Sunday, September 21, 2014

House Passes Consolidated Package of Securities and Regulatory Reform Measures

The House of Representatives passed a bi-partisan package of securities, tax, and regulatory reform legislation by a vote of 253 to 163, with 32 House Democrats voting for the measure. The Jobs for America Act, H.R. 4, contains two bills that have received broad bi-partisan support in the House Financial Services Committee.

The first is the Business Capital Access and Job Preservation Act, Division II, Title I of H.R. 4, which would exempt advisers to certain private equity funds from the new SEC registration requirements imposed by Title IV of the Dodd-Frank Act. Specifically, the measure exempts from SEC registration private equity fund advisers that have not borrowed and do not have outstanding a principal amount in excess of twice their funded capital commitments. The bill was introduced by Rep. Robert Hurt (R-Va.), Jim Himes (D-Conn.), and Scott Garrett (R-N.J.), Chair of the Capital Markets Subcommittee.

The second is the Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act, Division II, Title I, Originally sponsored by Rep. Bill Huizenga (R-Mich.), this measure would amend Section 15(b) of the Securities Exchange Act to reform the regulation of M&A brokers. Representative Huizenga noted that current federal law treats the sale of a small privately held business as if it were a Wall Street investment firm selling securities of a public company. The legislation establishes a streamlined and commonsense approach that allows for the sale of small- and mid-size businesses while maintaining the necessary safeguards, protecting jobs, and allowing for continued economic growth.

HR 4 has also packaged together a number of stand alone regulatory reform measures.

Regulatory Accountability Act (Sub B, Title II): Introduced by Judiciary Committee Chair Bob Goodlatte (R-VA), this measure would require federal regulators to think through new regulations better and with more public input and to adopt the least costly method of effectively implementing the law.

Regulatory Flexibility Improvements Act (Sub B, Title III): Introduced by Regulatory Reform, Commercial and Antitrust Law Subcommittee Chair Spencer Bachus (R-AL), this legislation requires federal agencies to better consider and lower adverse impacts on small businesses before they issue new regulations.

Regulations from the Executive in Need of Scrutiny (REINS) Act (Div. IV, Title I): Introduced by Rep. Todd Young (R-IN), this measure would require federal agencies to submit major regulations to Congress for approval and guarantees that no major regulations become effective until Congress approves them.

All Economic Regulations are Transparent Act (Sub B, Title I): Introduced by Rep. George Holding (R-NC), this legislation would require regulators to provide more timely, detailed information and greater transparency regarding planned or proposed regulations and prevents new rules from taking effect if they fail to do so.

Sunshine for Regulatory Decrees and Settlements Act (Sub B, Title IV): Introduced by Rep. Doug Collins (R-GA.), this measure would prevents secret settlement deals between federal agencies and pro-regulatory plaintiffs that result in new federal regulations for everyone.

Unfunded Mandates Information and Transparency Act: Introduced by Rep. Virginia Foxx, this measure would close a loophole in the Clinton-era Unfunded Mandates Reform Act (UMRA) by adding the SEC and other independent regulatory agencies to UMRA’s regime. Currently, according to Rep. Foxx, independent regulatory agencies, such as the SEC, the FCC, the CFPB and other federal agencies, can impose significant costs and burdensome requirements with little meaningful accountability and oversight. Signed by President Bill Clinton in 1995, the Unfunded Mandates Reform Act was bipartisan legislation that basically says that regulators have to evaluate a regulation’s cost and find less costly alternatives before adopting a major rule. In 1995, UMRA was imposed upon the executive agencies but not on independent federal agencies such as the SEC. Since the enactment of UMRA, those independent agencies have grown and so have their regulations.

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