McHenry & Garrett Send Letter to SEC Chair White Questioning Legality of Proposed Rules
Washington, July 23, 2013 | Parker Poling (202-225-2576)
Congressman Patrick McHenry (NC-10) and Congressman Scott Garrett (NJ-5) sent a letter to SEC Chairman Mary Jo White questioning the legality of proposed rules related to implementation of Title II of the JOBS Act
Yesterday, Congressman Patrick McHenry, Chairman of the Financial Services Subcommittee on Oversight and Investigations, and Congressman Scott Garrett, Chairman of the Financial Services Subcommittee on Capital Markets, sent a letter to Securities and Exchange Commission (SEC) Chairman Mary Jo White that questions the legality of the Commission’s rules that were added to the removal of the ban on general solicitation under Title II of the JOBS Act. The Commission’s rule proposals unnecessarily burden private issuers by increasing regulations and disclosure requirements that effectively preserve the ban on general solicitation, violating the law’s intent.
The letter specifically addresses Proposed Rule 503, which requires private issuers to file a wildly-expanded Form D fifteen days before engaging in general solicitation. The construction of this complex pre-filing requirement will negatively impact smaller businesses that the JOBS Act intended to empower. The letter requests the SEC to withdraw Proposed Rule 503 in order to uphold the intent of the law.
"While I am pleased that the SEC finally took action to implement Title II of the JOBS Act, I am extremely disappointed that it completely dismissed Congressional intent in the process," Congressman McHenry said. "The SEC’s added pre-filing requirement is yet another unnecessary burden that prevents small businesses from accessing capital that they need to grow and create jobs. This letter expresses to the Commission that it must immediately withdraw the proposed rule to adhere to the law."
“In just the latest instance of unnecessary regulatory overreach, the SEC’s proposed amendments to Form D filings—over the objections of two Commissioners—are not called for under Section 201 of the JOBS Act,” Congressman Garrett said. “These amendments would likely increase regulatory burdens on small businesses seeking to conduct Regulation D offerings and thereby undermine the fundamental goals of the JOBS Act. Despite receiving a narrow and straightforward mandate from Congress, the SEC’s actions once again call into question its commitment to small business capital formation and its ability to properly execute its core mission.”
A copy of the letter can be found here.