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[House Report 113-58]
[From the U.S. Government Publishing Office]

113th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     113-58

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   AMENDING A PROVISION OF THE SECURITIES ACT OF 1933 DIRECTING THE 
    SECURITIES AND EXCHANGE COMMISSION TO ADD A PARTICULAR CLASS OF 
 SECURITIES TO THOSE EXEMPTED UNDER SUCH ACT TO PROVIDE A DEADLINE FOR 
                              SUCH ACTION

                                _______
                                

  May 15, 2013.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 701]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 701) to amend a provision of the Securities Act 
of 1933 directing the Securities and Exchange Commission to add 
a particular class of securities to those exempted under such 
Act to provide a deadline for such action, having considered 
the same, report favorably thereon without amendment and 
recommend that the bill do pass.

                          Purpose and Summary

    H.R. 701 sets October 31, 2013, as the deadline by which 
the SEC must complete the rules to implement section 3(b)(2) of 
the Securities Act of 1933, as amended by title IV of the 
Jumpstart Our Business Startups (JOBS) Act (Pub. L. No. 112-
106), which provides for the exemption of certain issuers from 
registration under the Securities Act.

                  Background and Need for Legislation

    President Obama signed the JOBS Act into law on April 5, 
2012. That law requires the SEC to promulgate various rules and 
regulations in furtherance of several sections of the law. 
Since that time, however, the SEC has failed to meet some 
deadlines by which rulemaking must be completed, including 
deadlines expressly set forth in titles II and III of the Act.
    The JOBS Act does not provide a statutory deadline by which 
the rules referred to in title IV of the Act must be completed. 
Nevertheless, the policy enacted into law contained in that 
section is an important feature of the Act. In particular, the 
Act commands the SEC to exempt from the registration 
requirements of the Securities Act of 1933 domestic securities 
that meet the following criteria: (i) the aggregate offering 
amount of all securities offered and sold within the prior 12-
month period in reliance on the new exemption shall not exceed 
$50 million; (ii) the securities may be offered and sold 
publicly; and (iii) the securities shall not be restricted 
securities.\1\
---------------------------------------------------------------------------
    \1\A ``restricted security'' is a security that cannot be resold 
unless it qualifies for an exemption from such restriction.
---------------------------------------------------------------------------
    H.R. 701 endeavors to prompt the SEC to action by 
establishing October 31, 2013, as the date by which the SEC 
must complete its rulemaking to implement title IV of the JOBS 
Act.

                                Hearings

    The Committee on Financial Services held no hearings on 
H.R. 701.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
May 7, 2013 and ordered H.R. 701 to be favorably reported to 
the House by voice vote, a quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. No 
record votes were ordered during consideration of H.R. 701.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee's oversight findings 
are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 701 
will require the SEC to complete its rulemaking under title IV 
of the JOBS Act by October 31, 2013.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:
                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 13, 2013.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 701, a bill to 
amend a provision of the Securities Act of 1933 directing the 
Securities and Exchange Commission to add a particular class of 
securities to those exempted under such Act to provide a 
deadline for such action.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 701--A bill to amend a provision of the Securities Act of 1933 
        directing the Securities and Exchange Commission to add a 
        particular class of securities to those exempted under such Act 
        to provide a deadline for such action

    Under title IV of the Jumpstart our Business Startups Act 
(Public Law 112-106), the Securities and Exchange Commission 
(SEC) is required to issue a regulation that exempts certain 
stock offerings--specifically, where the aggregate amount 
offered and sold in the previous 12-month period does not 
exceed $50 million--from requirements to register the offering 
with the agency. H.R. 701 would require the SEC to finalize 
that regulation by October 31, 2013.
    Efforts are currently underway at the SEC to finalize the 
rule in question. Based on information from the agency, CBO 
expects that implementing H.R. 701 would have a negligible 
effect on the agency's workload. As a result, CBO estimates 
that implementing H.R. 701 would not significantly affect 
discretionary spending. Furthermore, under current law, the 
agency is authorized to collect fees sufficient to offset its 
operating costs each year; therefore, we estimate that the net 
cost to the SEC would be negligible, assuming appropriation 
actions consistent with that authority. Enacting HR. 701 would 
not affect direct spending or revenues; therefore, pay-as-you-
go procedures do not apply.
    HR. 701 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Susan Willie. 
The estimate was approved by Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 701 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                    Duplication of Federal Programs

    Pursuant to section 3(j) of H. Res. 5, 113th Cong. (2013), 
the Committee states that no provision of H.R. 701 establishes 
or reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(k) of H. Res. 5, 113th Cong. (2013), 
the Committee estimates that H.R. 701 does not require any 
directed rule makings. It simply states the date by which a 
previously required rulemaking is to be completed.

             Section-by-Section Analysis of the Legislation

Section 1. Rulemaking deadline for exempting certain securities

    This section sets October 31, 2013, as the deadline by 
which the SEC shall complete its rulemaking under title IV of 
the JOBS Act.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                         SECURITIES ACT OF 1933

TITLE I--SHORT TITLE

           *       *       *       *       *       *       *

                          EXEMPTED SECURITIES

  Sec. 3. (a) * * *
  (b) Additional Exemptions.--
          (1) * * *
          (2) Additional issues.--[The Commission] Not later 
        than October 31, 2013, the Commission shall by rule or 
        regulation add a class of securities to the securities 
        exempted pursuant to this section in accordance with 
        the following terms and conditions:
                  (A) * * *

           *       *       *       *       *       *       *

                                  
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