Giving Small Business Investment Companies a Break from Reporting Regulations (H.R. 432)
Do you support or oppose this bill?
What is H.R. 432?
(Updated July 19, 2017)
This bill would amend the Investment Advisers Act of 1940 to exempt advisers of small business investment companies (SBICs) from:
Securities and Exchange Commission (SEC) registration requirements related to giving venture capital funds with investment advice.
SEC registration and reporting requirements on assets under the management of private funds.
An SBIC is a privately-owned investment company that receives a license from the Small Business Administration (SBA) to finance small businesses through debt (typically loans) and equity (stock). Most of their investments are in the range of $100,000 to $250,000, and they are able to borrow money from the federal government in order supplement funds from private investors.
The bill would also exempt SBICs from any registration, licensing, or qualification requirements imposed by states on investment advisers.
Argument in favor
This bill would clarify the role SBICs play, while giving them a much-needed break from regulatory requirements that can keep them from helping small businesses grow and boost the economy.
Argument opposed
Why should SBICs get an exemption from the regulations that everyone else in the industry has to follow? SBICs should not be above federal registrations or state regulations.
Impact
Small businesses, venture capital funds, private investment funds, SBIC advisers, state regulators, and the SEC.
Cost of H.R. 432
A CBO cost estimate is unavailable.
Additional Info
In-Depth: According to the Small Business Investor Alliance, SBICs have invested nearly $60 billion in small American companies since they were created in 1958. During the 2010 fiscal year alone they provided over $2 billion to more than 1,300 small businesses.
This bill was passed by the House Financial Services Committee by a vote of 53 to 0 before it proceeded to the House floor.
Media:
- Sponsoring Rep. Blaine Luetkemeyer (R-MO) Press Release
- House Financial Services Committee Markup
- Businesswire
- Middle Market Growth
- Small Business Investor Alliance (In Favor)
- Investopedia (Context)
(Photo Credit: Flickr user vandalog)
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