SEC accused of dawdling on JOBS Act enabling rules

The Securities and Exchange Commission (SEC) drew fire Thursday from a key House Republican who complained that the regulator is moving too slowly to impose congressionally mandated rules designed to help small businesses grow.

More than a year has passed since President Obama signed the Jumpstart Our Business Startups (JOBS) Act, which directs the SEC to draft and enact several rules related to capital formation. But saddled with requirements to promulgate hundreds of rules under the sweeping Dodd-Frank financial regulation law, the commission has yet to enact the JOBS rules.

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During a hearing Thursday, Rep. David Schweikert (R-Ariz.), chairman of the House Small Business subcommittee on regulations, pressed SEC officials to move faster.

“The longer we wait for action by the regulators, the more our engines of economic growth will continue to simply tread water, or worse yet starve, for lack of opportunity,” Schweikert said.

Schweikert authored two of the legislation’s main components. One provision would raise from 500 to 2,000 the number of shareholders that would require a company to register with the SEC. The threshold has not been adjusted since it was first adopted in 1964.

The second aims to help businesses gather capital via private and crowd-funded stock offerings by raising the limitation from $5 million to $50 million.

“The JOBS Act was intended to increase capital formation opportunities for small businesses,” Schweikert said. “Sadly, delays by the SEC in setting out ground rules have kept these opportunities tied up in red tape on the sidelines.”

Appearing before the panel on behalf of the SEC were Lona Nallengara, acting director of the commission’s Division of Corporate Finance, and John Ramsay, acting director of the Division of Trading and Markets.

In prepared testimony, the officials noted the volume of Dodd-Frank regulations on the commission’s plate, but assured lawmakers that teams of rule writers were working on the JOBS Act regulations.

Even before issuing proposed language, the SEC has established a website through which interested parties can begin to comment. Commissioners and their staffs have also held meetings with various groups with a stake in the final language, they testified.

“While there is still much to be accomplished, the commission and the staff have made progress on, and continue to work diligently in, implementing the JOBS Act mandates,” they said. “We look forward to completing the remaining provisions as soon as practicable."

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