Senate Banking / House Financial Services Markups of Capital Formation Legislation
Both
the Senate Banking Committee and the House Financial Services Committee held
markups on the below package of capital formation legislation. It should be
noted that H.R. 1312, the Small Business Capital Formation Enhancement Act, has
a Senate version (S. 416) which was discussed briefly in the Senate markup but
not voted on due to a procedural issue. All the bills considered were approved,
with roll call votes taken in the House committee (the Senate committee
approved the entire package by a voice vote).
Bills
Considered
- S. 327 / H.R. 910, the “Fair Access to Investment
Research Act of 2017”
- S. 444 / H.R. 1219, the “Supporting America’s
Innovators Act of 2017”
- S. 462 / H.R. 1257, the “Securities and Exchange
Commission Overpayment Credit Act”
- S. 484 / H.R. 1366, the “US Territories Investor
Protection Act of 2017”
- S.488 / H.R. 1343, the “Encouraging Employee
Ownership Act of 2017”
- H.R. 1312, the
“Small Business Capital Formation Enhancement Act”
Senate
Markup
Chairman
Mike Crapo (R-Idaho) and Ranking Member Sherrod Brown (D-Ohio) jointly proposed
an amendment to S.327, which would give the Securities and
Exchange Commission (SEC) additional time to comply with the Act. The amendment
passed by a voice vote.
Sen.
Elizabeth Warren (D-Mass.) then introduced an amendment to S.327, which
purported to address “conflicts of interest” in cases where a broker-dealer
might have a financial interest in an exchange-traded fund (ETF) that it was
reporting on. Warren argued that her amendment would prevent broker-dealers
with financial interests in ETF’s from qualifying for the safe harbor the act
would create. Sen. Catherine Cortez-Masto (D-Nev.) praised the amendment and
voiced concerns over the growing “complexity” of ETFs. Warren then withdrew the
amendment from consideration.
Warren
introduced an additional amendment to S.327 that would have required the SEC to
adjust its definition of qualified purchasers. Warren argued the SEC’s current
definition of qualified purchasers is overly broad. She urged the committee to
discuss the matter in the future, and then withdrew her amendment.
Warren
then introduced her third and final amendment, which would have directed the
Financial Industry Regulatory Authority (FINRA) to create a fund to compensate
investors for unpaid arbitration awards against FINRA members. Warren noted
that some investors have been unable to collect court-ordered awards from
brokers. Brown and Sen. Mark Warner (D-Va.) spoke in favor of the amendment as
well. Warren withdrew the amendment, and noted her opposition to certain parts
of the legislative package broadly.
Final
Vote
After
the discussion described above ended, Crapo called for a vote on the entire
package of bills. The package was approved in its entirety by a voice vote.
Warren and Sen. Jack Reed (D-R.I.) voted against the package and requested the
record show their disapproval with it.
House
Markup
H.R. 910,
the “Fair Access to Investment Research Act of 2017”
Rep.
French Hill (R-Ark.) offered an amendment in the nature of a substitute,
explaining that his bill will increase access to research for exchange-traded
funds (ETFs). He stressed that although ETFs have grown, many broker-dealers do
not publish research on them due to current securities laws and regulations.
Hill continued that while the SEC has implemented safe harbors, as well as safe
harbors found in the JOBS Act for emerging growth companies, ETFs do not
benefit from them. He stated that if the SEC does not complete work within 270
days of the enactment of the bill, a “mirror” safe harbor will be in effect
until the work is complete. Hill concluded that his amendment only makes “minor
tweaks” that reflect the bipartisan compromise that was made in the Senate.
Chairman
Jeb Hensarling (R-Texas) noted his support for the bill, as well as Rep. Bill
Foster (R-Ill.), who added that the bill will add transparency to the financial
markets and benefit consumers. Rep. Carolyn Maloney (D-N.Y.) also noted her
support for the bill.
Final
Vote
The
amendment in the nature of a substitute passed by voice vote, and the bill was
adopted in a 56-2 vote.
H.R. 1219,
the “Supporting America’s Innovators Act of 2017”
Reps.
Patrick McHenry (R-N.C.) and Nydia Velazquez (D-N.Y.), explained that their
bill will create more opportunities for angel investing, by allowing more
accredited investors to serve as angels. Reps. Maxine Waters (D-N.Y.),
Hensarling, and Maloney noted their support for the bill.
Final
Vote
The
bill was adopted in a 54-2 vote.
H.R. 1257,
the “Securities and Exchange Commission Overpayment Credit
Act”
Rep.
Gregory Meeks (D-N.Y.) offered an amendment in the nature of a substitute,
explaining that it is a “simple fix to a pesky problem.” He continued that his
bill will allow national securities exchanges to receive credit for any
overpayments made to the SEC. Reps. Randy Hultgren (R-Ill.) and Hensarling
voiced their support for the bill.
Final
Vote
The
amendment in the nature of a substitute passed by voice vote, and the bill was
adopted in a 59-0 vote.
H.R. 1366,
the “US Territories Investor Protection Act of 2017”
Rep.
Nydia Velazquez (D-N.Y.) explained that her bill provides “fundamental”
protections for investors and investment companies that are located or
organized in U.S. territories, as well as provide a three-year compliance
period (with an additional three-years if approved by the SEC) to comply with
the 1940 Act. Reps. Hensarling and Waters voiced their support for the
bill.
Final
Vote
The
bill was adopted in a 58-0.
H.R. 1343,
the “Encouraging Employee Ownership Act of 2017”
Rep.
Randy Hultgren (R-Ill.) explained that his bill raises the “outdated” threshold
of stock ownership a company can give employees from $5 million to $10 million.
Reps. John Delaney (D-Md.), Thomas MacArthur (R-N.J.), Brad Sherman (D-Calif.),
and Ed Perlmutter (D-Colo.), and Hensarling voiced their support for the bill,
while Rep. Waters opposed the bill.
Final
Vote
The
bill was adopted in a 48-11 vote.
H.R. 1312,
the “Small Business Capital Formation Enhancement Act”
Rep.
Bruce Poliquin (R-Maine) offered an amendment in the nature of a substitute,
explaining that it is a “common sense bill” that asks the SEC to report what
actions it should take at the end of their public forums, based on
recommendations received. Rep. Hensarling voiced his support for the bill.
Final
Vote
The
amendment in the nature of a substitute was adopted by voice vote, and the bill
was adopted in a 58-0 vote.
For
more information on this markup, please click here.
,Blog Tags:,Blog Categories:,Blog TrackBack:,Blog Pingback:No,Hearing Summaries Issues:Capital/Resolution Authority/SIFIs,Hearing Summaries Agency:House Financial Services Committee,Publish Year:2017
Both
the Senate Banking Committee and the House Financial Services Committee held
markups on the below package of capital formation legislation. It should be
noted that H.R. 1312, the Small Business Capital Formation Enhancement Act, has
a Senate version (S. 416) which was discussed briefly in the Senate markup but
not voted on due to a procedural issue. All the bills considered were approved,
with roll call votes taken in the House committee (the Senate committee
approved the entire package by a voice vote).
Bills
Considered
- S. 327 / H.R. 910, the “Fair Access to Investment
Research Act of 2017” - S. 444 / H.R. 1219, the “Supporting America’s
Innovators Act of 2017” - S. 462 / H.R. 1257, the “Securities and Exchange
Commission Overpayment Credit Act” - S. 484 / H.R. 1366, the “US Territories Investor
Protection Act of 2017” - S.488 / H.R. 1343, the “Encouraging Employee
Ownership Act of 2017” - H.R. 1312, the
“Small Business Capital Formation Enhancement Act”
Senate
Markup
Chairman
Mike Crapo (R-Idaho) and Ranking Member Sherrod Brown (D-Ohio) jointly proposed
an amendment to S.327, which would give the Securities and
Exchange Commission (SEC) additional time to comply with the Act. The amendment
passed by a voice vote.
Sen.
Elizabeth Warren (D-Mass.) then introduced an amendment to S.327, which
purported to address “conflicts of interest” in cases where a broker-dealer
might have a financial interest in an exchange-traded fund (ETF) that it was
reporting on. Warren argued that her amendment would prevent broker-dealers
with financial interests in ETF’s from qualifying for the safe harbor the act
would create. Sen. Catherine Cortez-Masto (D-Nev.) praised the amendment and
voiced concerns over the growing “complexity” of ETFs. Warren then withdrew the
amendment from consideration.
Warren
introduced an additional amendment to S.327 that would have required the SEC to
adjust its definition of qualified purchasers. Warren argued the SEC’s current
definition of qualified purchasers is overly broad. She urged the committee to
discuss the matter in the future, and then withdrew her amendment.
Warren
then introduced her third and final amendment, which would have directed the
Financial Industry Regulatory Authority (FINRA) to create a fund to compensate
investors for unpaid arbitration awards against FINRA members. Warren noted
that some investors have been unable to collect court-ordered awards from
brokers. Brown and Sen. Mark Warner (D-Va.) spoke in favor of the amendment as
well. Warren withdrew the amendment, and noted her opposition to certain parts
of the legislative package broadly.
Final
Vote
After
the discussion described above ended, Crapo called for a vote on the entire
package of bills. The package was approved in its entirety by a voice vote.
Warren and Sen. Jack Reed (D-R.I.) voted against the package and requested the
record show their disapproval with it.
House
Markup
H.R. 910,
the “Fair Access to Investment Research Act of 2017”
Rep.
French Hill (R-Ark.) offered an amendment in the nature of a substitute,
explaining that his bill will increase access to research for exchange-traded
funds (ETFs). He stressed that although ETFs have grown, many broker-dealers do
not publish research on them due to current securities laws and regulations.
Hill continued that while the SEC has implemented safe harbors, as well as safe
harbors found in the JOBS Act for emerging growth companies, ETFs do not
benefit from them. He stated that if the SEC does not complete work within 270
days of the enactment of the bill, a “mirror” safe harbor will be in effect
until the work is complete. Hill concluded that his amendment only makes “minor
tweaks” that reflect the bipartisan compromise that was made in the Senate.
Chairman
Jeb Hensarling (R-Texas) noted his support for the bill, as well as Rep. Bill
Foster (R-Ill.), who added that the bill will add transparency to the financial
markets and benefit consumers. Rep. Carolyn Maloney (D-N.Y.) also noted her
support for the bill.
Final
Vote
The
amendment in the nature of a substitute passed by voice vote, and the bill was
adopted in a 56-2 vote.
H.R. 1219,
the “Supporting America’s Innovators Act of 2017”
Reps.
Patrick McHenry (R-N.C.) and Nydia Velazquez (D-N.Y.), explained that their
bill will create more opportunities for angel investing, by allowing more
accredited investors to serve as angels. Reps. Maxine Waters (D-N.Y.),
Hensarling, and Maloney noted their support for the bill.
Final
Vote
The
bill was adopted in a 54-2 vote.
H.R. 1257,
the “Securities and Exchange Commission Overpayment Credit
Act”
Rep.
Gregory Meeks (D-N.Y.) offered an amendment in the nature of a substitute,
explaining that it is a “simple fix to a pesky problem.” He continued that his
bill will allow national securities exchanges to receive credit for any
overpayments made to the SEC. Reps. Randy Hultgren (R-Ill.) and Hensarling
voiced their support for the bill.
Final
Vote
The
amendment in the nature of a substitute passed by voice vote, and the bill was
adopted in a 59-0 vote.
H.R. 1366,
the “US Territories Investor Protection Act of 2017”
Rep.
Nydia Velazquez (D-N.Y.) explained that her bill provides “fundamental”
protections for investors and investment companies that are located or
organized in U.S. territories, as well as provide a three-year compliance
period (with an additional three-years if approved by the SEC) to comply with
the 1940 Act. Reps. Hensarling and Waters voiced their support for the
bill.
Final
Vote
The
bill was adopted in a 58-0.
H.R. 1343,
the “Encouraging Employee Ownership Act of 2017”
Rep.
Randy Hultgren (R-Ill.) explained that his bill raises the “outdated” threshold
of stock ownership a company can give employees from $5 million to $10 million.
Reps. John Delaney (D-Md.), Thomas MacArthur (R-N.J.), Brad Sherman (D-Calif.),
and Ed Perlmutter (D-Colo.), and Hensarling voiced their support for the bill,
while Rep. Waters opposed the bill.
Final
Vote
The
bill was adopted in a 48-11 vote.
H.R. 1312,
the “Small Business Capital Formation Enhancement Act”
Rep.
Bruce Poliquin (R-Maine) offered an amendment in the nature of a substitute,
explaining that it is a “common sense bill” that asks the SEC to report what
actions it should take at the end of their public forums, based on
recommendations received. Rep. Hensarling voiced his support for the bill.
Final
Vote
The
amendment in the nature of a substitute was adopted by voice vote, and the bill
was adopted in a 58-0 vote.
For
more information on this markup, please click here.