Monday, August 20, 2012

House Oversight Chair Says SEC Delaying Implementation of JOBS Act Elimination of Ban on General Solicitation; Sets September Hearing

In a letter to SEC Chair Mary Schapiro, Rep. Patrick McHenry (R-NC), Chair of the TARP and Financial Services Subcommittee, said that the SEC’s decision to propose a rule eliminating the Regulation D ban on general solicitation as directed by Section 201 of the JOBS Act, rather than adopt an interim final rule, means that the Commission is unlikely to finalize the rule until next year. By ``kicking the can down the road,’’ noted Chairman McHenry, the SEC is abdicating its responsibility under the law and ignoring the will of Congress and the President. Chairman McHenry has set a hearing for September 13 to examine the SEC’s implementation of the JOBS Act, including the failure to implement Section 201 by the Act’s statutory deadline and by the deadline committed to in earlier congressional testimony.

The House Chair noted that it is over one month past the statutory deadline to implement Section 201’s direction to end the ban on general solicitation. The SEC had ample time to solicit additional public comment, said Chairman McHenry, adding that issuing an interim final rule would neither preclude additional public comment nor preclude revising the rule at a later date as appropriate. Thus, Chairman McHenry said that the fact that the SEC will now be proposing a rule after the Commission has had 130 days to seek additional comment ``can be viewed as nothing other than a delaying tactic.’’ The House Chair concluded that the Commission’s decision to propose a rule and delay implementation of this important part of the JOBS Act is a reflection of ideological opposition to a bi-partisan effort by Congress and the President to improve the conditions for capital formation.

The JOBS Act was passed by overwhelming majorities in the House and Senate and signed by the President on April 5, 2012. Chairman McHenry said that the JOBS Act reflects a bi-partisan Congressional consensus that the SEC needed to do much more to enable startup companies and other small businesses raise capital in the United States.

Chairman McHenry requested the following information from the SEC by August 30: all documents and communications between or among SEC Commissioners and staff referring or relating to potential SEC action to implement Section 201 of the JOBS Act; all communications between SEC Commissioners or staff and any outside party referring or relating to potential SEC action to implement Section 201; all documents, including legal memorandum, prepared by the SEC’s Office of the General Counsel, referring or relating to potential SEC action to implement Section 201.