Statement of IO&R Subcommittee Ranking Member Yvette Clarke before Subcommittee hearing entitled: "JOBS Act Implementation Update"

Statement of the Honorable Yvette Clark

Ranking Member

House Committee on Small Business

Subcommittee on Investigations, Oversight and Regulations

"JOBS Act Implementation Update”

April 11, 2013

Thank you Mr. Chairman and I’d like to welcome everyone to this morning’s hearing

For the past two years, our nation’s economy has experienced positive and steady private sector job growth. However, these gains have not been enough to overcome our nation’s above-average unemployment which currently stands at 7.6%; minority unemployment for African-Americans and Latinos, while retreating, remains at 13.3% and 9.2% respectively.  These facts, along with last week’s job’s numbers illustrate the work we have yet to complete. 

Creating nearly two-thirds of all new jobs, our small businesses must remain front and center to our recovery.  For our national economy to experience a more robust recovery, our entrepreneurs and small businesses must play their traditional job-creating role, and for that they must have access to capital.

For entrepreneurs who have a solid business plan, yet lack immediately marketable products, equity capital has been a crucial aspect of getting their businesses off the ground.  Many are turning to crowdfunding to finance their businesses.  However, the number of small businesses that can access capital is severely limited due to the prohibitions on equity investing via crowdfunding. 

In response, Congress passed the Jumpstart Our Business Startups, or JOBS Act, in late 2012, which provided a new exemption from SEC requirements to register public offerings for equity investing via crowdfunding.  This exemption has the potential to unlock the virtually untapped resources of millions of ordinary investors to small businesses. However, as evidenced by the rigorous Congressional debates before passage of the Act, a balanced approach to investor protection must be in place before allowing the general public to participate in this inherently more risky realm of small business investing.

Pursuant to the JOBS Act, the SEC was mandated to create rules to do just that.  However, the SEC has yet to complete the rulemaking process, thus preventing full implementation of the JOBS Act; missing several congressionally-mandated deadlines.

In today’s hearing, we will discuss the SEC’s delays in implementing the JOBS Act and the needs of our small business community.  While no one is happy waiting for these rules to be drafted, we must remember that it is vitally important that the SEC strike the appropriate balance between investor protection and producing a functional system that provides the capital for small businesses and entrepreneurs to create jobs.

Thank you again, Mr. Chairman for holding this important hearing, and I yield back.   

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