JOBS 3.0: More Studies, but Some Deregulation, Too

JOBS 3.0: More Studies, but Some Deregulation, Too

Yesterday we highlighted features of JOBS 3.0, which combines 32 separate bills into one.

Many of the bills are merely housekeeping items with lofty titles, but, taken as a whole, they should help strengthen the economy while promoting the growth of small businesses. A brief description of the bipartisan bills included in JOBS 3.0 follows:

H.R. 79, The Helping Angels Lead Our Startups (HALOS) Act defines an “angel investor group” and clarifies a regulation issued by the Securities and Exchange Commission (SEC) to ensure that startups have the opportunity to make a presentation to interested parties without running afoul of the securities laws.

H.R. 435, The Credit Access and Inclusion Act amends the Fair Credit Reporting Act (FCRA) to authorize an entity, including the Department of Housing and Urban Development (HUD) to furnish data to consumer reporting agencies regarding an individual’s history of on-time payments with respect to a lease, or contracts for utilities and telecommunications services.

H.R. 477, The Small Business Mergers, Acquisitions, Sales & Brokerage Simplification Act alleviates costs to small business owners by simplifying the securities registration system for mergers and acquisition brokers who help transfer the ownership of small, privately held companies. It disqualifies “bad actors” from using the simplified process and does not allow transactions involving shell companies.

H.R. 1585, The Fair Investment Opportunities for Professional Experts Act modernizes the definition of accredited investor so those who do not have a high income or high net worth, but do have the education and job experience to evaluate investment risks and merits, can participate in the growth of promising companies.

H.R. 1645, The Fostering Innovation Act amends Section 404(b) of the Sarbanes-Oxley Act (SOX) to extend the exemption to comply with the law for certain low-revenue emerging growth companies that would otherwise lose their exempt status at the end of the five-year period that applies under current law.

H.R. 2219, The End Banking for Human Traffickers Act amends the Victims of Trafficking and Violence Protection Act of 2000 to add the Treasury Secretary to the President’s Interagency Task Force to Monitor and Combat Trafficking, requires the task force to submit to Congress an analysis of anti-money laundering (AML) efforts of the U.S. government and financial institutions relating to severe forms of trafficking in persons, and requires the Treasury Secretary to designate an office within the Office of Terrorism and Financial Intelligence to coordinate efforts to combat the illicit financing of human trafficking.

H.R. 2364, The Investing in Main Street amends the Small Business Investment Act by increasing the percentage a financial institution or federal savings association can invest in a small business investment company (SBIC) to 15%, while requiring the financial institution or federal savings association to receive approval from its federal regulator before investing more than 5%.

H.R. 3555, The Exchange Regulatory Improvement Act requires the SEC to set forth the facts and circumstances it considers in determining what is a “facility” of an exchange.

H.R. 3903, The Encouraging Public Offerings Act amends the Securities Act of 1933 to expand to all public companies certain provisions of Title I of the Jumpstart Our Business Startups (JOBS) Act, which previously applied only to emerging growth companies. It allows issuers to submit draft registration statements within a year of an Initial Public Offering (IPO), as well as follow-on offerings, to the SEC for confidential review before publicly filing. It also allows companies to meet with qualified institutional buyers and other institutional accredited investors before filing to gauge their interest in the offering.

H.R. 3972, The Family Office Technical Correction Act clarifies that family offices and family clients are accredited investors under Regulation D of the SEC.

H.R. 4281, The Expanding Access to Capital for Job Creators Act amends the Securities Exchange Act of 1934 to have the SEC’s Advocate for Small Business Capital Formation identify any unique challenges to rural area small businesses when identifying problems that small businesses have with securing access to capital. It also requires that the annual report made by the SEC’s Small Business Advocate include a summary of any unique issues encountered by rural area small businesses.

H.R. 4292, The Financial Institution Living Will Improvement Act amends the Dodd-Frank Wall Street Reform and Consumer Protection Act to reform the resolution plan submission “living will” process by requiring bank holding companies to submit resolution plans to the Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC) every two years. It requires the Federal Reserve and FDIC to provide feedback regarding any resolution plan within six months after a bank holding company submission and to publicly disclose the assessment framework used to review the adequacy of resolution plans.

H.R. 4294, The Prevention of Private Information Dissemination Act establishes criminal penalties for the unauthorized disclosure of living will and stress test determinations and other individually identifiable information by federal officials, consistent with existing penalties for other unauthorized disclosure of confidential records by federal officials.

H.R. 4537, The International Insurance Standards Act ensures that international insurance standards and agreements are consistent with our domestic insurance system and provides greater Congressional oversight and transparency on international insurance standard negotiations.

H.R. 4566, The Alleviating Stress Test Burdens to Help Investors Act (Secs. 2 and 3) amends the Dodd-Frank Wall Street Reform and Consumer Protection Act to exempt nonbank financial institutions not primarily regulated by either a federal banking agency or the Federal Housing Finance Agency from Dodd-Frank’s mandatory company-run stress-testing requirements. It also clarifies that the SEC and the Commodity Futures Trading Commission retain their authority to issue regulations to require nonbank financial companies to conduct a periodic analysis of the financial condition of such companies under adverse economic conditions.

H.R. 4768, The National Strategy for Combating the Financing of Transnational Criminal Organizations Act requires the President, through the Secretary of the Treasury, to develop a national strategy to combat the financial networks of transnational criminal organizations. It requires assessment of the most significant threats, and of the individuals, entities and networks that provide financial support or facilitation to those organizations.

H.R. 5288, The Common Sense Credit Union Capital Relief Act delays the effective date of the rule used by the National Credit Union Administration titled “Risk-Based Capital” from 2019 to 2021.

H.R. 5749, The Options Markets Stability Act requires prudential regulators to implement a risk-adjusted approach to value centrally-cleared exchange-listed derivatives as it relates to capital rules to better and more accurately reflect exposure and to promote market-making activity.

H.R. 5783, The Cooperate with Law Enforcement Agencies and Watch Act provides a safe harbor for financial institutions that maintain a customer account at the request of a federal, state, tribal or local law enforcement agency.

H.R. 5877, The Main Street Growth Act allows for the registration of venture exchanges with the SEC to provide a venue tailored to the needs of small and emerging companies. It offers qualifying companies one venue in which their securities can trade.

H.R. 5953, The Building Up Independent Lives and Dreams (BUILD) Act allows certain non-profits that are conducting charitable mortgage loan transactions to use either the truth in lending (TIL), good faith estimate (GFE) and HUD-1 forms, or those required under the TILA-RESPA Integrated Disclosure (TRID) rule.

H.R. 5970, The Modernizing Disclosures for Investors Act requires the SEC to provide a cost-benefit analysis of SEC Form 10-Q, including the expected impact of the use of alternative formats of quarterly reporting for emerging growth companies. The bill also directs the SEC to make recommendations for decreasing costs, increasing transparency, and increasing efficiency of quarterly financial reporting.

H.R. 6069, The Fight Illicit Networks and Detect (FIND) Trafficking Act requires the Comptroller General of the United States to carry out a study on how virtual currencies and online marketplaces are used to buy, sell, or facilitate the financing of goods or services associated with sex trafficking or drug trafficking, and for other purposes.

H.R. 6139, The Improving Investment Research for Small and Emerging Issuers Act requires the SEC to evaluate issues affecting the provision of and reliance upon investment research into small issuers and pre-IPO companies, including emerging growth companies and other small issuers.

H.R. 6177, The Developing and Empowering our Aspiring Leaders (DEAL) Act requires the SEC to revise the definition of a qualifying investment to include equity securities acquired in a secondary transaction.

H.R. 6319, The Expanding Investment in Small Businesses Act requires the SEC to study whether the current diversified fund limit threshold for mutual funds constrains their ability to take meaningful positions in small-cap companies.

H.R. 6320, The Promoting Transparent Standards for Corporate Insiders Act requires the SEC to consider certain types of amendments to Rule 10b5-1 to ensure that corporate insiders are not able to indirectly engage in illegal insider trading through changes to their trading plans.

H.R. 6321, The Investment Adviser Regulatory Flexibility Improvement Act directs the SEC to consider alternative methods for businesses or organizations to qualify as a “small business” or “small organization” for the purposes of assessing the regulatory impact on investment advisers.

H.R. 6322, The Enhancing Multi-Class Share Disclosures Act requires issuers with a multi-class share structure to make certain disclosures in any proxy or consent solicitation material that provide enhanced transparency regarding certain shareholders’ voting power.

H.R. 6323, The National Senior Investor Initiative Act creates an interdivisional task force at the SEC to examine and identify challenges facing senior investors. It also requires the Government Accountability Office to study the economic costs of the exploitation of senior citizens.

H.R. 6324, The Middle Market IPO Underwriting Cost Act requires the SEC, in consultation with the Financial Industry Regulatory Authority, to study the direct and indirect costs associated with small and medium-sized companies to undertake initial public offerings.

H.R. 6380, The Crowdfunding Amendments Act allows crowdfunding investors to pool their money into a fund that is advised by a registered investment advisor.

JOBS 3.0 won’t change the world, but it’s a step forward. And it’s good to see two parties working together for a change.

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