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CQ: Obama Backs GOP Plan to Exempt Some Companies from SEC Registration

Washington, Sep 9 -

By Ben Weyl, CQ Staff

As part of his new jobs package, President Obama endorsed a GOP proposal that would exempt smaller companies that are planning to sell public shares from registering with the Securities and Exchange Commission.

In his Thursday speech, Obama said his plan would “cut away the red tape that prevents too many rapidly growing startup companies from raising capital and going public.”

Specifically, the administration is calling for companies that plan to sell up to $50 million in shares as part of a public offering to be exempt from registering with the Securities and Exchange Commission. Current law exempts companies that manage up to $5 million.

The proposal echoes a bill (HR 1070) authored by Rep. David Schweikert, R-Ariz., which was approved by the House Financial Services Committee by voice vote in June.

Schweikert said Friday that he was pleased to hear the president’s support for the proposal, and he said it should give the measure a boost.

“The White House does get some credit for looking at . . . the Republican jobs agenda that we are moving through Financial Services,” he said. “We’re hoping this is one of the good ideas that can become law fairly soon.”

Schweikert said his bill was needed because it has becoming increasingly costly to bring a small company public, and he said it would help reverse “the collapse of our [initial public offering] markets in this country.”

He added that making it easier for companies to be traded on public exchanges would in turn spur job creation.

“We know when companies go public, that is their peak of their hiring,” said Schweikert. “With new capitalization, they buy new capital equipment and they hire employees.”

The administration agrees, arguing in its factsheet for the jobs plan, “this will make it easier for entrepreneurs to raise capital and create jobs.”

Schweikert said he did not know when his bill might see action on the House floor. He said a bipartisan Senate companion measure is expected to be introduced in the coming weeks.