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McHenry: Efforts to Simplify Exempt Offering Framework Are Critical to Our Economic Recovery

Washington, Jun 8 -

Today, the top Republican on the House Financial Services Committee, Patrick McHenry (NC-10), sent a letter in support of the Securities and Exchange Commission’s (SEC) efforts to simplify and improve the complex exempt offering framework. In the letter, Ranking Member McHenry states that these proposed changes “would help small businesses and expand investment opportunities for Main Street investors”and encouraged the Commission to move swiftly to adopt these amendments.

Specifically, the Republican leader again expressed “particular concern with the overly burdensome requirements of Regulation Crowdfunding” and voiced his support for the proposed amendments to permit the use of certain special purpose vehicles and to increase the offering limits, which will “expand the number and scope of investors and empower small businesses to access more capital at a time when they need it most.”

Ranking Member McHenry concluded that “amendments to Regulation Crowdfunding are now more important than ever to provide businesses with the opportunity to raise capital, create jobs in our local communities, and develop innovative products and services.”

Last month, Ranking Member McHenry called on Chairman Clayton to raise the limit and make permanent recent modifications to crowdfunding as well as harmonize exempt offerings. Last year, the House passed McHenry’s bipartisan Crowdfunding Amendments Act to ensure investment crowdfunding can best support American small businesses and entrepreneurs seeking to raise capital.

Read the full text of the letter here or below:

Dear Ms. Countryman:

I write to express my support for the Securities and Exchange Commission’s efforts to simplify and improve the exempt offering framework. These efforts will increase opportunities for investors as well as expand access to capital for issuers. The proposed amendments are a step in the right direction to help companies continue to grow throughout the business cycle. This rulemaking is long overdue. I applaud Chairman Clayton and the Commission for their thorough and comprehensive review and encourage them to move swiftly to adopt the amendments.  

The exempt offering framework has become more complex over the last several decades.  The complexity has further increased as a result of the Commission’s actions taken after the JOBS Act of 2012, in direct contravention of congressional intent. This increasing complexity presents challenges to market participants, especially smaller companies with limited resources. I strongly support the proposed amendments to streamline the offering framework and increase offering and investment limits to reflect current capital raising trends in addition to the other goals of this rulemaking. These proposed changes would help small businesses and expand investment opportunities for Main Street investors while maintaining appropriate investor protections.

In my previous comment letter submitted on the Concept Release on Harmonization of Securities Offering Exemptions, I expressed particular concern with the overly burdensome requirements of Regulation Crowdfunding. These requirements hinder the ability of crowdfunding to address small-business capital needs. Specifically, the proposed amendments to permit the use of certain special purpose vehicles and to increase the offering limits will expand the number and scope of investors and empower small businesses to access more capital at a time when they need it most. 

In light of COVID-19 and the resulting economic crisis, amendments to Regulation Crowdfunding are now more important than ever to provide businesses with the opportunity to raise capital, create jobs in our local communities, and develop innovative products and services.

I believe the proposed amendments are critical to a strong economic recovery. I hope to see these long overdue changes adopted in short order.

Sincerely,                                            

Patrick McHenry

Ranking Member

Committee on Financial Services