House Passes Bill To Ease MicroCap Financing Regulation

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On Sept. 8 the house passed a bill that would allow any company traded on a public exchange to take advantage of Form S-3 shelf registration, a simpler form for offerings.

“What this really means is there will be no prior SEC review for microcap offerings,” said John Coffee, a securities law professor at Columbia University. “The company can file and sell and it doesn’t have to get through an SEC review person who says, ’I don’t think your financial statements are right.’”

Rep. Ann Wagner (R., Mo.), who sponsored the legislation said; “Extending these cost-saving provisions to smaller companies that large companies are currently able to enjoy is absolutely critical, and makes a difference for in their ability to issue additional offerings, expand their business and create more jobs.”

While the bill passed with minimal democratic support, it isn’t expected to get far with the White House threatening to veto the bill.

The primary concern among democrats is that the bill make things too easy on microcap and would allow the to issue stock to quickly, possibly in a pump and dump.

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