Members of the House Financial Services Subcommittee on Oversight and Investigations said during a Wednesday hearing that the SEC has cost America jobs because of its inability to meet provision deadlines under the Jumpstart Our Business Startups Act.
Many provisions of the JOBS Act took effect after it was signed into law last spring. The SEC, however, has missed a number of rulewriting deadlines for provisions designed to help small businesses hire and raise capital.
“Adding insult to injury, it appears that the SEC’s inaction on Title II certainly is not due to the complexity of the issue itself,” Rep. Ann Wagner (R-Mo.), a subcommittee member, said. “Indeed, it is both ironic and unfortunate that a bipartisan success such as the JOBS Act has been held up at the SEC for what appears to be political reasons.”
The hearing focused primarily on Title II of the JOBS Act, which would remove an SEC ban preventing small businesses from using advertisements to find accredited investors. The JOBS Act required the SEC to implement the provision before July 4 of last year.
Attorneys for the SEC recommended issuing an interim final rule before the deadline, but the SEC opted to adopt a proposed rule, meaning the regulator would be unable to finalize regulations to lift the ban until later this year.
Internal emails revealed former SEC chairman Mary Schapiro delayed implementing the law after a lobbyist told her special interest groups would be highly critical of the SEC if it pushed forward with the legislation.
In an email to her chief of staff and another SEC commissioner, Schapiro mentioned the lobbyist’s comments and expressed concern that the potential criticism would tarnish her “legacy” at the SEC.
“The SEC’s decision to delay implementation of major provisions of the JOBS Act is certainly disappointing, but to learn the former chairman prioritized special interest groups over adhering to the implementation of a strong bipartisan law is entirely unacceptable,” Subcommittee Chairman Patrick McHenry (R-N.C.) said. “I understand the SEC is under new leadership, and I have hope that the commission is poised to begin finalizing the provisions in the JOBS Act, as promised in the Rose Garden one year ago this month.”
Subcommittee members noted that the SEC’s decision to delay implementation came as the agency struggled with a number of legal setbacks, prompting concern that the regulator is misapplying its enforcement authority and misallocating its resources.