Congress has passed the Economic Growth, Regulatory Relief, and Consumer Protection Act, which principally addresses financial regulatory measures.  The legislation also includes a number of securities law related provisions.  For example, Section 503 requires that the SEC review the findings and recommendations of the annual SEC Government-Business Forum on capital formation and address the findings and recommendations publicly.  Section 504 expands the Section 3(c)(1) exception under the Investment Company Act to include venture capital funds that have up to 250 investors and $10 million in aggregate committed capital contributions and uncalled capital.  Section 507 raises the Section 701 threshold to $10 million and indexes the threshold to inflation going forward.  Section 508 allows reporting companies to rely on Regulation A.  Rule 509  provides closed-end funds listed on a national securities exchange and certain interval funds to benefit from the same securities offering and other provisions available to operating companies.  After the Small Business Credit Availability Act was passed modernizing the securities offering and communications related provisions for BDCs, there had been concern that closed-end funds had been forgotten.

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The Senate bill (S. 2155) titled the Economic Growth, Regulatory Relief, and Consumer Protection Act, which focuses principally on scaling back various Dodd-Frank Act bank regulatory provisions, also contains a number of securities law-related measures.  The securities law measures that found their way into the Senate bill by way of an amendment reflect the text from various bills that had been introduced in, and passed by, the House on a standalone basis.  These include the following:

  • Section 501 that would amend the Securities Act in order to apply the exemption from state regulation of a securities offering to securities listed on any national securities exchange, effectively broadening the definition of a “covered security;”
  • Section 503 that would require the Securities and Exchange Commission (the SEC) to review the recommendations of the annual SEC Government-Business Forum on Capital Formation and disclose any action taken in light of such recommendations;
  • Section 504 that would amend Section 3(c)(1) of the Investment Company Act in order to permit “qualifying venture capital funds” to be exempt from the Investment Company Act if they have no more than 250 beneficial owners (an increase from the current 100 beneficial owner threshold) and aggregate committed capital not exceeding $10 million;
  • Section 507 that would direct the SEC to amend Rule 701 in order to increase from $5 million to $10 million (subject to inflationary adjustments) the aggregate sales price or amount of securities sold during any 12-month period in excess of which the issuer is required to deliver additional disclosure to employees;
  • Section 508 that would direct the SEC to amend Regulation A in order to make it available to Exchange Act reporting companies; and
  • Rule 509 that would allow closed end funds to rely on the securities offering and proxy rules available to operating companies and bring them to parity with operating companies and also now with business development companies, or BDCs, which were the beneficiaries of provisions incorporated into the recently enacted spending bill.