On October 24, 2013, the House Subcommittee on Capital Markets and GSEs will hold a hearing on “Legislative Proposals to Reduce Barriers to Capital Formation.”  The hearing was originally scheduled for earlier in the month, as we wrote in a prior post, and was cancelled due to the government shutdown.  As discussed in the Subcommittee memo (see:  http://financialservices.house.gov/calendar/eventsingle.aspx?EventID=355850), various bills will be considered that address somewhat disparate issues, from BDCs to M&A broker-dealers, to tick size, that affect capital formation.  Perhaps the hearing will lead to a broader discussion of additional measures beyond those addressed by the proposed bills that would facilitate capital raising.  SEC Chair White in a recent speech commented on the Commission’s intention to review disclosure requirements with a view to modernizing and streamlining these.  If we had our own JOBS 2.0 “wish list,” in addition to modernizing disclosure requirements and modernizing the requirements applicable to offerings by BDCs, we might add the following (and then some):

  • Reviewing the accommodations made available to smaller public companies;
  • Adding knowledgeable employees to the definition of accredited investor;
  • Acting on the JOBS Act mandate to implement rules under Title IV for “Reg A+”;
  • Conducting a study of equity research;
  • Eliminating the IPO quiet period;
  • Reviewing existing communications safe harbors in order to modernize these and make available safe harbors for a broader array of companies;
  • Address CFTC “general solicitation” issues;
  • Revisit the WKSI standard in order to see if similar measures can be made available to a broader universe of companies;
  • Work with the securities exchanges to review their “20% Rules” (requiring a shareholder vote for private placements completed at a discount that will result in an issuance or potential issuance of securities greater than 20% of the pre-transaction total shares outstanding); and
  • Review the 1/3 limit applicable to primary issuances off of a shelf for companies under $75 million in public float.