The House Financial Services Committee passed eight “economic growth” bills on Thursday that range from requiring the SEC to perform a more thorough cost-benefit analysis on its rules, exempting private fund advisors from certain aspects of the JOBS Act, a “fix” to crowdfunding bill, legislation updating the Investment Advisers Act, as well as a bill protecting senior investors.
Two of the bills, H.R. 5429, the SEC Regulatory Accountability Act and H.R. 4852, the Private Placement Improvement Act of 2016, were introduced by Rep. Scott Garrett, R-NJ, chairman of the Capital Markets Subcommittee.
Garrett’s bill would require the SEC to “demonstrate that any rules it proposes will help our businesses grow by performing a cost-benefit analysis.”
Garrett argued that his bill “codifies guidance” that President Barack Obama gave to executive branch agencies and will “lend credibility to the SEC’s rules, and ensures that businesses and start-ups have suitable supervision from the SEC and are not burdened by costly overregulation.”
A version of the SEC Regulatory Accountability Act passed the House in 2013, as H.R. 1062, by a bipartisan vote.
Americans for Financial Reform, however, argued that the bill –if eventually passed into law—“would impose crippling new procedural obligations” on the SEC “and grant Wall Street firms new legal powers to overturn SEC rules, in a transparent move to make forceful agency action impossible.”
The Private Placement Improvement Act “makes a single notice of sales sufficient for exemption” from compliance with Regulation D, Garrett said, arguing that the bill helps the JOBS Act “reach its full potential by maintaining a clear and common-sense approach to regulations for private offerings.”
Americans for Financial Reform, argued, however that these “major new exemptions” under the Act include not requiring that funds have an annual independent audit of their client funds and securities holdings – “a precaution that could be crucial in preventing a fund from claiming to own securities when it actually does not, as Bernie Madoff did.”