U.S. Rep. Bill Huizenga (R-MI) called on the Securities and Exchange Commission to focus on creating a regulatory environment that supports innovation and job creation to help small businesses gain access to capital during a recent hearing.
Huizenga, the chairman of the House Financial Services Subcommittee on Capital Markets, Securities and Investment, convened the hearing to explore the impact of the Jumpstart Our Business Startups (JOBS) Act, which was signed into law in 2012 by President Barack Obama.
“While small companies are at the forefront of technological innovation and job creation, they often face significant obstacles in obtaining funding in the capital markets,” Huizenga said. “These obstacles are often attributable to the ‘one size fits all’ securities regulations — intended for large public companies — placed on small companies when they seek to go public.”
The JOBS Act aimed to help small businesses obtain funding, Huizenga continued, and to force the SEC to rethink capital formation and investor protections in fundamentally different ways in light of crowdfunding and other developments.
“The bipartisan JOBS Act was an attempt to remedy the SEC’s inaction on capital formation, and even President Obama called the law a ‘game changer’ for entrepreneurs and capital formation,” Huizenga said. “By failing to fulfill this important part of its mandated mission, the SEC is hurting small businesses, impeding economic growth and hindering the creation of new jobs.”
Huizenga said it was time to further modernize the nation’s securities regulatory structure to ensure a free-flow of capital, job creation and economic growth. “It’s time to get the federal government working to support innovation and reward hard-working Americans,” he said.
House Republicans’ plan to reform the Dodd-Frank Act, the Financial CHOICE Act, includes provisions to expand access to capital for small businesses and entrepreneurs.
Raymond Keating, the chief economist at the Small Business and Entrepreneurship Council, testified that despite positive changes created by the JOBS Act, areas of improvement are needed, such as with government over-regulating the ability of entrepreneurs to access capital and investors’ ability to make investments.
Thomas Quaadman, executive vice president for the Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce, expressed concern about the long-term decline in the number of public companies in the United States. He said only about half the public companies exist today than did 20 years ago.
“Whatever the exact economic consequences may be, it is indisputable that fewer public companies means less jobs, less growth, and less opportunity for American businesses and American workers,” Quaadman said.