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Jeff Butler
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April 09, 2014
By J.D. Harrison, Published: April 1 | Updated: Wednesday, April 2, 7:45 AMHoping to fuel more job-creating companies, lawmakers on both sides of the aisle are crafting legislation intended to encourage individual start-up investors, commonly called “angel investors,” to pour even more capital into new and growing businesses — but they don’t all agree on the best way to help. “We want you to make more investments, we want you to take more risks,” Sen. Chris Murphy (D-Conn.) told investors at the Angel Capital Association’s annual summit last week in Washington. “So why don’t we take a look at our regulatory structure so that we’re reducing the barriers to the type of investments that you make, not increasing them.” In the United States, angel investors funnel more than $1 billion into thousands of early-stage companies every year, and more of that money is moving into rapidly growing sectors like mobile and health care technology, according to a new report by Silicon Valley Bank and the Angel Resource Institute, a research organization. In addition, angel funding is increasingly spread out across the country, as opposed to traditional venture capital (pooled money among a group of investors), which has long been concentrated in metropolitan areas, particularly technology hubs like New York City, Boston and Silicon Valley in California. Rep. Patrick McHenry (R-N.C.) emphasized that second point in his own remarks at the conference, calling angel investors “very important for us in the rest of America, the ones outside of large urban areas, to ensure that entrepreneurs with great ideas have an opportunity to get started.” In an attempt to encourage those investors to put more of the their wealth behind a larger number of companies, Murphy, McHenry and other lawmakers in both chambers are working on proposals meant to make start-up investing simpler and more financially appealing. Here’s a look two of the ideas they are working on right now in Congress. National angel tax credit Murphy, for one, has put forth a bill that would create a national angel tax credit, which would give investors a tax break worth up to 25 percent of their total annual investments in high-tech start-ups based in the United States. The proposal is modeled after a program in Murphy’s state, which allows Connecticut investors who funnel at least $100,000 to an early-stage business in certain sectors to take an income tax credit equaling up to 25 percent of their investment. Since it started in 2010, it has supported more than 200 investments from 90 angel investors going to dozens of companies in fields like biotech, clean technology and information technology. “Our tax credit has worked,” Murphy said. In addition to funding companies that create jobs, he argued that expanding the credit nationwide will help “target growth in the science, technology and engineering fields, so the United States can continue to lead the world in innovation.” Murphy acknowledged that the proposal could be a tough sell as policymakers are currently looking for ways to simplify the tax code, not add new deductions. Moreover, the proposal has not sat well with consumer groups, who have slammed the tax break as yet another handout to some of wealthiest Americans. However, David L. Verill, founder of Hub Angels Investment Group in Boston and chairman of the Angel Capital Association, says that with successful entrepreneurs-turned-investors, that money will nearly always be funneled right back into the economy. Citing talks with other angel investors, he believes most would “plow the savings they get from the tax credit right back into another company.” “So it’s not going into the third house or the yacht or something like that,” he said. “It’s getting churned right back into the entrepreneurial ecosystem.” Reworking the JOBS Act North Carolina’s McHenry called the national angel tax credit idea a good idea — but he says lawmakers should first follow up on the JOBS Act. Signed into law two years ago, the Jumpstart Our Business Startups (JOBS) Act directed the Securities and Exchange Commission to ease a number of restrictions on the way entrepreneurs can communicate with and solicit funding from investors. However, a number of lawmakers and investment groups have complained that, in writing the rules to implement those changes, the SEC has actually made it harder rather than easier for companies to reach out to investors. As part of the law, for instance, regulators were to lift the ban on what is called general solicitation, which had prevented companies from widely advertising their securities offerings to investors. In doing so, though, officials haveproposed some new requirements for certain investors — requirements that McHenry says have made some of the key provisions in the law “unworkable.” He pointed out that regulators now require investors in some cases to file documentation two weeks in advance of launching discussions with a company in which they may consider investing. Noting that angel investors only tend to invest in a tiny fraction of the businesses from which they hear pitches, McHenry said “the idea that you are going to prefile 15 days before you even start discussions is absolutely absurd.” Meanwhile, the proposed regulations could require some angel investors to start proving their level of wealth via third-party certification, moving away from a longstanding precedent of self-certification for accredited investors. “They’re putting friction where there wasn’t any before,” Verill said. If the agency doesn’t amend some of those rules, Congress may step in. “At the end of the day, it’s going to be up to Congress to legislate and fix this problem, and we’re working on that now,” McHenry said, later adding, “I think you’ll see further action in a bipartisan way to hold [the SEC] accountable.” However, that might not happen right away. McHenry noted that the regulations are already well behind schedule, with some rules still yet to be finalized. And with the mid-term elections looming, many lawmakers are currently too preoccupied on the campaign trail to craft and debate new legislation on the Hill. Follow J.D. Harrison and On Small Business on Twitter.
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April 17, 2013
While some provisions of the bipartisan JOBS – Jumpstart Our Business Startups – Act went into effect when it was signed into law, the SEC has failed to meet the law’s deadlines to write required rules for other provisions that will help small businesses raise capital and hire workers. The subcommittee hearing focused specifically on one section of the JOBS Act that would remove an outdated SEC regulatory ban preventing small companies from using advertisements to find accredited investors. The law required the SEC to implement this section by July 4, 2012. SEC attorneys recommended issuing an interim final rule by the legal deadline. However, the SEC instead adopted a proposed rule rather than an interim final rule – meaning the agency will not be able to finalize regulations to lift the advertisement ban until sometime later this year. Internal SEC emails later revealed that then-SEC Chairman Mary Schapiro delayed implementing the JOBS Act after a Washington lobbyist informed her that special interest groups “were prepared to be quite aggressive” in criticizing the SEC if it moved forward. Schapiro told her chief of staff and a SEC commissioner in an email about the lobbyist’s comments and worried that the criticism would tarnish her “legacy” at the agency. “The SEC’s decision to delay implementation of major provisions of the JOBS Act is certainly disappointing, but to learn the former chairman prioritized special interest groups over adhering to the implementation of a strong bipartisan law is entirely unacceptable,” said Subcommittee Chairman Patrick McHenry (R-NC). “I understand the SEC is under new leadership, and I have hope that the commission is poised to begin finalizing the provisions in the JOBS Act, as promised in the Rose Garden one year ago this month.” Subcommittee members noted the SEC’s decision to disregard the legal deadline to implement the JOBS Act comes while the SEC has suffered a series of recent legal setbacks. This is prompting concerns the agency is both misallocating its resources and misapplying its regulatory enforcement authorities. In 2011, the D.C. Circuit Court of Appeals struck down an SEC rule, finding that the SEC “inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters.” In 2013, a unanimous U.S. Supreme Court rejected an attempt by the SEC to avoid the statute of limitations in an enforcement action. Specifically, the SEC sought to have the statute of limitations begin to run upon the commission’s discovery of the possible fraud violation, instead of when the alleged violation actually took place. ###
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April 05, 2013
Congressman McHenry Announces $48,000 Homeland Security Grant to Lawndale Fire Department in Cleveland County
WASHINGTON – Today, Congressman Patrick McHenry (R-NC) announced $48,000 in a U.S. Department of Homeland Security (DHS) grant to a local fire department in the Tenth Congressional District.
The grant will go to the Lawndale Fire Department in Cleveland County, and comes in the twenty-first round of the FY 2012 Staffing for Adequate Fire and Emergency Response (SAFER) Grant awards. SAFER was established to assist local fire departments to increase their staffing and deployment capabilities in order to respond to emergencies whenever they may occur. Local departments applied for the grants, and the program is administered by the Grant Programs Directorate of the Federal Emergency Management Agency in cooperation with the U.S. Fire Administration. According to Lawndale Assistant Fire Chief Steven McMurry, the SAFER funds will be used to establish a mileage reimbursement program for department volunteers. “Communities like Lawndale have been hard hit in recent years by the loss of textile jobs,” said Congressman McHenry. “This SAFER Grant will assist the Lawndale Fire Department in retaining and recruiting volunteers to maintain a superior level of fire protection for the citizens of Lawndale.” Lawndale is the first Tenth District department to receive SAFER funding in this fiscal cycle. Grants will continue to be announced in rounds weekly through the coming months.
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March 28, 2013
Congressman McHenry Announces $78,375 Homeland Security Grant to Waco Community Volunteer Fire Department in Cleveland County
U.S. Department of Homeland Security awards Assistance to Firefighter Grant funds to local department WASHINGTON – Today, Congressman Patrick McHenry (R-NC-10) announced $78,375 in a U.S. Department of Homeland Security (DHS) grant to a local fire department in the Tenth Congressional District. The grant will go to the Waco Community Volunteer Fire Department in Cleveland County, and comes in the nineteenth round of the 2012 fiscal year Assistance to Firefighters Grant Program (AFG), which aims to help firefighters and first responders throughout the country. Local departments applied for the grants, and the program is administered by the Grant Programs Directorate of the Federal Emergency Management Agency in cooperation with the U.S. Fire Administration. According to Waco Fire Chief Kevin Gordon, the grant funds will be used to purchase dual band communications equipment. “Our response area lies in both Cleveland and Gaston Counties,” said Chief Gordon. “Cleveland County Emergency Communications operates on an 800 megahertz system and Gaston County does not, making interoperability an issue for a department such as ours. These radios will allow us to operate seamlessly no matter which county we are responding in.” “Waco is blessed to have a professional fire service with Chief Kevin Gordon at the helm,” commented Congressman McHenry. “I was proud to visit their department a few years ago and commend them for their dedication to serving their community.” A panel of fire experts at DHS awards AFG grants through a competitive review process. Congressman McHenry hosts workshops for 10th District EMS and fire departments to help guide personnel through the process and give them an inside view of what the committee looks for. The workshops are taught by Cherryville Fire Chief Jeff Cash, a nationally recognized expert in his field and former member of DHS’s AFG review committee. Since Congressman McHenry and Chief Cash began the program, 10th District EMS and fire departments have consistently won more grants than departments in most of North Carolina’s other Congressional Districts. During the 2011 AFG funding cycle, $107,015 was awarded in six grants in the 10th District. Thus far in the 2012 funding cycle, $34,303 has been awarded to 10th District departments. Grants will continue to be announced in rounds weekly through the coming months. ###
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January 31, 2013
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While I was home here in Western North Carolina today, a summer intern in our D.C. office, Ariel Cohen, spent the morning honoring the legacy of local war hero Otis Glenn.
Hundreds of Americans gathered at the Vietnam Memorial Wall in Washington D.C on Flag Day to pay tribute to their family, friends and loved ones who courageously fought in the Vietnam War. Among the names read included longtime Burke County resident and Vietnam veteran Glenn Otis.
Glenn served as a sergeant in the United States Marine Corps, where his bravery in both the battles of Khe Sanh and Con Thien earned him a Purple Heart medal. After he completed his service in 1968, Glenn received a Presidential Citation for Bravery, and then returned home to North Carolina.
Although Sgt. Glenn came home from Vietnam with no external physical wounds, the battlefields left his lungs in poor condition. His health deteriorated over time, and as a result Sgt. Glenn died in 2007 due to internal wounds from his service. Although his name is not in scripted on the Vietnam Memorial Wall, he is counted among the thousands of American patriots who gave their lives as a result of valiantly serving in Vietnam.
Otis Glenn’s wife, Judith Glenn, read her husband's name in front of the Vietnam Veteran’s Memorial Wall in 2009 and added his name to the Vietnam Honor Roll Book to serve as a permanent remembrance of his service.
Over fifty years after his homecoming, Sgt. Glenn’s name continues to be spoken at the wall. The annual Flag Day ceremony commemorates not only those who fell on the battlefield, but also those who perished as a result of war injuries once they returned home.
In 2012, 96 additional heroes were inducted into the Vietnam Honor Roll Book.
During the 1960s, much protest arose regarding whether or not the United States should actually be engaged in the war. As a result, many war heroes never received a proper homecoming or welcome from their fellow citizens. Speakers at the memorial event today called upon citizens to remember the patriotism of those who served in Vietnam as America continues to face new challenges.
Thumbs up, thumbs down
By The Record Editorial Staff
THUMBS UP to U.S. Rep. Patrick McHenry for crafting a bill to help business owners that House members couldn’t refuse. His legislation to allow small businesses and entrepreneurs to raise money by securing small contributions from many sources – called “crowdfunding” – cleared the full House by a vote of 407 to 17. That’s a margin almost unheard of, given the divisiveness in Congress these days. The legislation would allow companies to raise up to $2 million, with individuals limited to investments of $10,000 or 10 percent of their annual income. Now, the Securities and Exchange Commission prohibits crowdfunding. It’s a good bill that can provide smaller companies with much-needed start-up money or operating expenses with relatively little risk to investors. We urge the Senate to give the Entrepreneur Access to Capital Act the same support as the House.
http://www2.hickoryrecord.com/news/2011/nov/04/thumbs-thumbs-down-ar-1576335/