Safe Harbor Act, which would establish a class of exempt securities transactions for small firms. Specifically, small businesses could exempt their securities offerings from expensive SEC registration requirements if: 1) The investor has a pre-existing relationship with an officer or shareholder with 10 percent or more of the shares of the issuing company; 2) There are fewer than 35 purchasers of the securities of the issuing company; and 3) The aggregate amount of the securities sold by the issuer does not exceed $500,000 over a 12-month period. These small steps would go a long way to spurring entrepreneurial activity by easing access to capital markets for small businesses.
Title III of H.R. 2357 is the Private Placement Improvement Act. This title would overturn a complicated proposed SEC regulation issued pursuant to the JOBS Act that will have a chilling effect on Regulation D offerings. Enacting this into law would be a significant victory for small businesses using Regulation D to raise capital.
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NTU also urges all Representatives to vote “YES” on H.R. 5424, the “Investment Advisers Modernization Act of 2016.” This legislation would update financial services laws to modern realities and help facilitate capital formation.
Since the Investment Adviser Act was enacted more than 75 years ago, the nature of the financial services industry has dramatically shifted. At the same time, federal laws have not always evolved in a similar fashion. By eliminating spurious regulations and easing undue burdens that unnecessarily increase costs for funds and investors, H.R. 5424 will provide a thoughtful response to the changing role of private equity in our financial system without compromising investor protections.
These two bills represent viable, desirable alternatives to expanding federally-backed small business programs; along with tax reform and other regulatory restraint, their passage would represent real progress for a vital sector of our economy.
Roll call votes on H.R. 2357 and H.R. 5424 will be included in our annual Rating of Congress and “YES” votes will be considered the pro-taxpayer positions.
If you have any questions, please contact NTU Counsel Clark Packard at (703) 299-8680