Jumpstart Our Business Startups Act
Floor Speech
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Ms. WATERS. I yield myself 4 minutes.
Madam Chair, I rise today in support of H.R. 3606, the Jumpstart Our Business Startups Act.
Before I begin my remarks, I would like to thank Chairman Bachus, Chairman Garrett and, certainly, Ranking Member Frank for their assistance and support on this bill. We were able to work in a bipartisan manner on this bill in our committee, passing many of the provisions in the bill with strong bipartisan majorities.
H.R. 3606 is an omnibus package of small business capital formation bills, some of which we already passed through the House back in November. I was pleased to work with Representative McCarthy on a provision now included in the bill to amend securities law in order to remove the prohibition on general solicitation, or general advertising, for the Office of Securities made under rule 506 of regulation D if those securities are only sold to accredited investors.
Last year, I worked with Representative McHenry to add critical investor protection provisions to this crowdfunding bill, which previously passed the House and is now included in this package. I was also pleased to support the provision from Representative Schweikert to allow companies to raise more funds through the Regulation A process and another provision to raise minimum shareholder thresholds at which companies must register their securities with the SEC.
On the title of this bill, which deals with the emerging growth companies, the IPOs, I support the goal of this legislation, and I hope that many of the amendments offered today on this title are accepted, including my own, which is dealing with the provision of research. Again, I am supportive of this legislation, but I think that more investor protection provisions are needed.
Why did we work together to get this legislation passed?
We worked from both sides of the aisle because we are all concerned about job creation and access to capital. We have gone through a recession in this country, starting with the loans that were made in the subprime market in 2003 to 2007. We almost reached a depression, and we destroyed the housing industry in this country. So we are all working to try and not only get the housing industry revitalized, but we are also working to make sure that our small businesses have access to capital and, thus, job creation.
I am very pleased that we were able to work together on this legislation despite the fact that what Mr. Frank brought to our attention today is the kind of effort that could interfere with attempts to have bipartisanship on some of these legislative attempts that we have made. What Congressman Frank brought to our attention was that title VI of the bill, a provision that was drafted by Representative Himes, with the support of Republicans, seems to have been bare minimally reworked and rebranded as a Representative Quayle bill.
While I support the provision, I think that taking Mr. Himes' work product undermines the spirit of bipartisanship and the cooperation that was otherwise demonstrated by this bill.
Do I like every one of these bills 100 percent? No, I don't. I have some concerns and I have some questions. I even have some uncertainty when we talk about crowdfunding. I want to make sure that we're protecting the investors. I want to make sure that the proper research is isolated from the underwriters who have connections to those people that they're writing the bills for.
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Ms. WATERS. I yield myself an additional 30 seconds.
To sum up this bill, it will make it just a bit easier for some companies to raise funds in our capital markets, enabling them to grow their businesses. But make no mistake, I believe that this Congress still needs to do more on jobs. In addition to these legislative changes that enable capital formation, we need to keep teachers, police officers, and firefighters on the job; extend unemployment insurance for laid-off workers; and revitalize neighborhoods devastated by foreclosures.
A truly comprehensive approach is needed to get Americans working again, and I hope my colleagues are willing to work with me on these issues.
I reserve the balance of my time.
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Ms. WATERS. Madam Chair, I yield myself 2 minutes.
To the Members of this House and to those who are listening to this debate, you've heard this described as a jobs bill. In my earlier remarks, I, too, described this as a jobs bill. You've heard us talk about job creation, access to capital, ways by which we can support small businesses in general but IPOs in particular. You heard us talk about crowdfunding and creative means by which we can help to invigorate this economy. And so certainly this is a jobs bill. But then you heard some reference to the President's jobs bill by our minority whip, Mr. Steny Hoyer, who talked about a comprehensive approach.
Make no mistake, this jobs bill is important, and I certainly hope that it will help to stimulate the economy in ways that all of us thought that it could. However, when you take a look at this compared to the President's comprehensive legislation, then you understand what Mr. Steny Hoyer was talking about.
Mr. Steny Hoyer was talking about the President's comprehensive jobs bill that would do some very important things. It talked about job sharing. It will make sure that our teachers and our firefighters are kept on the job. It talks about school construction. It talks about aid to community college and comprehensive efforts to provide tax credits for small businesses.
So, you see, we would like everybody to understand that we're not abandoning a comprehensive effort to do real job creation and access to capital and support for small businesses. We're trying to take every opportunity, every step, as it has been mentioned time and time again.
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Ms. WATERS. I yield myself 1 minute.
Continuing the comparison between the two efforts, as has been said over and over again today, we certainly have joined in a bipartisan fashion to move this bill. Even though I am not sure and some of our Members are not sure that everything that's in all of these bills is what we absolutely understand and we're willing to say we know that it will help, it will help to deal with this economy in ways that we want it to, but we are willing to take a chance. We're willing to try.
Now, when you compare this with the President's comprehensive jobs bill, then you can see this is only one effort; and in comparison, it's a small effort in comparison to what the President has proposed. And so, let us not forget, we still have work to do. We still have to be concerned about the unacceptably high unemployment rate. As we speak today, the unemployment rate is still in excess of 8 percent.
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Ms. WATERS. I offer my amendment today in the spirit of improving the underlying bill in the area of investor protection with regard to the provisions of research provisions in title I.
First, my amendment attempts to mitigate against potentially damaging conflicts of interest between the people who will profit from an emerging growth company's IPO and the people who write research about such IPOs. This amendment provides that if a broker or a dealer is underwriting an IPO and also providing research to the public about that IPO, those research reports need to be filed with the SEC and underwriters need to be held to stricter liability for their comments.
Second, this amendment provides that if emerging growth companies are communicating orally or in writing with potential investors before or following an offering, they need to file those communications with the SEC.
During the dot-com boom of the 2000s, it was uncovered that certain research analysts were recommending companies to the investing public because their firms had an economic interest in the firm's IPO, or wanting to get other businesses from the company.
Meanwhile, those same analysts were telling their colleagues in internal emails that the company's IPOs were junk. Essentially, these analysts misled the investing public and didn't disclose their economic interest in hyping the company.
Through a global settlement and related rules coming from the scandal, we cracked down on some of these conflicts of interest. My amendment, rather than letting these conflicts be restored, would require that if underwriters are also issuing reports about a company's IPOs, they need to file those with the SEC. Filing of materials subjects underwriters to more robust liability.
Secondly, the filing of a pre- or post-offering communication with the SEC under this amendment will also hold companies to a higher level of legal liability, ensuring their communications accurately portrayed the nature of the offering. It also allows the SEC and the public to make sure that companies aren't inappropriately hyping their offering to investors.
Today we received communications, both from the Chamber of Commerce and from the Council of Institutional Investors. The Council of Institutional Investors simply said, ``The Council membership supports the provisions of section 501 of Sarbanes-Oxley and the Global Research Analyst Settlement. Those provisions bolstered the transparency, independence, oversight, and accountability of research analysts,'' and similar comments from the Chamber of Commerce.
I would urge support for my amendment and for the underlying bill. We must help our small businesses to access our capital markets, but we must also mitigate against conflicts of interest that would mislead investors. I believe my amendment strikes the right balance.
I reserve the balance of my time.
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Ms. WATERS. Mr. Chairman, I join with Mr. Capuano in saying that we don't normally agree with the Chamber of Commerce. As a matter of fact, this may be the first time that I've agreed with the Chamber of Commerce. But you have also the Council of Institutional Investors that is warning us about this research problem that we have unless we clear it up.
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