WASHINGTON, D.C. – Today, the U.S. House of Representatives passed the JOBS and Investor Confidence Act of 2018 (S.488) by a vote of 406 to 4. The bipartisan package of legislation is aimed at helping America’s small businesses and entrepreneurs while protecting investors.
This legislative package contained three bills introduced by Representative Trey Hollingsworth (IN-09) including the Fostering Innovation Act (H.R. 1645) to ensure costly regulations don’t stand in the way of successful biopharmaceutical research, the Senior Security Act (H.R. 6323) to strengthen protections for senior citizens’ lifelong savings and investments, and the Developing and Empowering our Aspiring Leaders Act (H.R. 6177) to improve access to capital for startups.
“By passing the JOBS and Investor Confidence Act, we’re empowering Hoosier confidence to invest in growing American firms,” said Representative Trey Hollingsworth.
Read the full text of the legislation, here.
Senior Security Act
According to a 2015 report, older Americans lose approximately $36.5 billion each year to financial scams and abuse, and these numbers are increasing as technology makes it easier for scammers to target older Americans. A 2016 survey from the Investor Protection Trust found that almost 1-in-5 seniors, approximately 7 million Americans, have reported being victims of exploitation.
H.R. 6323 creates an interdivisional task force at the SEC, composed of staff from the Division of Enforcement, Office of Compliance, Inspections and Examinations, and Office of Investor Education and Advocacy, to examine and identify challenges facing senior investors. Every two years, in consultation with other SEC offices, State securities and law enforcement authorities, State insurance regulators, and Federal agencies, the Taskforce will report its findings to Congress and recommend any regulatory or statutory changes. Further, within one year of enactment, the U.S. Government Accountability Office shall study and report on the economic costs of the financial exploitation of senior citizens.
Fostering Innovation Act
Currently, emerging growth companies (EGCs) are exempt from certain regulatory requirements for the first five years after their IPO. One of the requirements EGCs are exempt from is Sarbanes-Oxley Section 404 (b) - which requires public companies to obtain an external audit on the effectiveness of their internal controls for financial reporting. This reporting requirement is both costly and unnecessary because management is still required to assess internal controls, and these EGCs have limited public exposure.
H.R. 1645 is a narrowly-tailored fix that temporarily extends the Sarbanes-Oxley Section 404(b) exemption for an additional five years for a small subset of EGCs with annual revenue of less than $50 million and less than $700 million in public float. This legislation does not prohibit an external audit if the company or the majority of shareholders determine an audit is benefit.
Developing and Empowering our Aspiring Leaders Act
The DEAL Act requires the Securities and Exchange Commission to expand the definition of a qualifying investment to include broader equity securities. This would allow venture funds to provide necessary growth capital as those companies go public without having to register as a registered investment adviser.