Opening Statement: Hearing on the Implemenation of the JOBS Act
The following remarks were made by Congresswoman Waters during a joint subcommittee hearing on the implementation of the JOBS Act. The hearing included members of the House Financial Services Committee and the House Oversight and Government Reform Commitee.
Thank you, Mr. Chairman, for holding a hearing this morning on the important issue of implementation of the JOBS Act.
As you know, I reluctantly supported the Act, with the hope that it would help facilitate capital formation and create jobs. I did, however, express some concerns about particular provisions in the Act, including the elimination of the wall separating investment banking from research, the expansive definition of "emerging growth companies," and the increase in exemptions for provisions put into place by Sarbanes-Oxley and Dodd-Frank.
I understand that today, we're going to focus on some aspects of the JOBS Act that require SEC rulemaking before they become effective. Some of my colleagues on the other side of the aisle have criticized the Commission for not just rushing through the process and putting a finalized rule into place before any public comment. They are apparently upset that the SEC missed a deadline for a rule that was supposed to come out in July of 2012.
Now, I would have more sympathy for their concerns if they weren't also pushing to delay other rulemakings by the SEC. Because while they complain about slowed rulemaking on a provision that would relax industry regulations, they're also:
• Passing legislation to delay any derivatives rulemaking for two years;
• Asking regulators to re-propose the Volcker Rule, which was coincidentally also due in July; and
• Trying to bog the SEC down in additional, onerous cost/benefit requirements, while not supporting an increase in their budget.
Now, I voted for the JOBS Act, and I want to see it get implemented. But complaints about the slow pace of rulemakings under the Act are simply unreasonable given these other facts I've highlighted.
In fact, I'm glad that the SEC is seeking public comment on their proposed rule eliminating the ban on general solicitation and advertising, under Title II of the JOBS Act. I had an amendment to that Title, which required that issuers of securities using this exemption take "reasonable steps" to verify that the purchasers of the securities were, in fact, "accredited investors," or individuals or entities that are supposedly sophisticated and not in need of additional investor protections. Given that this general solicitation ban has been around for decades, and given the many stakeholder perspectives on how to implement my amendment, it's appropriate that the public have the opportunity to comment on this provision.
After considering the SEC proposal, I'm a bit disappointed that they didn't require more robust verification procedures on behalf of issuers. And the Commission also should have considered the many suggestions offered by investor advocates and other stakeholders for additional measures that would decrease fraud in these expanded offerings.
I want to make sure that, as the SEC implements this provision, they are putting equal focus on all facets of their mission – including not just facilitating capital formation, but also protecting investors and maintaining market integrity. I hope to explore that with our witnesses here today and I yield back the balance of my time.