House bill to impose a deadline on SEC JOBS Act rulemaking is narrower than you might think

My ears perked up when I heard that the House of Representatives had passed another bill introduced by Representative Patrick McHenry of North Carolina.

Rep. McHenry appears to be mastering the craft of getting bills through with wide bipartisan support. This bill, HR 701, passed the House by a vote of 416 to 6, which is as strong or stronger than the vote supporting his original investment crowdfunding exemption (which, alas, never made it into the JOBS Act - the Senate substituted a different equity crowdfunding exemption, and not one that any rules will be able to implement, in my view).

7270825858_12af2ac8b7_z (1)Rep. McHenry knows how to be partisan, too, however. He dishes out more than his share of rhetorical outrage over how long it is taking the SEC to implement those provisions of the JOBS Act that Congress specified should not take effect on the passage of the law, but instead should wait on rulemaking for implementation.

That rhetoric is tapped into in the messaging around HR 701. Here's an official statement from Rep. McHenry's office about the bill:

“'To cultivate a stronger economy, we have to build a more vibrant marketplace for our startups and entrepreneurs, which is what this legislation is all about,' said Congressman McHenry. 'It’s critical that the SEC finally start to implement the JOBS Act – a bipartisan bill that was signed into law more than a year ago.  Small businesses and entrepreneurs are starving for capital, and this legislation simply sets a firm deadline for the SEC to get its job done.'”

But in fact the bill only specifies a deadlne of October 2013 for the SEC to write rules on the changes to Regulation A that were authorized under Title IV of the JOBS Act. The bill does not speak to the lack, to date, of rules to implement the JOBS Act Title II lifting of the ban on general solicitation for Rule 506 offerings that are limited to accredited investors. Nor does it address implementation of non-accredited investment crowdfunding under Title III of the JOBS Act. Congressional deadlines to get rulemaking done on those initiatives have been missed.

A re-vitalized Reg A, with a cap of $50 million, could end up being a big deal. But it appears to have been targeted as the vehicle for this bill because the original JOBS Act never specified a deadline for Reg A rulemaking.

Photo: Digital Game Museum / Flickr.


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