Financial CHOICE Act Would Broaden Form S-3 Availability

David Feldman |

On May 4, 2017, the House Financial Services Committee narrowly, by a vote of 34-26, passed the Financial CHOICE Act of 2017, which now moves to the full House. Most of the bill relates to rollbacks of Dodd-Frank provisions that are better covered by those who follow issues affecting large financial institutions. Among other things it would repeal the Volcker Rule which prohibits banks from doing proprietary trading and sponsoring hedge and private equity funds.



One small section of the summary of the bill is called “Capital Formation.” The Committee’s summary of the bill praises the ideas that come out of the annual SEC small business conference and criticizes the SEC for its slow implementation of the Jumpstart Our Business Startups (JOBS) Act of 2012. But they noted tremendous benefit coming out of the JOBS Act rollout and added more goodies to the bill to enhance capital formation opportunities. Most important, they would allow all SEC reporting companies to use short registration Form S-3, which could be a tremendous help for over-the-counter issuers current in their filings. It also would exempt emerging growth and smaller reporting companies from burdensome XBRL financial reporting rules.

The bill also requires the SEC to formally respond to each recommendation from the small business conference and disclose what action, if any, it is taking in response. It also eliminates the requirement of a broker-dealer or funding portal in JOBS Act Title III crowdfunding. No clue whether this will pass, we will stay tuned!

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