By Jesse Hamilton
Bloomberg News
U.S. Lawmakers should reduce the $1 billion annual revenue threshold for easing regulations on newly public companies in legislation now being considered by the Senate, said Securities and Exchange Commission Chairman Mary Schapiro.
Several provisions of the so-called JOBS Act, a House-approved bill designed to ease regulations for small and emerging companies, go too far, Schapiro said in a letter to Senate Banking Committee Chairman Tim Johnson, a South Dakota Democrat, and Richard Shelby of Alabama, the committee’s senior Republican. The House language would allow “even very large companies” to bypass investor protections, Schapiro said.
“A lower annual revenue threshold would pose less risk to investors and would more appropriately focus benefits provided by the new provisions on those smaller businesses that are the engine of growth for our economy,” Schapiro said in the letter. Giving so-called on ramp companies a break from internal controls audits is “unwarranted,” she said.
Schapiro wrote to the lawmakers after former regulators and investor advocates criticized the legislation, which passed passed the House in a 390-23 vote and has been endorsed by President Barack Obama.
Schapiro said senators now working on the bill should also consider further restrictions on its so-called crowdfunding idea to let companies solicit and pool investment online. The provision should include regulator oversight of professionals who handle such offerings and additional disclosures about the companies seeking investors, she said in the letter, adding that the idea “needs additional safeguards to protect investors from those who seek to engage in fraudulent activities.”
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