Bioeconomy Research and Development Act of 2021

Floor Speech

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Mr. SHERMAN. Madam Speaker, I include in the Record the accompanying three letters from Americans for Financial Reform, the Consumer Federation of America, and Public Citizen, which express support for my amendment, No. 573, which was included in En Bloc amendment No. 1 to H.R. 4521. Americans for Financial Reform, February 2, 2022.

Dear Members of the Committee: Americans for Financial Reform support Chairman Sherman's amendments to amend H.R. 4521, the America COMPETES Act.

We support Representative Sherman's amendments that would close some of the gaps that allow covered companies to escape from financial reporting requirements with the Securities and Exchange Commission through exemptions in Regulation D, Regulation S, and Rule 144A. This would increase transparency and accountability.

The amendment would require identification of:

Issuer

Issuer's place of incorporation

Amount of issuance

Principal beneficiaries of issuer

Use of proceeds, including each country and industry where proceeds are invested. Sincerely, Americans for Financial Reform. ____ Consumer Federation of America, February 2, 2022. Re Support for Amendment #573 to H.R. 4521. Hon. Brad Sherman, Washington, DC.

Dear Congressman Sherman: On behalf of the Consumer Federation of America (CFA), I am writing to express support for your amendment to H.R. 4521, the America COMPETES Act of 2022. By requiring certain privately held issuers to disclose basic information to the U.S. Securities and Exchange Commission (SEC), your amendment will promote additional transparency in the ``private placement'' market and enhance investor protection.

CFA has long been concerned about the rapid expansion and relative opacity of the private securities markets. Under the current exempt offering framework, foreign and domestic issuers can access virtually unlimited amounts of private capital without ever having to register with the SEC or engage in ongoing reporting under the Securities Exchange Act of 1934. Moreover, many other stakeholders, including state securities regulators, SEC Commissioners, leading academics and practitioners, and others--have echoed CFA's concerns in this regard.

In December of 2020, Congress passed the Holding Foreign Companies Accountable Act, which requires that any U.S. exchange-listed foreign company be delisted if, for three consecutive years, the PCAOB is unable to inspect the primary auditor of that company. As hearings held by the House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets have established, in the event that foreign issuers--and especially issuers based in the People's Republic of China (PRC), are prevented from listing on U.S. securities exchanges pursuant to the Holding Foreign Companies Accountable Act, it is possible and indeed likely that such issuers may attempt to utilize the exempt offering framework as a means to continue to raise large amounts of capital from U.S. investors. Your amendment anticipates this possibility and takes important steps to prevent it.

In summary, your amendment will enact important reforms to the exempt offering framework to enhance transparency for the investing public with respect to privately issued securities sold by foreign issuers. Such reforms are commendable in-and- of themselves. Your amendment would also compliment the Holding Foreign Companies Accountable Act by making it more difficult for foreign issuers to ignore its requirements while continuing to raise capital from U.S. investors. For those reasons, CFA is pleased to support your amendment.

Thank you for your attention to CFA's views. Please do not hesitate to contact me should you have any questions. Sincerely, Dylan Bruce, Financial Services Counsel, Consumer Federation of America. ____ Public Citizen, Washington, DC, February 2, 2022. Hon. Nancy Pelosi, Speaker, House of Representatives, Washington DC.

Dear Speaker Pelosi: On behalf of more than 500,000 members and supporters of Public Citizen, we support an amendment sponsored by Rep. Brad Sherman (D-Calif) to the ``America COMPETES Act'' regarding disclosure requirements of certain securities transactions, including those involving Chinese corporations.

Currently, foreign companies that wish to raise capital in American securities markets may do so through a number of exemptions (Rule 506(b), Regulation S, or Rule 144a) that allow them to avoid basic disclosures that apply to standard securities. In fact, more than 60 percent of capital raised in US securities markets is generated under one of these exemptions, according to a report from the Securities and Exchange Commission (SEC). As a matter of national security and basic investor protection, we believe that improved disclosure is warranted.

The Sherman Amendment would require firms using one of these exemptions to disclose: the place of incorporation of the issuer; the amount of capital raised; the principal beneficial owners; the intended use of the proceeds; each country in which the issuer intends to invest the proceeds; and each industry in which the issuer intends to invest such proceeds. This amendment will apply to transactions of more than $25 million, or those the aggregate to more than $50 million in a one-year period. Finally, the SEC must report to the House Financial Services Committee all those transactions that relate either to a firm incorporated in the People's Republic of China or maintains significant entities within China that are consolidated in the parent company.

We believe these additional disclosures will be valuable to investors as well as those responsible for national security to better understand how American capital is deployed.

For questions, please contact Bartlett Naylor. Sincerely, Public Citizen.

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