Tuesday, March 06, 2012

Obama Administration Issues Statement of Policy Endorsing House Capital Formation, On Ramp, and Crowdfunding Legislation

The Obama Administration has issued a formal Statement of Policy supporting the Jumpstart Our Business Startups (JOBS) Act, HR 3606, which would create an on ramp for companies to go public, authorize crowdfunding, reform Regulations D and A, and raise the 500-shareholder threshold for private companies and community banks. The Act reduces the costs of going public by providing companies with a temporary reprieve from SEC regulations by phasing in certain regulations over a five‐year period, thereby allowing smaller companies to go public sooner. The measure also removes an SEC regulatory ban preventing small businesses from using advertisements to solicit investors. HR 3606 would also remove SEC restrictions that prevent crowdfunding so entrepreneurs can raise equity capital from a large pool of small investors.

The Administration noted that HR 3606 will help startups and small businesses succeed and create jobs, which is fundamental to having an economy built to last. The President outlined a number of ways to help small businesses grow and become more competitive in his September 8, 2011, address to a Joint Session of Congress on jobs and the economy, as well as in the Startup America Legislative Agenda he sent to the Congress last month.

In both the speech and the agenda, notes the Policy Statement, the President called for cutting the red tape that prevents many rapidly growing startup companies from raising needed capital. The President is encouraged to see that there is common ground between his approach and some of the proposals in H.R. 3606. The Administration looks forward to continuing to work with the House and the Senate to craft legislation that facilitates capital formation and job growth for small businesses and provides appropriate investor protections.