GOP lawmaker accuses regulator of ‘ignoring the will of Congress’

A House Republican has accused a top financial regulator of deliberately stalling the implementation of a bill he sponsored.

Rep. Patrick McHenry (R-N.C.) accused Mary Schapiro, chairwoman of the Securities and Exchange Commission (SEC) of "abdicating" her responsibility in implementing a bill aimed at helping small companies line up capital, the JOBS Act. McHenry was a lead sponsor on the legislation.

"By kicking the can down the road, you are abdicating your responsibility to follow the law, failing to fulfill your sworn commitment to this Subcommittee, and ignoring the will of Congress and the President of the United States," he said in an Aug. 16 letter.

McHenry even went so far as to suggest that Schapiro, who had aired concerns about the bill before it was enacted, was deliberately slow-walking its implementation.

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"I am unfortunately left with no choice but to conclude that your decision to propose a rule and delay the implementation of this important part of the JOBS Act is a reflection of your ideological opposition to a bipartisan effort by Congress and the President to improve the conditions for capital formation in the United States," he said.

According to McHenry, Schapiro told him the SEC would be proposing rules implementing a portion of the law, as opposed to issuing them as interim final rules, which would give them immediate power. The rules in question would implement a provision that eliminates a ban on general solicitation and advertising of certain private securities, so long as they are sold to accredited investors.

Under the law, the SEC was required to implement that provision within 90 days of the bill becoming law. President Obama signed the JOBS Act on April 5, but Schapiro indicated early on she did not believe the SEC could get it done in that time frame.

"While we recognize the importance of the statutory mandate and are committed to acting expeditiously, as Chairman Schapiro previously stated, the 90-day deadline did not provide a realistic time frame for the drafting of a new rule, the preparation of an accompanying economic analysis, the proper review by the commission and an opportunity for public input," SEC spokesman John Nestor said Monday.

He added that the SEC's typical procedure of proposing a rule and waiting to gather feedback protects the rule from potential legal challenges.

But McHenry argued that Schapiro has had ample time to solicit comments on the provision and suggested that she was deliberately dragging her feet.

He accused Schapiro of misleading his House Oversight subcommittee when she testified on the issue in June. She told the lawmaker that the SEC would not make the July 4 deadline for lifting the ban but hoped to advance on the issue over the summer. McHenry highlighted her comments in his letter.

"I expect that in the next two days we will actually publicly publish the timeline for the commission consideration of the — lifting the general solicitation ban, and I expect that it will be done this summer," she said on June 28.

McHenry and Schapiro have not seen eye to eye on the startup measure. After the bill was approved by the House in March, Schapiro sent a letter to Senate lawmakers detailing her concerns with it, warning it could roll back needed investor protections.

When Schapiro testified before McHenry's panel in June, he chided, saying he felt "sideswiped" by her approach.

"To send an unsolicited letter in the eleventh hour, I don't think is the best way to go," he said.

Schapiro said she had previously aired her concerns with the measure before the letter but added that she would work to discuss future concerns with sponsors.