On May 7, 2013, Chair Mary Jo White of the U.S. Securities and Exchange Commission (the “SEC”) testfied before the U.S. Senate Subcommittee on Financial Services and General Government, Committee on Appropriations, in support of President Obama’s $1.674 billion fiscal year 2014 budget request1 on behalf of the SEC, and several other items related to the SEC’s work, chief among which included the Jumpstart Our Business Startups Act (the “JOBS Act”). Chair White stated that, while the SEC has made significant progress on completing the JOBS Act’s mandates, promptly finalizing the rulemaking required by the JOBS Act continues to be a top SEC priority.
We have set forth below a brief summary of the SEC’s key priorities, which generally fall into three categories: (1) the SEC must complete the rulemaking mandates contained in the JOBS Act; (2) the SEC must expand its economic and risk analysis in its rulemaking and oversight processes; and (3) the SEC must enhance its review of corporate disclosures and support the implementation of the JOBS Act. The full testimony is available at: http://www.sec.gov/news/testimony/2013/ts062513mjw.htm?_sm_au_=iVVsnt36MnFHswSM.
SEC’s Key Priorities
First, the SEC must complete, quickly and thoughtfully, the significant rulemaking mandates contained in the JOBS Act. Chair White did not provide a set time frame during which to complete the rulemaking. Cheerleading progress already achieved under the JOBS Act, Chair White noted that SEC rulewriting teams have been working on recommendations for the SEC’s consideration with respect to JOBS Act rulemakings concerning general solicitation, crowdfunding, an exemption from registration for public offerings up to $50 million, and thresholds for registration and deregistration under Section 12(g) of the Securities Exchange Act of 1934, as amended. She said the SEC and the staff continue to work diligently on completing the rule with respect to removing the ban on general solicitation and on the recommendations for each of the other rulemaking mandates contained in the JOBS Act.
Second, the SEC requests funding to expand the size of the Division of Economic and Risk Analysis to perform economic analyses and research in support of the SEC’s activities, including those undertaken in connection with the JOBS Act. Chair White stated that strong economic analysis, including cost-benefit analysis, is essential to the SEC’s rulemaking function. The SEC is committed to the robust economic analysis of its rulemaking process.
Third, the SEC is seeking to enhance its review of corporate disclosures and to support the implementation of the JOBS Act. Chair White noted that part of President Obama’s budget request would be spent on enhancing reviews of corporate disclosures, including supporting implementation of the JOBS Act. Chair White elaborated that the SEC requested 25 new positions for the Division of Corporation Finance (the “Division”). These positions would permit the SEC to hire additional staff to enhance the Division’s reviews of large companies and to prepare, finalize and implement the remaining rules and projects under the JOBS Act, including responding to requests for interpretive guidance regarding new rules. Further, the additional positions would allow the Division to enhance its review of SEC rules and regulations impacting small business capital formation and to better evaluate trends in increasingly complex offerings.
For additional information on the JOBS Act, see The Enactment of the Jumpstart Our Business Startups Act: Simplifying the IPO Process While Transitioning to Full Public Company Status, April 3, 2012, by Valerie Ford Jacob, Andrew B. Barkan, Bonnie A. Barsamian, Daniel J. Bursky, Stuart H. Gelfond, David B. Hardison, Michael A. Levitt, Paul D. Tropp, Vasiliki B. Tsaganos and Anuja A. Majmudar,2 Impact of JOBS Act on Private Investment Funds, April 5, 2012, by Jonathan S. Adler and Justin Nasatir,3 Market Practice Evolves Under the Jumpstart Our Business Startups Act, May 15, 2012, by Valerie Ford Jacob, Andrew B. Barkan, Bonnie A. Barsamian, Daniel J. Bursky, Stuart H. Gelfond, Michael A. Levitt, Paul D. Tropp and Vasiliki B. Tsaganos,4 The Jumpstart Our Business Startups Act and Its Impact on Equity Research Analysts, May 18, 2012, by David B. Hennes and Carmen J. Lawrence,5 US$500 and a Click: Investing the “Crowdfunding” Way, June 12, 2012, by Stuart H. Gelfond and Anthony D. Foti,6 Preparing For Life Under The JOBS Act, Compliance Reporter, July 2, 2012, by David B. Hennes and Carmen Lawrence,7 SEC Issues Guidance Regarding Research Analysts and Underwriters Under the JOBS Act, August 29, 2012 by Stuart H. Gelfond, Michael A. Levitt and Vasiliki B. Tsaganos,8 SEC Issues Guidance Regarding the Application of the JOBS Act on Exchange Offers and Mergers and Other Aspects of General Application, October 11, 2012, by Joshua T. Coleman, Stuart H. Gelfond, John E. Sorkin, and Vasiliki B. Tsaganos,9 and Effects of the JOBS Act on Marketing Activities of Private Investment Funds, INSIGHTS, June 2012, by Jonathan S. Adler and Justin Nasatir.10