Floor Updates

Durbin

Morning Business

Mar 14 2012

04:56 PM

Senator Durbin: (4:08 PM)
  • Spoke on the JOBS Act.
    • SUMMARY "This bill is really designed to change disclosure, accounting and auditing standards and to exempt many firms and corporations from the Securities and Exchange Commission oversight. One part of this bill exempts newly public firms with less than $1 billion in revenue from certain disclosure, accounting and auditing standards over a transition of a period of five years after they first go public. It exempts firms with less than $1 billion in revenue and less than $700 million in traded stock, which they characterize as emerging growth companies, they would be exempt from regulation for the most part. That would in fact exempt more than 90% of the companies going public in America. The so-called emergency emerging growth companies would be exempt from stocks 404-b which requires a firm's auditor to attest to and report on controls. It would exempt firms from safeguards that we adopted in this country after Enron. There is little justification for rolling back the Dodd-Frank provisions on executive compensation, but firms would be exempt in many respects because of this bill. It is hard to imagine that a firm with $1 billion in revenue doesn't have the resources to disclose golden parachutes in executive compensation agreements. Exempting firms from new accounting standards would create a two-tiered accounting system that's bound to be confusing. The financial accounting standards board, says provisions would undermine the rigorous process already undertaken. We're other part of this bill increases the amount of capital private companies may raise under a public offering from $5 million to $50 million annually and remain exempted from SEC oversight. They want to take a lot of this capital formation and business formation off the grid. They don't want oversight and disclosures and transparency. That's what this bill does. It fails to include a multiyear cap on the amount firms may raise and allows firms to raise $50 million annually indefinitely while avoiding SEC registration and disclosure. It goes on, something called crowd funding. It allows firms to remain exempt from SEC registration and raise up to $1 million annually through crowd funding. What does that mean? Large numbers of individuals contributing a small amount of money to a company. retail and unsophisticated investors will be allowed to invest up to $10,000 through crowd funding sites with few disclosure requirements. There's another provision that allows private firms that sell more than $5 million in securities to generally solicit or advertise private offerings without being required to register with the SEC provided the firm verifies all purchasers or credited investors. The risk of fraud through cold calls and other sales tactics increases significantly with the elimination of a requirement that firms have a preexisting relationship with potential investors."