Private Company Flexibility and Growth Act

Mr. Chairman, I yield myself 3 minutes.

Mr. Chairman, it is clear that jobs and the economy are issue number one for our constituents. Many of them don't see the recovery. Even though professional economists may see it, it is clearly the slowest and weakest recovery in the postwar era. We still have now 3 full years of 8-plus percent unemployment, half of our population now being classified as either low income or in poverty. Again, our constituents are demanding jobs.

Public policy makes a difference. Republicans have many disagreements with our President over public policy. We disagree with the $11 trillion of additional debt that he has put into his budget. We disagree with the $1.9 trillion in new job-killing tax increases he wants to impose, much of it on small businesses. We disagree--we believe the Keystone pipeline, with its 20,000 shovel-ready jobs, should be approved. We believe these policies harm job growth and the economy.

But, Mr. Chairman, we have a rare occasion today, and that is there is something that we do agree on. We have found an opportunity to work on a bipartisan basis, on common ground, with the President of the United States. The President said:

It is time to cut away the redtape that prevents too many rapidly growing start-up companies from raising capital and going public.

House Republicans agree, and thus we are happy to bring to the floor, on a bipartisan basis, the JOBS Act.

The President has issued his Statement of Administration Policy endorsing this legislation. Again, a rare occurrence, and I believe it's something that our constituents would like to see us do. They want to see us stand on principle, but they also want to see us compromise on policies to advance those principles. And so this is a bill that will give these emerging growth companies--again, perhaps the future Googles, perhaps the future Apples, the future Home Depots and the future Starbucks--that opportunity to begin to access equity capital where the hurdles, the redtape, and the cost burdens have been too high.

We know that, of many of the root causes of the economic debacle we had, clearly this was an economy that was overleveraged. So we in the Congress need to do whatever we can to enable the start-up companies, the job engines of America, to be able to access the equity markets, not just the debt markets. So this is a bill most of which has been previously approved by large majorities either in the Financial Services Committee or on the floor.

I want to thank the gentleman from Tennessee (Mr. Fincher) for his leadership, Chairman Bachus, Leader Cantor, and the ranking member, Mr. Frank from Massachusetts. The American people want to see jobs, hope, and opportunity. So let's pass the JOBS Act, and let's pass it now.

I reserve the balance of my time.

Mr. Chairman, I now would like to yield 2 minutes to the gentleman from Arizona (Mr. Quayle).

Madam Chairman, I yield myself 10 seconds to say that the American people care about jobs and economic growth, not a John Grisham novel of intrigue. Either the gentleman, the ranking member, likes the policy--in which case, he can vote for it. If he doesn't like the policy, he can vote against it. The President of the United States apparently supports it.

At this time, I yield 3 minutes to the gentleman from Tennessee (Mr. Fincher), the author of the JOBS Act.

I yield myself 10 seconds just to say that President Reagan once said there's no limit to what the American people can achieve if they don't mind who gets the credit. We seem to hear the ranking member say, if I and my friends can't take credit, we're going to pick up our toys and go home. All of us can take credit if we will support the JOBS Act.

I yield 2 minutes to the gentlewoman from Illinois (Mrs. Biggert), the chair of the Housing and Insurance Subcommittee.

Madam Chair, I ask that the gentleman's words be taken down.

I yield myself 10 seconds just to say the gentlelady alluded to the gentleman from Massachusetts for bringing something to our attention. What he brought to our attention is that he violated House rules and is prohibited from speaking the rest of the day when the rest of the Chamber wishes to promote jobs for the American people.

At this time, I am happy to yield 2 minutes to the gentleman from Illinois (Mr. Dold).

I yield myself 10 seconds simply to respond to my friend that we have tried the President's jobs bill, the stimulus, the health care package, Dodd-Frank; and yet we still have the highest duration of 8 percent-plus unemployment since the Great Depression. Here's at least a bipartisan bill we can work on, and I look forward to that today.

At this point, I will yield 2 minutes to the gentleman from New Jersey (Mr. Garrett), the chairman of the Capital Markets Subcommittee.

Madam Chair, I now yield 2 minutes to the gentleman from Virginia (Mr. Hurt).

Madam Chairman, at this time, I am happy to yield 2 minutes to the vice chairman of the Capital Markets Subcommittee, one of the prime authors of this bill, the gentleman from Arizona (Mr. Schweikert).

Madam Chair, I yield the gentleman an additional 1 minute.

I yield myself as much time as I may consume.

Madam Chair, again, jobs and growing the economy is what our constituents care about. Again, we are unfortunately and regrettably in the midst of the slowest and weakest recovery in the postwar era. And, in fact, many of my constituents, they don't feel the recovery. They don't see it. They still know many of their friends, neighbors, and family members remain unemployed. That's why the number one priority of House Republicans has been to grow this economy and create more jobs. That is why House Republicans have a plan for America's job creators.

Now, Madam Chair, it's very difficult, very difficult, to find common ground in this institution, as we all know. Regrettably, the vast majority of these bills are stacked up like cordwood in the United States Senate. They won't take them up. We've tried many of the President's ideas. For 2 years we tried every single one of his ideas. We tried the stimulus program, which helped stimulate the national debt to the level it is today. We tried the President's health care plan that we were told would help grow jobs and the economy. Dodd-Frank, our financial institutions--the big get bigger, the small get smaller, and the taxpayer gets poorer.

We disagreed with those policies, and so we have tried to find common ground. We heard the distinguished minority whip lament that the bill didn't do more. This is the common ground we can find with our friends on the other side of the aisle. It's important. It's not as important as repealing the President's health care program, which is absolutely strangling our small businesses. It's not as important as turning back so much of the red tape that impacts every single small business in America by enacting the REINS Act to ensure that Congress, not the unelected bureaucracy, controls whether or not we impose job-killing regulations on our small business enterprises. But it's still an important bill nonetheless. It's a bill that will allow these emerging growth companies, again, perhaps the Googles of tomorrow and the Apples of tomorrow, to be able to access vital equity capital. And so it's an important piece of legislation. I wish it did more.

I wish my friends from the other side of the aisle would acknowledge that we have tried many of their partisan ideas, and they haven't worked. But here's at least a bipartisan idea where we have worked with the President. We have his support right here--right here--Madam Chair, where the President of the United States supports this legislation. So I'm happy that at least one portion of the House Republican plan for America's job creators stands a very good chance of being turned into law and that the American people will see that we continue to work to find that common ground.

So I'm happy, again, to be able to encourage my colleagues to support this today. I look forward to the day that the President can sign this into law.

At this time, Madam Chair, I would like to yield 2 minutes to the gentleman from North Carolina (Mr. McHenry).

Mr. Chairman, might I inquire how much time I have remaining.

In that case, Mr. Chairman, I'm happy to yield exactly that 1 minute to the prime author of the JOBS Act, the gentleman from Tennessee (Mr. Fincher).

Mr. Chairman, I yield back the balance of my time.

Mr. Chairman, I ask unanimous consent to claim the time in opposition to the amendment; although I'm not opposed to the amendment.

I want to commend, again, the gentleman from Tennessee and the gentleman from Delaware for this amendment that I believe helps improve the underlying amendment with some technical corrections. I would urge all Members to adopt it.

Mr. Chairman, I yield back the balance of my time.

I ask unanimous consent, Mr. Chairman, to claim the time in opposition, although I'm not opposed to the amendment.

Mr. Chairman, I would like to encourage the House to support the amendment from the gentleman from North Carolina. I believe it to be very straightforward, very simple, very common sense to ensure that there is an inflation adjustment that is applied to the underlying bill.

I think that it's helpful. I urge, again, all Members to adopt it.

I reserve the balance of my time.

Mr. Chair, I claim the time in opposition.

I yield myself as much time as I may consume.

Mr. Chairman, again, the people of America care about jobs, they care about economic growth. Although we've had some recent improvement in our monthly unemployment figures, when we add in those who are working part-time who would prefer to be working full-time, and when we add in those who, frankly, have just given up and left the labor force, we know that the true unemployment rate in America is closer to 15.3 percent.

We know that the job engine of America is small business. And every big business had to start out as a small business.

I respect the gentleman's contribution to the bill. And this is about line drawing. I understand that. I respect his opinion. I know the professional background from which he has come. But I feel like his amendment would take this bill in the complete opposite direction of where we need to take this policy for emerging growth companies.

He used the example of Spirit Airlines. I don't have the figure at my fingertips, but I believe their market cap was in excess of what is provided for in the underlying bill, so I believe, again, they would not have qualified for the exemption in the first place.

But we want to provide this on-ramp for emerging growth companies, so, again, we can find tomorrow's Google, we can find tomorrow's Apple. And yes, this is drawing some lines in the sand, but it's clearly not a line that seems to be of great concern to the President.

We all know that the White House issues the Statement of Administration Policy, and when they have concerns about provisions in a piece of legislation, they have never been shy or reticent to share that with us. As I read the Statement of Administration Policy, the President doesn't seem to have a problem with where that line has been drawn.

I would also point out that the companion legislation on the Senate side, S. 1933, introduced by Senator Schumer of New York, Democrat, also has a gross revenue test of $1 billion. And so it appears that the President supports this. Senator Schumer supports this. This is bipartisan support for this $1 billion figure. I think at this particular time in our Nation's history the American people demand we err on the side of creating jobs and economic growth.

So, again, I respect the gentleman for his amendment, but I would urge that it be rejected.

I reserve the balance of my time.

I continue to reserve the balance of my time.

If the time of the gentleman from Connecticut has expired, in that case, Mr. Chairman, I will yield the remainder of the time to the gentleman from Tennessee (Mr. Fincher).

I claim time in opposition.

I'm not, frankly, certain I'm in opposition to the gentlelady's amendment, and I appreciate her bringing it to the floor.

If she would yield for a question, I'm just trying to understand the purpose of her amendment, and what is the deficiency in the underlying bill that she seeks to address with this amendment would be that question.

I would be happy to yield to the gentlelady.

I'm inquiring as to the perceived deficiency in the underlying bill that you seek to address with your amendment, and I would be happy to yield to my friend from Texas.

I have one other question for the gentlelady.

On the 3-year period, I'm just curious as to the thought or purpose behind that particular selection of a 3-year period.

I'd be once again be happy to yield to my friend, the gentlelady from Texas.

I thank the gentlelady for her responses.

I reserve the balance of my time.

Is the gentlelady yielding?

Yes, the gentlelady was very perceptive in her hearing. I was contemplating the answers that the gentlelady gave. At this time, I do not intend to oppose the amendment.

I rise in opposition to the amendment.

Mr. Chairman, again, when we add in those who want full-time work and yet have part-time work, those who have given up and have left the labor force, those who have been unemployed for weeks and months on end, we know that the true unemployment rate in America is, regrettably, close to 15.3 percent.

Jobs is the number one concern, jobs and the economic growth of the American people, and it has to be our number one concern as well. And as ever well-intentioned as the gentleman

from Minnesota's amendment is, it is not one particular regulatory burden; it is the cumulative impact of them all that is inhibiting job growth in America today.

Anytime I talk to small business people in the Fifth District of Texas, which I have the honor and privilege of representing, and whether I'm talking to small business people or, frankly, to Fortune 50 CEOs, this is what they tell me: it is the government red tape. Now, it doesn't mean all regulation is bad, but we have to look at the cumulative impact, particularly in the midst of what our constituents view as a crisis.

John Mackey, cofounder and CEO of Whole Foods Market:

In some cases, regulations have gone too far, and it really

makes it difficult for small businesses. There's too much

bureaucracy and red tape. Taxes on businesses are very high.

So we're not creating the enabling conditions that allow

businesses to get started.

Again, on a bipartisan piece of legislation that is supported by the President of the United States, most of the provisions have been overwhelmingly supported either on the House floor or in the Financial Services Committee. Regrettably, the gentleman from Minnesota's amendment takes a huge step backwards and makes it more difficult for these emerging growth companies to get started.

Now, I understand his particular concern on Say on Pay, but I would note that emerging growth companies still have to disclose their executive compensation arrangements to shareholders in their SEC filings in the same way that the SEC requires for smaller reporting companies. How many votes do you want to compel shareholders to take, particularly on emerging growth companies?

We could require votes on patent filings. We could require votes on the retention of the accounting firm. Maybe we could require it on the acquisition of real estate. Perhaps shareholders should be compelled to vote to ratify any particular union contract. Maybe we should compel a vote on the IT system. We could go to the ridiculous. Maybe we have to have shareholder votes to choose between Coke and Pepsi in the break room, or as to whether or not the coffee is organically grown or not organically grown. What is the company logo?

At some point, it begs the question: Are we here to stand up for shareholder value or for somebody's subjective, personal values, which I respect, but which, again, can harm emerging growth companies as they're trying to grow jobs and the economy.

I reserve the balance of my time.

Mr. Chairman, how much time remains on both sides, please?

Mr. Chairman, I yield the balance of my time to the gentleman from Tennessee (Mr. Fincher).

Mr. Chairman, every single regulation imposes some type of financial burden on a company that cannot be used to create a job.

If this was a concern, why don't we find it listed in the Statement of Administration Policy. It's not a concern of the President. Let's work together and pass this bill.

I yield back the balance of my time.

Mr. Chairman, I rise to claim time in opposition to the amendment.

Mr. Chairman, we've had a vigorous debate over some amendments that were accepted, others that we thought were unwise. Frankly, this one, Mr. Chairman, we believe would simply gut the entire bill. You know, Mr. Chairman, you cannot sue your way into job growth. You are not going to be able to sue your way into economic growth.

This amendment takes us a huge, huge step in the opposite direction. The practical impact of the amendment from the gentlelady from California is to essentially squash any of the reporting that would take place on these emerging growth companies for imposing the prospectus level of liability imputed to the communications of the research reports.

I mean, in order to get onto this IPO on-ramp in order for the small growth companies to access our equity market, there has to be the research which is published. Without it, without it, the accredited investors will probably never know of the existence of the companies in the first place. I would point out that many of the concerns should have already been addressed.

Number one, all these emerging growth companies are still liable for the Global Research Analyst Settlement of 2003, which established a comprehensive set of rules that sever the link between investment banking and research activities, section 501 of Sarbanes-Oxley, which requires the research analysts and broker-dealers to disclose all potential conflicts of interest, Regulation AC, stock exchange-listing standards, FINRA codes of conduct, and the list goes on and on and on.

And so again, Mr. Chairman, to add yet another level of liability, one that we are told would simply have an incredibly dampening impact on the existence of these research reports, for all intents and purposes this would simply gut the bill. I suppose it would be an early evening in the House if we accepted it, but everything that Members of both sides of the aisle have worked for would be for naught.

Again, if this was a concern of the administration, why wasn't it listed in their Statement of Administration Policy where they always list their concern?

The President would like to see this passed. We would like to see it passed. There is bipartisan support in the Senate.

I would urge a strong rejection of this amendment, and I reserve the balance of my time.

Mr. Chair, I continue to reserve the balance of my time.

May I inquire of the Chair how much time I have remaining.

In that case, I will yield 1 minute to the gentleman from Arizona (Mr. Schweikert).

I yield the balance of my time to the gentleman from New Jersey (Mr. Garrett), the chairman of the Capital Markets Subcommittee.

I rise to claim time in opposition.

I yield 1\1/2\ minutes to the gentleman from Tennessee (Mr. Fincher).

Mr. Chairman, I yield 1 minute to the gentleman from New Jersey, the chairman of the Capital Markets Subcommittee, Mr. Garrett.

I yield the gentleman 30 additional seconds.

Mr. Chairman, how much time do I have remaining?

At this time, I will yield 1\1/2\ minutes to the gentleman from Arizona (Mr. Schweikert).

I yield myself the balance of the time.

I would just say to my friend, the gentlelady from Texas will have to settle for batting .500, as I supported her earlier amendment, but I have to rise in opposition to this one. The very purpose of an accredited investor is to

identify the class of individuals who have greater capacity to handle risk, do not require the enhanced protections. Her amendment would unnecessarily restrict capital formation and consequently job growth. I urge its rejection, and I yield back the balance of my time.

Mr. Chairman, I rise to claim the time in opposition.

Mr. Chairman, I have some good news for the gentleman from Virginia. The very issue that he cares to study has already been studied. In January of 2011, Democrat CFTC Commissioner Michael Dunn said:

To date, CFTC staff has been unable to find any reliable

economic analysis to support either the contention that

excessive speculation is affecting the markets we regulate or

that position limits will prevent excessive speculation. With

such a lack of concrete economic evidence, my fear is that,

at best, position limits are a cure for a disease that does

not exist or at worst a placebo for one that does.

A similar study has been conducted by the Federal Trade Commission.

Mr. Chairman, if we're going to be in the business of conducting studies, perhaps we should study why this administration has had over 3 years to study the Keystone pipeline and still refuses to allow more energy to come to America for Americans. Now, apparently, in a reversal, the President has decided that if the energy can hitchhike from

Canada successfully to the Red River, the northern border of Texas, he'll allow it to get to the refineries on the gulf coast. Otherwise, no energy.

Shouldn't, on the road to American energy independence, we ought to at least go through the road of North American energy independence. These are 20,000 shovel-ready jobs--and I know the administration gets confused at what is a shovel-ready job--but 20,000 shovel ready jobs, and yet it's rejected by this administration. Why? Well, because this is an administration that has essentially declared war on carbon-based industry, thus is trying to increase prices of energy for small businesses, for struggling American families, for hardworking taxpayers. Please don't take my word for it; take the word of the Secretary of Energy, Steven Chu: ``Somehow we have to figure out how to boost the price of gasoline to the levels of Europe.''

Well, again, I've got good news for the administration: they're doing a wonderful job. They have us on the road to increasing energy levels to the price of Europe, and the consequent unemployment that goes with it, and the consequence of having the fewest business start-ups in almost two complete decades. So, the matter that the gentleman cares to study has already been studied. It has already been studied.

I also recall a time when these people were called investors, and we actually welcomed them into the market. I suspect that it is fear of this administration's energy policies that is causing these prices to skyrocket even further. As bad as they are today, people know they're going to be even worse.

So I would urge a rejection of this amendment that takes this bill in the complete opposite direction that it needs to be going.

I reserve the balance of my time.

In that case, I yield 1 minute to the gentleman from Tennessee (Mr. Fincher).

Mr. Chairman, I yield myself the balance of my time.

Regrettably, the ranking member is not here because he chose to violate House rules, and his speaking privileges were denied for the rest of the day. But during our committee markup, he said:

First of all, studies are not done for free by the SEC.

Given the current decision to restrict SEC funding, I will be

much more careful about burdening them with studies which

will inevitably come at the expense of more important duties.

One more reason to oppose the gentleman's amendment.

Mr. Chairman, I yield back the balance of my time.

I have an amendment at the desk.

Let me acknowledge, first of all, the combined efforts that have generated this approach to putting Americans back to work. Let me acknowledge the manager that is on the floor, Congresswoman Waters, for her enormous leadership on many of these issues, as well as the ranking member of the full committee; Mr. Frank, who certainly has served and exercised his willingness to deal with questions of these markets; and, of course, my friend from Texas who is managing this and is, again, I hope working with us in a bipartisan way on some very serious matters.

Again, let me emphasize that the most effective way to reduce our deficit is to put Americans back to work. My amendment in this legislation deals with acknowledging that the emerging companies under this legislation--provides for 5 years from the date of the EGC's initial public offering; 2, the date an EGC has $1 billion in annual growth; and then the date the EGC becomes ``a large accelerated filer,'' which is defined by the Securities and Exchange; a number of provisions to, in essence, help small businesses. This is an important principle. But my amendment adds a requirement that a company would not be considered an emerging growth company, an EGC, if it has issued more than $1 billion in nonconvertible debt over the prior 3 years.

Let me suggest that we are doing better than many of us might think. Many aspects of this bill, for example, will help community banks, which will help other small businesses. But if we look to the economy as we speak, the private sector unemployment has grown for 23 straight months, the economy has grown for 10 straight quarters, overall business investment is going up, corporate profits are up, as are investments in equipment and software, and exports have been a source of growth.

But emerging growth of small businesses needs the extra push, because when you think of the backbone of America, you think of small businesses. As a matter of fact, it is not uncommon for a company to be financed with debt as opposed to equity, and that while $1 billion is not what it used to be, it is still a pretty substantial sum of money.

So what I am saying is I want to help small businesses, but I also want to ensure that we do not expand this legislation where it is not actually helping those smaller emergent growth companies that truly are in need. For years, both Wall Street and big banks lacked the requisite government and oversight

accountability, and I believe that it is important to ensure continued oversight but continued help for these particular companies.

With that, I'd ask my colleagues to support this amendment, and I reserve the balance of my time.

I thank the gentleman.

I like the concept of emerging growth, and I think the concept is to build these businesses up, to give them greater opportunities. What I am suggesting is that, the amendment suggests that if you have issued more than a billion dollars, you have grown sufficiently to have an additional standard or a different standard. This particular amendment suggests that we have a framework for emerging growth.

I'd tell my good friend, it is not 3 years.

I thought that was an appropriate framework for a billion dollars. If you spread it out over a period of time, that's $300 million to $400 million a year.

Let me just say that I think the concept is so important, to my friend from Texas, that a friendly modification would be welcomed in the timeframe. But I think the billion dollars is an appropriate standard, if you will, for trying to ensure that we really do boost and give latitude to emerging growth companies.

Let me just conclude my remarks, and if I might, let me yield to the gentleman, because I did not hear him clearly. Let me yield to the gentleman from Texas.

I'd like to raise the question, I did not hear your support or opposition to this initiative.

I'm hoping for a good bipartisan effort here, but I am yielding to the gentleman.

The gentleman is very kind.

So let me just say, as my leader on the floor was trying to get an inquiry about it--and you always take a gift quickly and you say ``thank you''--I think that this will add to the confidence of this legislation.

And as I indicated, though this is not specifically to this point, I want to make sure that we're helping community banks provide more lending and access to small businesses. I want to make sure that we, under the definition of this bill, help emerging growth companies, as well, be stronger and, as well, to be part of the creation of jobs putting Americans back to work.

With that, I ask my colleagues to support the Jackson Lee amendment.

Mr. Chair, I rise today to offer my amendment No. 4 to H.R. 3606 ``The Reopening American Capital Markets to Emerging Growth Companies Act of 2011.'' My amendment would create a five-year ``on-ramp'' for smaller companies to comply with certain provisions of Sarbanes-Oxley and Dodd-Frank.

In the bill, Emerging Growth Companies are exempted from certain regulatory requirements until the earliest of three dates: (1) five years from the date of the EGC's initial public offering; (2) the date an EGC has $1 billion in annual gross revenue; or (3) the date an EGC becomes a ``large accelerated filer, which is defined by the Securities and Exchange Commission (SEC) as a company that has a worldwide public float of $700 million or more.

H.R. 3606 thus provides temporary regulatory relief to small companies, which encourages them to go public, yet ensures their eventual compliance with regulatory requirements as they grow larger.

I agree in principle that it is important to modernize and improve the ability of a company to raise capital in today's environment, but I am concerned H.R. 3606 goes beyond what is necessary at the expense of protecting the investor.

My amendment adds a requirement that a company would NOT be considered an ``emerging growth company'' (EGC) if it has issued more than $1 billion in non-convertible debt over the prior three years.

As a matter of fact, it is not uncommon for a company to be financed with debt as opposed to equity, and that while $1 billion dollars is not what it used to be---it is still a pretty substantial sum of money. Frankly, Mr. Chair, a company that size needs to have some oversight to protect the public.

For years, both Wall Street and big banks lacked the requisite government oversight and accountability. Relying on Wall Street and big banks to police themselves resulted in the worst financial crisis since the Great Depression, the loss of 8 million jobs, failed businesses, a drop in housing prices, and wiped out personal savings.

We must restore responsibility and accountability in our financial system to give Americans confidence that there is a system in place that works for and protects them. We must create a sound foundation to grow the economy and create jobs.

To wit--this debt financing might be tax deductible, whereas the equity financing typically is not--which gives debt financing a distinct advantage.

H.R. 3606 encourages emerging growth companies (EGCs) to access the public capital markets by temporarily exempting EGCs from some registration procedures, prohibitions on initial public offering (IPO) communications, and independent audits of internal controls over financial reporting, among other exemptions.

I encourage my colleagues to vote for this amendment to H.R. 3606 that adds a requirement that a company not be considered to be as an ``emerging growth company,'' if it has issued more than $1 billion in non-convertible debt over the prior three years.

Mr. Chair, let's continue to protect the investing public.

I yield back the balance of my time.

Mr. Chairman, I have an amendment at the desk.

I thank the chairman very much.

I started my earlier discussion with a previous amendment by suggesting that our underlying premise or the goal should be to reduce the deficit and to put America back to work. This concept of emerging growth opportunities or emerging growth companies is, in fact, I believe, a viable step of doing so.

I do want to remind my colleagues again that overall business investment is growing, corporate profits are up, as are investments in equipment and software. Exports have been a source of strength. We're working very hard to ensure that we reinvigorate manufacturing. We want to make it in America. We want to bring companies back home, and certainly we want to encourage investment. Private sector employment has grown for 23 months, and the economy has grown for 10 straight quarters.

My amendment is to discuss the fine distinctions between those who are very sophisticated and those who are not. My amendment narrows the permissible exemption to allow oral or written communications with potential investors who are qualified institutional investors, but it omits accredited investors from this exemption in the name of investor protection. That is simply to say that we know that the accredited investors are less, if you will, able with the information that they have to compete with what we have classified as qualified institutional investors.

The idea of this amendment is to ensure that an accredited investor would not be considered a qualified investor and therefore be taken advantage of. Under the bill, the commonly known test-the-waters provision would amend the Securities Act of 1933 to expand the range of permissible prefiling communication to sophisticated institutional investors to allow emerging growth companies to determine whether qualified institutional or accredited investors might have an interest in a contemplated securities offering.

Mine is an amendment simply being concerned about the accredited investors and whether or not there is the equal playing field alongside of the qualified institutional investors, which you would expect would have far more sophistication in making determinations about investments. It is simply an effort to provide extra protection for those who will now be out in the marketplace under these emerging growth concepts.

I ask my colleagues to support this amendment, and I reserve the balance of my time.

Mr. Chairman, who has the right to close?

Mr. Chairman, let me just maintain that this is a simple premise of protecting the less sophisticated investor, and I have no desire to not see jobs being created or the opportunity for emerging growth entities to have access to opportunities for investment. It is quite clear that qualified institutional investors are far more sophisticated than the accredited investors' status, and so I can't get clearer than that, trying to make sure that we protect those.

And as we noted for the Democrats who served on the Financial Services Committee, they made certain statements, if you would, to ensure that we have the greatest amount of protection for those who we want to see having greater opportunities.

So with that, Mr. Chairman, I happily yield back my time and ask my colleagues to support this very simple amendment that seeks to protect accredited investors.

Mr. Chair, I rise today to offer my amendment # 7 to H.R. 3606 ``The Reopening American Capital Markets to Emerging Growth Companies Act of 2011.'' This amendment strikes language in the bill that allows an emerging growth company or its underwriter to communicate with ``institutions that are accredited investors.''

H.R. 3606 would exempt certain regulatory requirements until the earliest of three dates: (1) five years from the date of the EGC's initial public offering; (2) the date an EGC has $1 billion in annual gross revenue; or (3) the date an EGC becomes a ``large accelerated filer, which is defined by the Securities and Exchange Commission (SEC) as a company that has a worldwide public float of $700 million or more.

The bill thus provides temporary regulatory relief to small companies, which encourages them to go public, yet ensures their eventual compliance with regulatory requirements as they grow larger.

My amendment narrows the permissible exemption to allow oral or written communications with potential investors who are ``qualified institutional investors,'' but omits ``accredited investors from this exemption, in the name of investor protection.''

For example, this amendment would ensure that an accredited investor would not be considered a qualified institutional investor and therefore would not be able to engage in certain types of investments.

Under the bill, the commonly known ``test the waters provision,'' would amend the Securities Act of 1933 to expand the range of permissible pre-filing communications to sophisticated institutional investors to allow Emerging Growth Companies (EGCs) to determine whether qualified institutional or accredited investors might have an interest in a contemplated securities offering.

I believe that while many Accredited Investors are sophisticated and prosperous, and meet the brokerage firm requirements for alternative investments.

My amendment is merely a continuation of the investor protection theme of Dodd-Frank. Specifically, investors that lack the necessary capital to absorb the losses that can arise when investing in an Emerging Growth Company.

Moreover, I would note that many qualified institutional investors have a minimum of $1 billion to invest, which simply may not be the case with accredited investors. My sentiments are similar to those expressed by my Democratic colleagues on the Financial Services Committee: that they and Republicans share the desire to create an accessible, robust and efficient capital market for the benefit of small businesses and investors, alike.

I too, expect that as H.R. 3606 moves forward, further refinements will be adopted to ensure that investor protections are not sacrificed.

Again, as my Democratic colleagues on the Financial Services Committee stated:

H.R. 3606 encourages emerging growth companies (EGCs) to

access the public capital markets by temporarily exempting

EGCs from some registration procedures, prohibitions on

initial public offering (IPO) communications, and independent

audits of internal controls over financial reporting, among

other exemptions.

Democrats agree in principle that it is important to

modernize and improve the ability of a company to raise

capital in today's environment, but are concerned H.R. 3606

goes beyond what is necessary at the expense of protecting

the investor.

I encourage my colleagues to vote for this consumer and investor- friendly amendment.

Let me say to my good friend from Texas, I'm going to look forward to working with him on the previous amendment that simply was misconstrued, and we certainly want to respect those who have a million dollars outside their window, but we also want to ensure that we have protection for those less sophisticated investors.

The amendment that I have before me, likewise, has an intent to allow the SEC not to be plagued by frivolous filings. But I want to work with the committee going forward, and so I will not pursue this amendment. And, Mr. Chairman, I'm going to ask unanimous consent to withdraw this amendment No. 8 at this time.

I will conclude by saying I like batting .500, and I will continue to work with this committee on these important issues.

I yield myself 4 minutes.

Madam Chair, I rise today in support of H.R. 3606, the Jumpstart Our Business Startups Act.

Before I begin my remarks, I would like to thank Chairman Bachus, Chairman Garrett and, certainly, Ranking Member Frank for their assistance and support on this bill. We were able to work in a bipartisan manner on this bill in our committee, passing many of the provisions in the bill with strong bipartisan majorities.

H.R. 3606 is an omnibus package of small business capital formation bills, some of which we already passed through the House back in November. I was pleased to work with Representative McCarthy on a provision now included in the bill to amend securities law in order to remove the prohibition on general solicitation, or general advertising, for the Office of Securities made under rule 506 of regulation D if those securities are only sold to accredited investors.

Last year, I worked with Representative McHenry to add critical investor protection provisions to this crowdfunding bill, which previously passed the House and is now included in this package. I was also pleased to support the provision from Representative Schweikert to allow companies to raise more funds through the Regulation A process and another provision to raise minimum shareholder thresholds at which companies must register their securities with the SEC.

On the title of this bill, which deals with the emerging growth companies, the IPOs, I support the goal of this legislation, and I hope that many of the amendments offered today on this title are accepted, including my own, which is dealing with the provision of research. Again, I am supportive of this legislation, but I think that more investor protection provisions are needed.

Why did we work together to get this legislation passed?

We worked from both sides of the aisle because we are all concerned about job creation and access to capital. We have gone through a recession in this country, starting with the loans that were made in the subprime market in 2003 to 2007. We almost reached a depression, and we destroyed the housing industry in this country. So we are all working to try and not only get the housing industry revitalized, but we are also working to make sure that our small businesses have access to capital and, thus, job creation.

I am very pleased that we were able to work together on this legislation despite the fact that what Mr. Frank brought to our attention today is the kind of effort that could interfere with attempts to have bipartisanship on some of these legislative attempts that we have made. What Congressman Frank brought to our attention was that title VI of the bill, a provision that was drafted by Representative Himes, with the support of Republicans, seems to have been bare minimally reworked and rebranded as a Representative Quayle bill.

While I support the provision, I think that taking Mr. Himes' work product undermines the spirit of bipartisanship and the cooperation that was otherwise demonstrated by this bill.

Do I like every one of these bills 100 percent? No, I don't. I have some concerns and I have some questions. I even have some uncertainty when we talk about crowdfunding. I want to make sure that we're protecting the investors. I want to make sure that the proper research is isolated from the underwriters who have connections to those people that they're writing the bills for.

I yield myself an additional 30 seconds.

To sum up this bill, it will make it just a bit easier for some companies to raise funds in our capital markets, enabling them to grow their businesses. But make no mistake, I believe that this Congress still needs to do more on jobs. In addition to these legislative changes that enable capital formation, we need to keep teachers, police officers, and firefighters on the job; extend unemployment insurance for laid-off workers; and revitalize neighborhoods devastated by foreclosures.

A truly comprehensive approach is needed to get Americans working again, and I hope my colleagues are willing to work with me on these issues.

I reserve the balance of my time.

Madam Chair, I yield 3 minutes to the minority whip, the gentleman from Maryland, Mr. Steny Hoyer.

Madam Chair, I yield 1 minute to the gentleman from Maryland (Mr. Sarbanes).

Madam Chair, I yield 3 minutes to the gentleman from Connecticut (Mr. Himes).

Madam Chair, I yield myself 2 minutes.

To the Members of this House and to those who are listening to this debate, you've heard this described as a jobs bill. In my earlier remarks, I, too, described this as a jobs bill. You've heard us talk about job creation, access to capital, ways by which we can support small businesses in general but IPOs in particular. You heard us talk about crowdfunding and creative means by which we can help to invigorate this economy. And so certainly this is a jobs bill. But then you heard some reference to the President's jobs bill by our minority whip, Mr. Steny Hoyer, who talked about a comprehensive approach.

Make no mistake, this jobs bill is important, and I certainly hope that it will help to stimulate the economy in ways that all of us thought that it could. However, when you take a look at this compared to the President's comprehensive legislation, then you understand what Mr. Steny Hoyer was talking about.

Mr. Steny Hoyer was talking about the President's comprehensive jobs bill that would do some very important things. It talked about job sharing. It will make sure that our teachers and our firefighters are kept on the job. It talks about school construction. It talks about aid to community college and comprehensive efforts to provide tax credits for small businesses.

So, you see, we would like everybody to understand that we're not abandoning a comprehensive effort to do real job creation and access to capital and support for small businesses. We're trying to take every opportunity, every step, as it has been mentioned time and time again.

I yield myself 1 minute.

Continuing the comparison between the two efforts, as has been said over and over again today, we certainly have joined in a bipartisan fashion to move this bill. Even though I am not sure and some of our Members are not sure that everything that's in all of these bills is what we absolutely understand and we're willing to say we know that it will help, it will help to deal with this economy in ways that we want it to, but we are willing to take a chance. We're willing to try.

Now, when you compare this with the President's comprehensive jobs bill, then you can see this is only one effort; and in comparison, it's a small effort in comparison to what the President has proposed. And so, let us not forget, we still have work to do. We still have to be concerned about the unacceptably high unemployment rate. As we speak today, the unemployment rate is still in excess of 8 percent.

I yield myself the balance of my time.

Madam Chair, I would like for us all to recognize that we are taking a step that we are constantly accused of not being able to do, and that is move something in a bipartisan fashion.

I'm appreciative for my colleagues on the opposite side of the aisle who have been so cooperative, and I'm appreciative for the leadership that has been provided on this side of the aisle. But we still must remember that unemployment is unacceptably high. We must remember that we must have a comprehensive approach. We must remember that the President has presented us with a comprehensive, realistic approach by which we can stimulate this economy, create jobs, support education and our schools, and help the unemployed in ways that they are desperately waiting for.

With that, Madam Chair, I yield back the balance of my time.

Mr. Chairman, I have an amendment at the desk.

I offer my amendment today in the spirit of improving the underlying bill in the area of investor protection with regard to the provisions of research provisions in title I.

First, my amendment attempts to mitigate against potentially damaging conflicts of interest between the people who will profit from an emerging growth company's IPO and the people who write research about such IPOs. This amendment provides that if a broker or a dealer is underwriting an IPO and also providing research to the public about that IPO, those research reports need to be filed with the SEC and underwriters need to be held to stricter liability for their comments.

Second, this amendment provides that if emerging growth companies are communicating orally or in writing with potential investors before or following an offering, they need to file those communications with the

May I inquire as to how much time I have left.

I yield the balance of my time to the gentleman from Massachusetts (Mr. Capuano).

Mr. Chairman, I join with Mr. Capuano in saying that we don't normally agree with the Chamber of Commerce. As a matter of fact, this may be the first time that I've agreed with the Chamber of Commerce. But you have also the Council of Institutional Investors that is warning us about this research problem that we have unless we clear it up.

Mr. Chairman, I demand a recorded vote.

I thank the gentleman for yielding.

I want to thank my colleague, Mr. Carney, for his hard work and his staff for helping work on something good for the country, for the private sector, getting people back to work. That's what we were sent here to do.

I'm pleased to be the lead sponsor on H.R. 3606, the Jumpstart Our Business Startups Act.

Today, according to the Bureau of Labor Statistics, the unemployment rate is currently 8.3 percent. However, in December of last year, all but one of the counties I represent had a higher unemployment rate than the national average of 8.5 percent. At the top of the list was Obion County, with an unemployment rate of 15.3 percent, and Crockett County, where I live, 10.5 percent.

It is no secret that our Nation has seen a decline in small business start-ups over the last few years, which means less jobs created for American workers. I think we all can agree that small businesses and entrepreneurs are the backbone of our Nation and our economy.

The heartbeat of America is in the heartland of America, not here in Washington. The best thing our government can do right now to get our economy moving in the right direction is to help create an environment where new ideas and start-up companies have a chance to grow and succeed. The provisions in the JOBS Act will put the focus on the private sector, capitalism, and the free market, providing the jump- start our Nation's entrepreneurs need.

Title I of this bill is legislation that I introduced with Congressman Carney, the Reopening American Capital Markets to Emerging Growth Companies Act, which would help more small and mid-size companies go public. During the last 15 years, fewer and fewer start-up companies have pursued initial public offerings because of burdensome costs created by a series of one-size-fits-all laws and regulations. These changes have driven up costs and uncertainty for young companies looking to go public. Not going public deprives companies of the needed capital to expand their businesses, develop innovative products, and hire more American workers.

Title I would create a new category of issuers called emerging growth companies that have less than $1 billion in annual revenues when they register with the SEC and less than $700 million in public float after the IPO.

Emerging growth companies will have as many as 5 years, depending on size, to transition to full compliance with a variety of regulations that are expensive and burdensome. This on-ramp status will allow small and mid-size companies the opportunity to save on expensive compliance costs and create the cash needed to successfully grow their business and create American jobs. It will also make it easier for potential investors to get access to research and company information in advance of an IPO in order to make informed decisions about investing. This is critical for small and medium-sized companies trying to raise capital that have less visibility in the marketplace.

Our bill had tremendous bipartisan support when passed by the Financial Services Committee 2 weeks ago. It's my hope that we can continue to work together as we move this package of bills forward.

Madam Chairman, the JOBS Act will provide companies some valuable tools they need to grow and create jobs. I urge my colleagues to support this bill.

I want to thank the gentleman from Texas for yielding.

I stand today heartbroken that something that we've meant for good here--myself and my colleague, Mr. Carney--a JOBS Act would be tied up in some heated rhetoric.

I want to urge my colleagues on the other side of the aisle that jobs aren't Democrat or Republican; they're American. People are begging for Congress to get out of the way and let the private sector get back in the business of creating jobs. That's what we're doing with this jobs bill that we're pushing through.

So hopefully, hopefully, we can get beyond some feelings--hurt feelings maybe--and let's focus back on the reason why we were sent up here, and that's to put the people back in power and not Washington.

Mr. Chairman, I have an amendment at the desk.

Mr. Chairman, I rise today, along with the gentleman from Delaware (Mr. Carney), to offer a technical amendment to H.R. 3606.

The amendment now pending would simply provide technical corrections to the underlying bill. Both Members and committee staff have heard from various groups and stakeholders affected by this bill. The amendment is a reflection of the technical advice given to us by these groups. I strongly believe that these technical changes improve the bill and would ask my colleagues to support this amendment.

I reserve the balance of my time.

Mr. Chairman, I yield 1 minute to my colleague, the gentleman from Delaware (Mr. Carney).

Mr. Chairman, with that, I yield back the balance of my time.

I want to be clear: This bill is about new companies, not existing companies, but about new companies that are wanting to go public.

The $1 billion revenue and $700 million in public float thresholds for emerging growth companies in the underlying bill were recommended by the nonpartisan IPO task force comprised of industry experts, such as venture capitalists, public investors, entrepreneurs, investment bankers, accountants, professors, securities attorneys, and the exchanges.

If we strike the public float requirements, we break this provision's ties to an already defined SEC threshold. Seven hundred million in public float is the threshold for a company to be considered ``a large accelerated'' filer under SEC rules. This number is used by the SEC to define a mature company, meaning that the company will be able to handle complying with a variety of SEC regulations on day one of its

I thank the gentleman from Texas for yielding.

The SEC already provides smaller reporting companies with an additional year to comply with executive-compensation disclosure and say-on-pay vote compliance.

This bill would simply extend the extension to emerging growth companies during the on-ramp period. They would still disclose compensation arrangements to shareholders in the same way that the SEC requires for smaller reporting companies, we think, forcing shareholder votes on internal issues such as compensation levels, risk, undermining the emerging growth companies' ability to exercise independent judgment on behalf of all the corporation's shareholders. The bottom line here is that we must spare emerging growth companies from the costly litigation that could result if an emerging growth company's board of directors reject or refuse to abide by the results of the shareholder vote.

I would just remind all of my colleagues the President is supporting this jobs bill. We think this is something that will really, really put Americans back to work.

I thank the gentleman for yielding.

Mr. Chair, I rise in opposition to the gentlelady's amendment.

Again, our goal here today is to help America's start-up companies grow, raise capital, create jobs. The amendment offered by the gentlelady from Texas would limit opportunities for emerging growth companies to expand business by cutting them off from experienced investors.

Part of generating a successful IPO is having the ability to test the waters through pre-IPO meetings with institutional qualified investors. These are the investors you want to talk to and receive feedback from before launching an IPO to ensure success. If a company learned that there is a good chance it

will have a successful IPO, it would be less likely to choose a merger and acquisition path, which often results in losing jobs, and continue to grow organically and create jobs. So it doesn't make sense to me to cut these investors off from emerging growth companies.

I understand there may be some concerns with investor protections. But in this amendment, emerging growth companies are only allowed to test the waters with highly sophisticated investors so existing investor protections are not weakened. Therefore, I cannot support this amendment.

I thank the gentleman from Texas.

It seems like the gentleman's amendment is trying to confuse the recent sharp rise in gas prices with the purpose of this bill, which is to provide emerging growth companies with a temporary break from costly compliance burdens.

It's true that gas prices have been going up, but emerging growth companies are not to blame. I introduced this bill, along with my colleague, Mr. Carney, to encourage small business to go public, to have access to more capital, and create more jobs. Job creation is the purpose of this bill, not gas prices.

Rising gas prices is a critical issue, and we would be glad to have the debate some other day. But today we're talking about job creation in the private sector. This is a very important piece of legislation that the President supports. So let's give the power back to the people.

I have an amendment at the desk.

Mr. Chair, this amendment is very simple. We brought this up in committee. I would like the whole body to be able to get a chance to have their say on Say on Pay. Say on Pay is a good, commonsense thing that empowers investors. It allows shareholders and companies to be able to say, Do I believe that the CEO pay in this company is too high?

Companies are not exercising the right to approve or to have a nonbinding vote on pay. As a matter of fact, Nabors Industries announced that its former CEO agreed to waive a $100 million termination payment, and that was regarded as a rare win for shareholders. In light of this, I would like to submit for the Record and for the purpose of this debate, an article entitled, ``A Rare Win for Say on Pay.''

Now, this is a bill that I would like to support. I think it's a good idea. The fact of the matter is--Mr. Chair, you would be shocked to know--that we actually, I think, passed this bill out of our committee without any dissenting votes.

The issue remains that there are a lot of advantages to this bill. It relieves the emerging growth companies of the pretty hefty burden of complying with 404(b) of Sarbanes-Oxley. It allows them to escape the obligation of providing 3 years of audited financial statements. Although I think they're good for our system with regard to controls, these things are costly and do take a toll.

Do you know what, Mr. Chair? Say on Pay is not costly, and it's not burdensome. It empowers investors and makes them more engaged and gives them greater reason to be plugged into what the company is doing.

I have a letter from the Council of Institutional Investors that I would also like to submit for the Record. They are concerned about this section that would waive Say on Pay because it would effectively limit the shareholders' ability to voice their concerns about executive compensation packages.

[From Real-Time Advice, Feb. 6, 2012]

A Rare Win for Say on Pay

(By Sarah Morgan)

NABORS INDUSTRIES' (NBR) announcement that its former CEO

agreed to waive a $100 million termination payment was a rare

win for shareholders, who experts say often gripe about

excessive compensation but rarely act.

Under pressure from shareholders, who voted against Nabors'

pay packages and directors in a recent proxy voting, the oil

drilling company said this morning that former CEO Eugene

Isenberg will waive the huge payout. Instead, his estate will

receive a payment of $6.6 million plus interest upon his

death. ``Isenberg has more than enough money. So having him

defer this $100 million is a good thing for shareholders,''

says Stephen Ellis, a Morningstar equity analyst.

In recent years, compensation has become a lightning rod

for criticism from investor advocates, who say poorly

designed pay policies often give executives the wrong

incentives. Instead, shareholders want to see management paid

for performance, says Jesse Fried, a professor of law at

Harvard University. Nabors' $100 million payment was a

perfect example of ``pay for failure,'' he says. ``There's a

lot of things that are wrong with pay practices in the United

States, but this was particularly egregious, so it's not

surprising it drew shareholder anger,'' he says.

This case also proves that shareholder outrage has an

impact: Boards pay attention, and companies do change their

policies, Fried says. ``Pressure matters, and investors

shouldn't feel shy about applying it,'' he says.

Thanks to the Dodd-Frank financial reform bill, and to the

recession, investors are now paying more attention than ever

to compensation issues, says Michael Littenberg, a partner at

Schulte Roth & Zabel LLP who focuses on corporate governance

issues. The Dodd-Frank bill required annual (though non-

binding) say on pay votes, and companies do take those votes

very seriously, because a few companies whose pay policies

haven't passed muster have been sued by shareholders,

Littenberg says.

But investors aren't taking as much advantage of this new

power as some had hoped (or feared). Last year (the first

with the new say on pay rule in place), shareholders voted

down pay policies at only 36 companies in the Russell 3000,

or 1.6%, although roughly another 350 companies saw their

policies pass with low enough votes that they'd be considered

at risk for a ``no'' vote in the future, Littenberg says.

Nabors is one of the few companies that has suffered a

``no'' vote on its pay practices, according to Governance

Metrics International, an independent research firm. ``We

have long rated Nabors poorly, because of concerns over poor

compensation practices,'' including ``a bonus formula rarely

seen in modern practice with no measure against a peer

group,'' says Greg Ruel, a research associate with GMI.

Many companies that see ``no'' votes or worryingly low

``yes'' votes do make some changes, but they don't always

change the actual pay policy, Littenberg says. Some companies

might try to better explain how pay is determined, or simply

sit down with institutional shareholders to figure out what's

most important to investors, he says. Of course, individual

shareholders aren't privy to those conversations.

All observers agree that Isenberg had long enjoyed an

unusually lavish compensation package. He was

``extraordinarily well paid,'' in part because of an unusual

compensation plan that was put in place back in 1987, when he

took on the CEO role to lead the company out of bankruptcy,

Ellis says. His contract with the company entitled him to a

cash bonus of 10% of any amount of the company's cash flow

that exceeded 10% of average shareholder equity. This

arrangement made his pay work more like a hedge fund

manager's than like a typical CEO's, Morningstar's Ellis

says.

Since the current CEO, Tony Petrello, took over, the

company has taken some other steps that show it's responding

to widespread shareholder anger over pay practices, Ellis

says. They're now going to allow their board of directors to

be elected by a majority instead of a plurality, making it

easier for shareholders to vote out directors they're not

happy with, and hold annual ``say-on-pay'' votes. However,

Petrello is still being paid in a similar hedge-fund-like

fashion, getting a percentage of cash flow above a certain

benchmark, and while the recent shareholder-friendly moves

are good signs, it would certainly be better for investors if

the company got rid of this unusual pay policy, Ellis says.

A spokesman for the company said that Isenberg, who holds

more than 8 million shares of Nabors, decided that waiving

the payment was best for his fellow shareholders, and that

the company views the decision as ``positive,'' but declined

to comment on whether any other changes would be made to pay

policies in the future.

I reserve the balance of my time.

I yield 1 minute to the gentleman from Massachusetts (Mr. Capuano).

I yield 1 minute to the gentleman from Massachusetts, Mr. Stephen Lynch.

Mr. Speaker, we are talking about a vote once a year, probably at the annual meeting, probably take a sum total of a few seconds; and my friends on the other side of the aisle don't want to at least agree to this small thing that empowers investors and shareholders and puts them in the position to be good stewards of the company that they own.

Now, you would think that we could come together on something like this; but when you want to stand up for the highest, most grotesque and egregious executive pay imaginable, then, of course, you're going to say no. In 2010, median pay for CEOs and large corporations was $11 million. It's time to get some say on pay.

I yield back the balance of my time.

Mr. Chairman, I demand a recorded vote.