Democrats Succeed on Dodd Bill Cloture Vote in Senate; Final Vote Is Expected Friday

“The Harkin Amendment would overturn the SEC rule, which is designed to provide disclosure, suitability, and sales practice protections afforded by state and federal securities laws,” AARP wrote in a letter to the Senate. “If this amendment is adopted, the industry will be encouraged to develop hybrid products in the future specifically designed to evade a regulatory regime designed to protect consumers.”

In a May 14 letter to the Senate, NASAA and CFA said regulating equity-indexed annuities as securities “is long overdue and vitally important to our nation’s investors.”

Meanwhile, a bipartisan amendment that’s designed to ease restrictions in the financial reform bill for accredited investors, which was sponsored by Senators Kit Bond (R-Missouri) and Senate Banking Committee Chairman Christopher Dodd (D-Connecticut) and co-sponsored by Senators Mark Warner (D-Virginia), Scott Brown (R-Massachusetts), Maria Cantwell (D-Washington) and Mark Begich (D-Alaska), was adopted by voice vote May 17 as part of Dodd’s financial reform bill.

The amendment, the Senators say, “promotes small business startups by speeding and increasing the availability of essential seed capital from qualified investors. Specifically, the Bond, Dodd, Warner, Brown, Cantwell and Begich amendment eliminates the language in the underlying bill that required a 120 day Securities and Exchange Commission review period for investors that prove an annual income in excess of $200,000 and net worth totaling more than $1 million.”

“Given today’s rather anti Wall Street sentiment, it is refreshing to see that capital raising, especially for small businesses, is properly recognized for having great value to Main Street,” says Michael Tannenbaum, a partner in the law firm of Tannenbaum Helpern Syracuse & Hirschtritt in New York. “Job creation must be given a high priority these days and this clearly is a step in the right direction.”

The Senators say that “promoting investments in startups is particularly important as the nation’s unemployment rate continues to hover just under 10% and the necessity for small business job creation remains critical. The amendment also seeks to promote integrity in private placements and protect would-be investors and the American public from fraud by prohibiting felons and other known bad-actors from seeking to raise investment and capital.”