Small Company Capital Formation Act of 2011

Floor Speech

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Mr. PETERS. Mr. Speaker, I yield myself such time as I may consume.

The American people need to see our Congress taking meaningful action to help grow our economy. America is tired of too much partisanship out of Washington, and they want to see Republicans and Democrats working together on bipartisan solutions to create jobs and grow American businesses. As Chairman Bachus said earlier today, this is exactly what we are doing.

But before I go any further, I would like to thank the gentleman from Arizona (Mr. Schweikert) for introducing H.R. 1070, the Small Company Capital Formation Act, and I would also like to thank the gentleman from Arizona for working across the aisle to ensure that the concerns of both Republicans and Democrats were met in this very commonsense bill.

Mr. Speaker, this bill would permit a small company to raise up to $50 million through a security offering process that balances both streamlined registration with adequate investor protections. As of right now, the current exemption under the SEC's regulation A is little used due to the small size of issuances permitted. As a result, there were only three offerings last year.

The current offering limit of $5 million hasn't been raised since 1992, almost 20 years; and it's long past time for us to do something about it. In the last Congress, Democrats sent a letter to the SEC recommending that it raise the exemption limits. Today we can fix this problem by passing this bill.

Additionally, H.R. 1070 would also provide small and medium companies with the ability to offer securities of up to $50 million publicly without the full cost of a registered offering, potentially expanding their access to capital beyond private offerings that many use.

In the spirit of bipartisanship, Democrats also added important investor protections to this bill, such as requiring companies to provide investors with audited financial statements annually. In addition, Democrats offered investors legal recourse for misstatements companies make in their prospectus documents in order to prevent potential abuses.

Finally, the gentleman from Arizona has also worked with Democrats on the remaining issue of contention, and that was the preemption of State law. The gentleman from Arizona's substitute amendment to H.R. 1070 removes the exemption from State level review that was previously provided to an issuer using a broker-dealer to distribute and issue. Regulation A securities can be high-risk offerings that may also be susceptible to fraud, making protections provided by the State regulators an essential future.

Mr. Speaker, it's clear that we must pass this bipartisan legislation to help our small companies grow and create jobs. I urge adoption of this bill.

I reserve the balance of my time.

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Mr. PETERS. Mr. Speaker, I want to thank my friends Mr. Schweikert and Ms. Eshoo for their work on this bipartisan bill to help small companies grow and expand. As we all know, the American people want to see Congress working together to strengthen our economy and to create jobs. This bill will help companies access the capital they need to pull our Nation out from these tough economic times and put Americans back to work.

Additionally, this bill provides the necessary protections investors need to have in order to ensure that they will not be subjected to potential abuses.

Mr. Speaker, I urge my colleagues to vote for H.R. 1070, a commonsense, bipartisan bill to improve our economy, and I yield back the balance of my time.

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