House Panel Chair Says SEC Proposed Regulations Implementing JOBS Act Crowdfunding Provisions are Unacceptable in Global Competitive Context

At a hearing on cross-border financial regulation and international competitiveness conducted by the House Oversight and Investigations Subcommittee, Chairman Patrick McHenry (R-NC) said that the SEC proposed regulations implementing the crowdfunding provisions of the JOBS Act are too complicated. The SEC proposal is unacceptable, he added, in a world where capital knows no boundaries and the E.U. is implementing less burdensome crowdfunding regulations. In response to a question from the Chair on the cost and benefits of the crowdfunding proposal, Alon Hillel-Tuch, CFO of an established crowdfunding platform, said that intensive study has revealed that there are friction points in the SEC proposed regulations that add to the cost of compliance. Some of these frictions could be ameliorated by the SEC, he noted, but some may have to be dealt with by Congress. More broadly, the Chair said that, since financial regulation is now global and somewhat integrated, particularly those implementing the Dodd-Frank Act, Congress must become aware of the impact and costs of financial regulations as they involve U.S. competitiveness. He noted that the U.S. is currently a net importer of capital and a net exporter of financial services; and that the Dodd-Frank Act threatens this rubric. Subcommittee Ranking Member Al Green (R-TX) said that he does not oppose a congressional review of the efficacy of regulations in the global financial environment. But he added that Congress should amend Dodd-Frank, not end it, adding that Dodd-Frank is necessary and that many of its provisions have been emulated globally. He also noted that the SEC is woefully underfunded to the extent that some mission-critical projects may be compromised. He supports the President’s budget request for the SEC, which would increases the Commission’s budget 30 percent over the 2014 enacted levels.