A group of top House Republicans is accusing the Securities and Exchange Commission (SEC) of slow-walking implementation a law aimed at helping small startups raise capital, one of the 112th Congress's signature achievements.
In a letter sent Tuesday to SEC Chairman Elisse Walter and obtained by The Hill, the quartet of lawmakers said they are "surprised and troubled" to see the SEC expending resources on a project to force political spending disclosures by corporations even as they run behind in implementing the new law — the Jumpstart Our Business Startups (JOBS) Act.
"The Commission appears to be allocating its limited resources on a discretionary project wholly unrelated to its mandate to 'protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation,'" they wrote. "In light of the SEC's extraordinary delays in meetings the JOBS Act's mandatory statutory deadline, an allocation of resources devoted to non-essential rule making raises serious questions."
"At the signing ceremony in the White House Rose Garden, President Obama called the JOBS Act a 'game changer' for entrepreneurship and capital formation," the lawmakers wrote. "However, the game will not change until the SEC acts."
They note that implementation of one provision of the law, which would partially lift the ban on general solicitation for raising capital, is 246 days overdue, while rules implementing other provisions have yet to be proposed.
The members note that the SEC has made a regular habit of telling Congress it lacks the resources to implement the law on time. They go on to question why it is, then, that the SEC is expending its "limited resources" on writing a discretionary rule that would require publicly traded companies to disclose information about their political spending activities, which they contend is outside the SEC's jurisdiction.
The SEC announced in December that it was considering proposing rules requiring such a disclosure, after the idea was pushed by a bipartisan group of law professors and the SEC received hundreds of thousands of comment letters backing the idea.
However, major business groups like the U.S. Chamber of Commerce have come out strongly against such a rule, arguing it is immaterial to investors and outside the SEC's boundaries.
The lawmakers are demanding details on the amount of resources being expended on the disclosure project, as well as any communications tied to the project.
Republicans have long been critical of the SEC's implementation of the JOBS Act. In a letter sent to former SEC Chairman Mary Schapiro last August, McHenry accused her of "ignoring the will of Congress" by delaying implementation, and suggested she was doing it deliberately due to "ideological opposition." A leading sponsor of the law, McHenry later cited emails Schapiro sent saying she did not want to be "tagged with an Anti-Investor legacy" as proof of the assertion.
Schapiro also aired concerns about the law before its passage, arguing it could eliminate key investor protections.
An SEC spokesman declined to comment on the letter in advance of a formal response to lawmakers, and noted that there has been no decision made about whether to draft rules on disclosures of political contributions.
- Updated at 2:43 p.m.