November 7, 2011

Small Business Capital Formation: House Passes Four Bills

Last Thursday, as noted in this blog by Jim Hamilton, the House passed the “Access to Capital for Job Creators Act” (H.R. 2940) and the “Entrepreneur Access to Capital Act” (H.R. 2930). The first bill would remove the prohibition against general solicitation for private offerings of securities if all purchasers were accredited investors – and the second bill would require those seeking crowdfunding to notify the SEC, who would then notify state regulators, of any new offerings (but registration would not be required).

Also, as noted in this press release, on Wednesday, the House passed the “Small Company Capital Formation Act of 2011” (H.R. 1070), which would increase the Regulation A offering threshold from $5 million to $50 million (another pending bill is HR 2671, which would increase the total assets threshold from $1 million to $10 million – and the class of equity security holders of record threshold from 500-750 to 1000 – before companies would be required to register under the ’34 Act). The House also passed a bill with no name as far as I can tell (H.R. 1965), which would modify the threshold for ’34 Act registration and deregistration for bank and bank holding companies.

Given that all four of these bills were presented in the magical name of “job creation,” they passed with flying color margins. If they become law (after being combined in some fashion when reconciled with any similar Senate bills that pass), then guys like Angel from Rockford Files can run around selling stock in local brewpubs without looking over their shoulders so much…

On Saturday, the Breeders Cup featured this race that is one of the most exciting ever. Watch the light grey horse in the back of the pack named “Turallure.” And don’t stop laughing about the one called “Compliance Officer”…

DOJ Won’t Probe Ex-SEC General Counsel David Becker

Here’s a Bloomberg article with the latest on the David Becker- SEC IG saga (here’s my last blog on this):

Federal prosecutors have told former U.S. Securities and Exchange Commission General Counsel David Becker that they won’t open an investigation into whether he violated ethics laws, his attorney said. The SEC’s inspector general, H. David Kotz, in September called for the Justice Department to review whether Becker should be criminally charged for having a financial interest in a policy he worked on relating to Bernard Madoff’s Ponzi scheme. Becker inherited profits from the fraud through an account held by his late mother. “We are gratified at the decision, and it’s consistent with our view that Mr. Becker did exactly what he was supposed to do under the circumstances,” Becker’s attorney, William Baker III, said in an interview today.

Becker, who left the SEC in February to return to private legal practice, has said he had no financial interest in the agency’s Madoff policy. He had received clearance from the regulator’s ethics counsel to work on the matter in 2009. He had also informed SEC Chairman Mary Schapiro about the account. Kotz referred his report to the Justice Department’s public integrity section, which reviewed it and concluded a formal probe wasn’t warranted. A department spokeswoman, Laura Sweeney, declined to comment; Kotz didn’t respond to a request for comment.

Also check out this Bloomberg article entitled “SEC Enforcers Frozen as Internal Watchdog Kotz Unleashes ‘Chilling’ Probes.”

PCAOB Chair Speaks: Challenge Our Culture

Last week, PCAOB Chair Jim Doty delivered this speech entitled “Prizes Captured, Shops Sold, Et Cetera: Importance of Keeping Investors Properly Informed.”

Last week, the PCAOB posted this briefing paper on auditor rotation and independence, as well as these slides regarding pricing services for the Standing Advisory Group meeting set for this week…

– Broc Romanek