This week’s roundup features news of the Senate’s hearings on “Legislative Proposals to Increase Access to Capital” and “Legislative Proposals to Examine Corporate Governance,” the SEC’s release of a draft strategic plan and the ruling by SCOTUS against non-consenting employee fees.
Please note that due to the holiday, we will not be posting a public policy roundup next week. Wishing you a great Fourth of July from Washington, D.C.!
Senate Banking Hearings on Proposals to Increase Access to Capital and to Examine Corporate Governance
On June 26, 2018, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing on “Legislative Proposals to Increase Access to Capital”. Chairman Crapo emphasized that the goal of the legislative proposals is to “encourage capital formation and reduce burdens for small businesses.”
There were three noteworthy bills mentioned in the hearing:
S.588 – Helping Angels Lead Our Startups (HALOS) Act. This bill would amend Regulation D to avoid triggering general solicitations during ‘demo days’ and other such events designed for startups to pitch their company to groups of angel investors in-person. The bill has broad bi-partisan support.
S.2765 – RBIC Advisers Relief Act of 2018. This bill would provide the same relief provided to Small Business Investment Companies to Rural Business Investment Companies, a classification of venture capital organizations funds that invest primarily in rural areas with populations of 50,000 or less.
S.3004 – Small Business Audit Correction Act. This bill would remove requirements for small SEC- and FINRA-registered broker-dealers ‘in good standing’ under the Sarbanes-Oxley Act requiring broker-dealers to file financial statements that are certified by a registered public accounting firm.
Later in the week, on June 28, 2018, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing on “Legislative Proposals to Examine Corporate Governance”. In his opening statement, Chairman Crapo indicated that he hoped to work with Sen. Brown to move legislation through the committee. Furthermore, Sen. Crapo said, “If there are ways to modify proposals to get support, I encourage it.” Of particular note was the following bill:
“If there are ways to modify proposals to get support, I encourage it,” said Sen. Crapo.
S.2756, the Fair Investment Opportunities for Professional Experts Act. Sponsored by Senators Tillis (R-NC) and Cortez Masto (D-NV), this bill has bipartisan support and would expand the definition of an accredited investor to include:
- An individual whose net worth or joint net worth with their spouse exceeds $1 million (adjusted for inflation), excluding from the calculation of their net worth their primary residence and a mortgage secured by that residence in certain circumstances;
- An individual whose income over the last two years exceeded $200,000 (adjusted for inflation) or joint spousal income exceeded $300,000 (adjusted for inflation) and who has a reasonable expectation of reaching the same income level in the current year;
- An individual who is licensed as a broker or investment adviser by certain entities; and
- An individual determined by the Securities and Exchange Commission (SEC) to have qualifying education or experience.
SEC Releases Draft Strategic Plan
The Securities and Exchange Commission released an initial draft of its strategic plan for fiscal years 2018-2022. The plan centers around three main goals: to focus on the long-term interests of Main Street investors, to recognize significant developments and trends in evolving capital markets and to adjust SEC efforts to ensure an effective allocation of resources, and to elevate the SEC’s performance by enhancing its analytical capabilities and human capital development.
The second goal relating to recognizing trends and allocating resources is particularly relevant because the SEC identifies in the plan strategies that align with ACG’s advocacy including:
- Identify, and take steps to address, existing SEC rules and approaches that are outdated.
- Examine strategies to address cyber and other system and infrastructure risks faced by our capital markets and our market participants.
- Expand market knowledge and oversight capabilities to identify, understand, analyze, and respond effectively to market developments and risks.
SCOTUS Rules Against Non-Consenting Employee Fees
On Wednesday, the United States Supreme Court ruled (5-4) in Janus v. AFSCME that it was a violation of the First Amendment for state and public-sector unions to charge agency fees from employees who do not consent to such. All five Republican justices sided with the majority opinion, while all Democrats dissented. This decision overruled the 1997 Abood v. Detroit Bd., which stated that nonmembers of public unions may be required to pay dues to the benefits they receive from collective bargaining. The Wednesday ruling outlined that requiring fees creates a situation in which the nonmember is compelled to “subsidize private speech on matters of substantial public concern.”
Maria Wolvin is ACG Global’s vice president and senior counsel, public policy.
Ben Marsico is ACG Global’s manager of legislative and regulatory affairs.