| WASHINGTON, April 11
WASHINGTON, April 11 At least 175 companies have
taken advantage of a new law that allows them to keep their
draft initial public offering documents confidential, two top
U.S. Securities and Exchange Commission officials told lawmakers
Lona Nallengara and John Ramsay, acting directors for the
SEC's divisions of corporation finance and trading and of
markets, respectively, reported on companies using the Jumpstart
Our Business Startups, or JOBS Act, in testimony prepared for a
U.S. House of Representatives Small Business panel.
Signed into law roughly one year ago, the JOBS Act is a
measure designed to spur small business growth by relaxing
federal securities regulations to make it easier for companies
to raise capital and eventually go public.
It received wide bipartisan support but has also faced
staunch criticism from some Democrats and investor advocates who
say it causes critical information to be withheld from investors
and could expose them to fraud.
Many of the provisions of the JOBS Act went into effect
right away when it was signed into law, but several key sections
still require rulewriting by the SEC.
One rule, for instance, would lift a long-standing ban on
general advertising for private placement offerings, making it
easier for hedge funds and others to reach new investors.
Another rule would establish a new regulatory regime for
intermediaries that offer crowdfunding, a capital-raising
strategy that lets investors take small stakes in private
start-ups over the Internet.
The SEC is far behind in completing the rules, and
Republicans are unhappy at the agency for missing congressional
"The longer we wait for action by the regulators, the more
our engines of economic growth will continue to simply tread
water, or worse yet starve, for lack of opportunity," said
Republican David Schweikert, who chairs the House Small Business
Subcommittee on investigations, in prepared opening remarks.
The two SEC officials did not give any timetables for when
rules may be completed.
Mary Jo White, who was sworn in on Wednesday as the SEC's
new chairman, has said JOBS Act rulemaking would be among her
top priorities, but she has not yet revealed her thinking on how
the rules should be crafted.
In addition to the confidential IPO filings, the SEC
officials said banks are taking advantage of another provision
in the law which changed the number of shareholders of record
that trigger public financial reporting requirements.
To date, about 78 banks have deregistered with the agency,
meaning they no longer need to publicly report.