TheCorporateCounsel.net

Having worked at the SEC during the heyday of penny stock fraud, I can’t help but chuckle at the notion of Congress trying to ramp those terrible deals back up in the just passed “Accelerating Access to Capital Act” (HR 2357), which incorporates the “Micro Offering Safe Harbor Act” and the “Private Placement Improvement Act.” Of course, not every penny stock offering was fraudulent – but plenty were back then. President Obama has threatened to veto this bill if the Senate ever passed it. Here’s the intro from this WSJ article:

Penny-stock firms, which regulators warn are more susceptible to manipulation by swindlers and company insiders, would be granted access to a regulatory shortcut for selling stock under legislation approved Thursday by the House of Representatives. The House voted 236-178, largely along party lines, to approve legislation that would allow microcap companies to tap a method of issuing shares that typically involves less oversight by regulators. Republicans who supported the legislation said it would allow smaller companies to use a fundraising tool that has so far been restricted to bigger companies. “Extending these cost-saving provisions to smaller companies that large companies are currently able to enjoy is absolutely critical, and makes a difference for in their ability to issue additional offerings, expand their business and create more jobs,” said Rep. Ann Wagner (R., Mo.), who sponsored the legislation. Only one Republican opposed it.

The bill, which doesn’t have a Senate sponsor, would allow microcap companies, including those that don’t meet exchange-listing standards, to offer stock on a rolling basis without having each sale approved by the Securities and Exchange Commission. The SEC defines microcaps as companies whose shares outstanding are valued at less than $300 million.

Meanwhile, here’s a letter from CII about the proxy advisors bill…

House Passes Private Equity Deregulation Bill

Here’s news from the intro of this WSJ article:

House lawmakers on Friday approved a bill to ease regulatory requirements on private-equity managers, legislation that the White House has threatened to veto. The House voted 261 to 145 to advance the bill sponsored by Rep. Robert Hurt (R., Va.), largely along party lines. The measure exempts private-equity firms from having to provide regulators with certain information, such as the debt levels of their portfolio companies and the countries where investments were made.

The legislation, which lacks a companion bill in the Senate and is opposed by the Obama administration, faces long odds of becoming law. Its likelihood of enactment hangs on the possibility of its provisions being added to a must-pass spending bill Congress often advances at the end of the year. The bill comes after years of failed attempts by the industry to exempt most managers of private-equity funds from having to register with the Securities and Exchange Commission. Instead, Friday’s legislation aims to roll back regulatory provisions that supporters say are unduly burdensome and crimp funds’ investment in companies that create jobs. Thirty-five Democrats supported the measure. Managers of private-equity funds pool their money alongside institutional investors such as pension funds and university endowments to buy equity stakes in companies or pieces of them.

Before Friday’s vote, the House agreed to modify some provisions that opponents found objectionable, approving by voice vote an amendment sponsored by Rep. Bill Foster, an Illinois Democrat. The amendment has the effect of preserving investor-protection rules set up in the wake of the Bernard Madoff Ponzi scheme. Those rules require that funds undergo a third-party audit or a surprise SEC examination to verify they actually own the assets they say they do.

Notables While I Was Gone: To Fly (With Bruno)

1. Nice scoop by John about a possible SEC Enforcement sweep over non-GAAP disclosures.

2. The SEC proposes to mandate links to exhibits! A capital idea that was long overdue. I’ll be blogging more about my own ideas on this – & may even submit my 1st personal comment letter to the SEC about a rulemaking!

3. Corp Fin has been able to get out a slew of proposals despite the limitations of having only three sitting SEC Commissioners! Bravo!

4. While I was gone, John did a helluva job with the Penske file – but he clearly isn’t Penske material (I didn’t even know that Mr. Tuttle was finished interviewing)…

5. Switzerland is awesome! Great vaca. Wasn’t planning on running off a steep cliff & paragliding. But it happened…here’s the 3-minute video to prove it!

– Broc Romanek