[House Report 113-58]
[From the U.S. Government Publishing Office]
113th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 113-58
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AMENDING A PROVISION OF THE SECURITIES ACT OF 1933 DIRECTING THE
SECURITIES AND EXCHANGE COMMISSION TO ADD A PARTICULAR CLASS OF
SECURITIES TO THOSE EXEMPTED UNDER SUCH ACT TO PROVIDE A DEADLINE FOR
SUCH ACTION
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May 15, 2013.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
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Mr. Hensarling, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 701]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 701) to amend a provision of the Securities Act
of 1933 directing the Securities and Exchange Commission to add
a particular class of securities to those exempted under such
Act to provide a deadline for such action, having considered
the same, report favorably thereon without amendment and
recommend that the bill do pass.
Purpose and Summary
H.R. 701 sets October 31, 2013, as the deadline by which
the SEC must complete the rules to implement section 3(b)(2) of
the Securities Act of 1933, as amended by title IV of the
Jumpstart Our Business Startups (JOBS) Act (Pub. L. No. 112-
106), which provides for the exemption of certain issuers from
registration under the Securities Act.
Background and Need for Legislation
President Obama signed the JOBS Act into law on April 5,
2012. That law requires the SEC to promulgate various rules and
regulations in furtherance of several sections of the law.
Since that time, however, the SEC has failed to meet some
deadlines by which rulemaking must be completed, including
deadlines expressly set forth in titles II and III of the Act.
The JOBS Act does not provide a statutory deadline by which
the rules referred to in title IV of the Act must be completed.
Nevertheless, the policy enacted into law contained in that
section is an important feature of the Act. In particular, the
Act commands the SEC to exempt from the registration
requirements of the Securities Act of 1933 domestic securities
that meet the following criteria: (i) the aggregate offering
amount of all securities offered and sold within the prior 12-
month period in reliance on the new exemption shall not exceed
$50 million; (ii) the securities may be offered and sold
publicly; and (iii) the securities shall not be restricted
securities.\1\
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\1\A ``restricted security'' is a security that cannot be resold
unless it qualifies for an exemption from such restriction.
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H.R. 701 endeavors to prompt the SEC to action by
establishing October 31, 2013, as the date by which the SEC
must complete its rulemaking to implement title IV of the JOBS
Act.
Hearings
The Committee on Financial Services held no hearings on
H.R. 701.
Committee Consideration
The Committee on Financial Services met in open session on
May 7, 2013 and ordered H.R. 701 to be favorably reported to
the House by voice vote, a quorum being present.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. No
record votes were ordered during consideration of H.R. 701.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee's oversight findings
are reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee states that H.R. 701
will require the SEC to complete its rulemaking under title IV
of the JOBS Act by October 31, 2013.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimates
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 13, 2013.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 701, a bill to
amend a provision of the Securities Act of 1933 directing the
Securities and Exchange Commission to add a particular class of
securities to those exempted under such Act to provide a
deadline for such action.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 701--A bill to amend a provision of the Securities Act of 1933
directing the Securities and Exchange Commission to add a
particular class of securities to those exempted under such Act
to provide a deadline for such action
Under title IV of the Jumpstart our Business Startups Act
(Public Law 112-106), the Securities and Exchange Commission
(SEC) is required to issue a regulation that exempts certain
stock offerings--specifically, where the aggregate amount
offered and sold in the previous 12-month period does not
exceed $50 million--from requirements to register the offering
with the agency. H.R. 701 would require the SEC to finalize
that regulation by October 31, 2013.
Efforts are currently underway at the SEC to finalize the
rule in question. Based on information from the agency, CBO
expects that implementing H.R. 701 would have a negligible
effect on the agency's workload. As a result, CBO estimates
that implementing H.R. 701 would not significantly affect
discretionary spending. Furthermore, under current law, the
agency is authorized to collect fees sufficient to offset its
operating costs each year; therefore, we estimate that the net
cost to the SEC would be negligible, assuming appropriation
actions consistent with that authority. Enacting HR. 701 would
not affect direct spending or revenues; therefore, pay-as-you-
go procedures do not apply.
HR. 701 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The CBO staff contact for this estimate is Susan Willie.
The estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
H.R. 701 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Duplication of Federal Programs
Pursuant to section 3(j) of H. Res. 5, 113th Cong. (2013),
the Committee states that no provision of H.R. 701 establishes
or reauthorizes a program of the Federal Government known to be
duplicative of another Federal program, a program that was
included in any report from the Government Accountability
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most
recent Catalog of Federal Domestic Assistance.
Disclosure of Directed Rulemaking
Pursuant to section 3(k) of H. Res. 5, 113th Cong. (2013),
the Committee estimates that H.R. 701 does not require any
directed rule makings. It simply states the date by which a
previously required rulemaking is to be completed.
Section-by-Section Analysis of the Legislation
Section 1. Rulemaking deadline for exempting certain securities
This section sets October 31, 2013, as the deadline by
which the SEC shall complete its rulemaking under title IV of
the JOBS Act.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
SECURITIES ACT OF 1933
TITLE I--SHORT TITLE
* * * * * * *
EXEMPTED SECURITIES
Sec. 3. (a) * * *
(b) Additional Exemptions.--
(1) * * *
(2) Additional issues.--[The Commission] Not later
than October 31, 2013, the Commission shall by rule or
regulation add a class of securities to the securities
exempted pursuant to this section in accordance with
the following terms and conditions:
(A) * * *
* * * * * * *