A top Republican outlined on Thursday proposals that he said he expects soon will become bills to help improve capital formation and incentivize initial public offerings. The collection includes a proposal to press the nation's securities regulator to adopt a measure that seeks to help entrepreneurs raise capital cheaply, known as "crowdfunding."
Rep. Scott Garrett, R-N.J., chairman of a key financial services subcommittee on Capitol Hill, told The Deal that the package of measures under discussion are bipartisan and may be included in a collection of bills dubbed JOBS Act 2.0, which follows bipartisan legislation approved a year ago that sought to help small companies accumulate capital.
That law, known as the Jumpstart Our Business Startups Act, is being transformed into regulation by the Securities and Exchange Commission.
Specifically, Garrett, who spoke to The Deal after addressing a security traders conference, said he was concerned that the SEC has not yet adopted a crowdfunding rule, which was required by the JOBS Act. It seeks to ease restrictions on entrepreneurs so they can raise capital cheaply from retail investors employing new online funding portals. He suggested that if the SEC can't get organized to adopt rules, Congress can "effectively" approve the regulations through a new statute.
However, he acknowledged that SEC Chairwoman Mary Jo White has said it is "her priority" to adopt rules in this area and he hopes she will get this done in a bipartisan manner.
Garrett also said the House Financial Services Committee, of which he is a key member, is working on a variety of other JOBS Act 2.0 measures, including one that would set up a pilot program allowing small and midsized companies to widen the one-penny spread increment that is used to trade securities.
Backers argue that the measure would increase the visibility of small publicly traded companies by giving small boutique investment banks the incentive to trade them more, which could convince many private companies to take the IPO plunge knowing that their stock will not be ignored in the public markets. However, opponents say it will increase the cost of trading for retail, institutional and high-speed investors.
Garrett also outlined other areas for possible bills, including measures to modernize the regulatory regime for business development companies and an effort to "appropriately scale" costly SEC filing rules for small publicly traded companies.
He also said the committee is evaluating how they can encourage more research and analyst coverage of small public companies.
Garrett also noted that a small-business advisory committee that meets regularly at the SEC has a number of other ideas that the House Financial Services Committee is considering. The SEC advisory committee has made a series of nonbinding recommendations to the commission in recent months, including a suggestion that the SEC should help facilitate the creation of an exclusive exchange for micro- and small-capitalization public companies that would only be available for high-net-worth investors.
Backers said companies would be encouraged to list on an exchange for high-net-worth investors because they won't be required to provide costly prospectuses and disclosures that are necessary when retail investors are involved.
After a shakeup that claimed the jobs of co-CEOs Jürgen Fitschen and Anshu Jain, Deutsche Bank's global head of M&A Henrik Aslaksen is leaving the bank. For other updates launch today's Movers & shakers slideshow.
The Deal's Rhonda Schaffler speaks with Marc Shaffer an M&A transaction advisory partner with Crowe Horwath. Marc discusses Crowe Horwath's new study, Steering Successful Growth: Value Capture in M&A. More video