WASHINGTON (Reuters) - A top regulator on Friday slammed a House bill to boost small business growth, adding to the chorus of critics who appear poised to derail passage of a rare bi-partisan bid to spur growth in an election year.
The House of Representatives last week overwhelmingly approved the JOBS Act to allow smaller companies to raise capital more easily and offer public stock offerings by relaxing filing requirements.
But U.S. Securities and Exchange Commissioner Luis Aguilar echoed concerns of some Senate Democrats and SEC Chairman Mary Schapiro when he said the measure relaxed too many critical investor protections, in comments posted on the SEC website.
“As an SEC Commissioner, I cannot sit idly by when I see potential legislation that could harm investors,” he wrote, noting that removing too many protections could actually damage growth — by causing investors to flee.
“I urge Congress to undertake the review necessary to resolve these questions and to ensure that investors, as the providers of the capital that companies need to grow and create jobs, have the protections they need and deserve.”
The House bill had allowed fairly large companies - those with up to $1 billion in annual gross revenue - to qualify for certain key regulatory exemptions — like an extended pass on external audits — after their initial public offerings.
Aguilar argued that this would free the vast majority of IPO candidates from important disclosure requirements.
“Such reduced financial disclosure may make it harder for investors to evaluate companies in this category by obscuring the issuer’s track record,” he wrote.
Senate Democrats proposed lowering the threshold for the exemption to $350 million.
But the Democratic amendments turned the bill from an election-friendly jobs measure seen winning quick approval to one that looked set to succumb to partisan bickering.
Republicans quickly accused Democrats of trying to block the measure with parliamentary maneuvers, “partisan provisions” and “poison pills”.
Senate Democrats also proposed that the legislation extend the Export-Import Bank’s lending authority until 2015 and increase its lending limit to $140 billion from $100 billion. The bank’s charter is due to expire on May 31 and it is expected to hit the lending cap in a few weeks.
Some Republicans object to this because they believe the Eximbank is displacing private-sector lenders from big trade finance deals and that the taxpayer-subsidized financing it offers to foreign firms can actually hurt U.S. companies.
The amendments would need 60 votes to be adopted, but even if they fail, the Democrat-controlled Senate could kill the original House measure with a majority vote.
Reporting By Alexandra Alper; Editing by Ron Popeski