Middle-Market Public Policy Roundup

In this week’s roundup, we preview ACG’s upcoming Middle-Market Advocacy Summit. Plus, we look at new bills passed by the House Financial Services Committee, an update on the Volcker Rule, and a new rule ordered by the SEC.

Middle-Market Advocacy Summit: Register Today

Registration for ACG’s 2018 Middle-Market Advocacy Summit is now open. Join us on Sept. 13 to find out how current regulatory and legislative changes are impacting the middle market and your business. You’ll also have a chance to use your experience in the middle market to advocate for the industry.

ACG’s annual Middle-Market Advocacy Summit gathers regulators, members of Congress and Beltway insiders to address the federal issues affecting middle-market businesses. Members of ACG and its Private Equity Regulatory Task Force attending the summit can also visit Capitol Hill to share the story of the economic impact of middle-market companies. The summit and Capitol Hill meetings are an important extension of ACG’s public policy advocacy efforts. Register for the summit here.

With new space restrictions in place, top 2018 ACG PAC donors will have the chance to attend a late-night Capitol tour with Rep. Juan Vargas. The congressman will guide attendees in this exclusive tour of the Capitol at 10 p.m. on Sept. 12, allowing for an intimate experience with Rep. Vargas that includes exclusive access to the Capitol. For more information on how to secure your spot on this tour, please email policy@acg.org.

House Financial Services Committee Passes Bipartisan Capital Formation Bills

On Wednesday, June 11, the House Financial Services Committee held a markup of eight bipartisan bills intended to foster capital formation. All eight bills were unanimously passed, with Chair Hensarling, R-Texas, and Ranking Member Waters, D-Calif., agreeing to only hold voice votes “in the spirit of bipartisanship.” Noteworthy bills include:

• Investment Adviser Regulatory Flexibility Improvement Act would direct the SEC to revise the definitions of “small business” and “small organization,” to expand qualifications for investment advisers to be eligible for regulatory relief under the Regulatory Flexibility Act. The Regulatory Flexibility Act directs federal agencies to review regulations for their impact on small businesses and to consider less burdensome alternatives. The current qualifications for investment advisers is under $25 million in assets under management and under $5 million in total assets.
• The Developing and Empowering our Aspiring Leaders Act would amend the definition of a “qualifying portfolio company” and “qualifying investment” under the venture capital exemption from the Investment Advisers Act of 1940. This bill would allow venture capital funds to invest in emerging growth companies (publicly traded firms with less than $1 billion in total annual gross revenues) while remaining exempted from registration requirements.
• The Middle-Market IPO Underwriting Fee Act would direct the SEC to carry out a study surrounding the various fees involved in the initial public offerings (IPOs) of middle-market companies, in order to understand and attempt to reduce costs.

Volcker Proposal Publication Expected July 17, Advocacy Groups Request Longer Comment Period

As we have previously reported, the five federal agencies responsible for enforcing the Volcker Rule have started the rulemaking process to ease Volcker Rule restrictions by way of a “Notice of Proposed Rulemaking.” The proposed rulemaking is now finally expected to be published in the Federal Register on July 17, after which there will be a 60-day comment period.

However, on July 10, four organizations—Better Markets, Americans for Financial Reform, Public Citizen and Center for American Progress—submitted a letter to the five Volcker regulatory agencies requesting that the comment period be extended for 90 additional days in order to provide “meaningful public input.”

SEC Orders on Federal Pay-to-Play Rule

On July 10, the SEC issued cease and desist orders and fines to Oaktree Capital Management L.P., EnCap Investments, L.P. and Sofinnova Ventures, Inc. for violating federal “pay-to-play” rules.

Rule 206(4)-5, commonly known as the pay-to-play rule, prohibits investment advisers from providing advisory services to a government client for two years after a covered associate (firm executives, employees or the adviser) makes a campaign contribution to campaigns of candidates whose offices have influence over the selection of investment advisers for public entities (e.g. state level pension funds).

Check back each Friday for the weekly Public Policy Roundup. Is there a policy issue you’d like us to cover? Send your suggestions to MMG Editor Kathryn Mulligan at kmulligan@acg.org.