GOP attempts to roll back the Dodd-Frank Act under the guise of job creation continue.
Rep. Scott Garrett, R-N.J., chairman of the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises, plans to hold a hearing on Wednesday, March 16, on “Legislative Proposals to Promote Job Creation, Capital Formation, and Market Certainty,” to examine five draft bills—four of which would amend or repeal provisions of the Dodd-Frank Act.
The four draft bills are: The Small Business Capital Access and Job Preservation Act; The Business Risk Mitigation and Price Stabilization Act of 2011; The Burdensome Data Collection Relief Act; The Asset-Backed Market Stabilization Act of 2011.
The fifth bill to be discussed on Wednesday is The Small Company Formation Act of 2011, which would update an existing Securities and Exchange Commission (SEC) rule “to better promote capital formation.” According to a memorandum distributed to Committee staffers on Tuesday and obtained by AdvisorOne, this draft legislation would increase the offering threshold for companies exempted from SEC registration under SEC Regulation A from $5 million—the threshold set in the early 1990s—to $50 million. The bill also requires the SEC to re-examine the threshold every two years and report to Congress on decisions regarding the adjustment of the threshold. The bill also would provide the SEC with the authority to increase the threshold.
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The first draft bill, the Small Business Capital Access and Job Preservation Act, seeks to halt the registration of private investment funds with the SEC. Dodd-Frank amended the Investment Adviser Act of 1940 to require most advisors to private investment funds to register with the SEC. But the draft legislation argues that because private equity funds “are not a source of systemic risk, subjecting their advisers to [SEC] registration requirements imposes a burden on them while doing nothing to make the financial system more stable or less risky.”
Moreover, the bill says that “given the costs of registration and ongoing compliance, subjecting private equity advisers to these registration requirements diverts capital, time, and effort from activities that result in job creation.”