The House Financial Services Committee approved six bills intended to enhance capital formation.

The legislation includes the:

  • Fair Access to Investment Research Act of 2017 (H.R. 910), which will require the SEC "to provide a safe harbor related to certain investment fund research reports," and will exempt from certain otherwise applicable statutes a broker-dealer distributing research regarding SEC-registered investment companies, including open-end investment companies of which it may be participating in an offering;
  • Supporting America's Innovators Act of 2017 (H.R. 1219), which will "expand the investor limitation for qualifying venture capital funds under an exemption from the definition of an investment company." The expansion is actually quite limited: a qualifying venture fund could have up to 250 investors (as opposed to 100 under current law), but the maximum size of a qualifying fund would be only $10 million;
  • Securities and Exchange Commission Overpayment Credit Act (H.R. 1257), which will require the SEC "to refund or credit excess payments made" to the agency. This may not be considered a matter of general interest. SEA Section 31 requires each exchange to pay the SEC a fee based on the amount of trading on the exchange. This bill would allow each exchange to require that the SEC reimburse any overpayments;
  • U.S. Territories Investor Protection Act of 2017 (H.R. 1366), which will terminate an Investment Company Act exemption for companies located in Puerto Rico, the Virgin Islands, and any other possession of the United States. Section 6(a) of the Investment Company Act provides an exemption from registration under the Act for funds based in certain territories of the United States, including Puerto Rico. This bill would eliminate the exemption for new funds and require existing funds to come into compliance with the ICA within three years (which time period could be extended by the SEC);
  • Encouraging Employee Ownership Act of 2017 (H.R. 1343), which will require the SEC to "increase the threshold amount" of securities that may be sold before requiring issuers "to provide certain disclosures relating to compensatory benefit plans." This bill would slightly increase the value of securities that an issuer could sell pursuant to Rule 701 of the Securities Act before triggering a disclosure threshold; and
  • Small Business Capital Formation Enhancement Act (H.R. 1312), which will "require an annual review by the [SEC] of the annual government-business forum on capital formation." This bill is essentially intended to force the SEC to focus on improving the opportunities for small businesses to raise capital.

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