Chairman Hensarling Urges Senate Action on JOBS Act 3.0 on US House Floor — reprinted by Ronald Woessner

WASHINGTON – Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following speech on the House Floor today, urging the Senate to pass the “JOBS & Investor Confidence Act of 2018,” otherwise known as the JOBS Act 3.0:

“I come here today, Mr. Speaker, and I picked up a copy of this morning’s edition of the Wall Street Journal. Many Americans would consider it to be the most influential newspaper in America; but certainly at least on economic matters, I think, most would agree.

I just happened to read the lead editorial today, Mr. Speaker, and it says that the House, this body, “has done yeoman’s work shepherding bipartisan bills to expand access to capital.” Most influential paper in America. There’s a lot in between but let me go to the last sentence where it says, “The Senate shouldn’t scuttle what could be one of this congress’s better achievements.” That’s in today’s Wall Street Journal, Mr. Speaker, and the Journal’s talking about JOBS 3.0. It’s a bill that came out of this body 406-4, and its purpose, Mr. Speaker, is to promote small business, to promote entrepreneurial capitalism, to promote venture capital. Again, Mr. Speaker, it came out of this body 406-4. We couldn’t get 406-4 votes on a Mother’s Day resolution. And yet it languishes on that side of the Capitol.

So I’ve been in this body for 16 years, Mr. Speaker, and I’ve learned a few things. One of the things I’ve learned is never underestimate the Senate’s capacity to do nothing. And unfortunately, so far, the United States Senate has done nothing on a bill that passed 406-4.

Mr. Speaker, thanks to the leadership of President Donald Trump, thanks to the leadership of Speaker Paul Ryan, thanks to the leadership of Chairman Kevin Brady, we have what for most Americans – not all, but for most Americans – is the greatest economy they have had in their entire lifetime. Unemployment at a 50-year low. Cutting across all socioeconomic groups. Small business optimism, consumer optimism, off the charts. We are seeing more people come back into the labor force, and this is all great news.

But we cannot be blinded by the fact that as good as the economy is of today, we still have to concentrate on the economy of tomorrow. And we need to know, can we ensure that the seed capital is there? Can we make sure that our public policy nourishes the drivers of tomorrow’s economy, the next Amazons, the next Googles, the next Ubers; where are they going to come from?

So unfortunately, Mr. Speaker, what we have seen is that as recently as 2016, as recently as 2016, startups in America have been cut in half. And oh, incidentally the securities regulatory burden has increased by over 50% in the last 10 years, and by over 80%. It now costs, Mr. Speaker, twice as much to go public today as it did 10 years ago.

And what do we see? We see half the number of companies going public. They don’t seem to have that problem in China, Mr. Speaker, because China has over 1/3 of the world’s I.P.O.’s or initial public offerings.

Yet the United States, our I.P.O.’s have been cut in half. That’s why it’s so important that every Congress, every Congress we go back and we ensure that our securities laws are written in such a way that we make sure that entrepreneurial capitalism can’t just survive in America, but absolutely thrive. So I come to this floor again to ask that our colleagues on the other side of the Capitol, and I have many friends in that body, but I am often confused why, why they cannot act on something that has received incredible, incredible support in the House.

Mr. Speaker, November is National Entrepreneurship Month. There’s only two days left in the month. So I hope that my voice can be heard on the other side of the Capitol, and I would ask the United States Senate to immediately take up the JOBS 3.0 Act, and make sure that the economy of tomorrow for our children and grandchildren is as healthy and thriving as the economy of today.”

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See the link here for Mr. Woessner’s bio.

 

SEC Proposed Rule Regarding Covered Investment Fund Research Reports – Summary by Ronald Woessner

On May 23, 2018, as directed by Congress pursuant to the Fair Access to Investment Research Act of 2017, the SEC proposed a new rule under the Securities Act of 1933.

If adopted, the proposal would establish a safe harbor for an unaffiliated broker or dealer participating in a securities offering of a “covered investment fund” to publish or distribute a “covered investment fund research report.” If the conditions for the safe harbor are satisfied, this publication or distribution would be deemed not to be an offer for sale or offer to sell the covered investment fund’s securities for purposes of sections 2(a)(10) and 5(c) of the Securities Act of 1933.

The SEC also proposed a new rule under the Investment Company Act of 1940. This proposal would exclude a covered investment fund research report from the coverage of section 24(b) of the Investment Company Act (or the rules and regulations thereunder), except to the extent the research report is otherwise not subject to the content standards in self-regulatory
organization rules related to research reports, including those contained in the rules governing communications with the public regarding investment companies or substantially similar standards.

Public comments on the proposal were required to be submitted to the SEC on July 9, 2018.

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See Mr. Woessner’s biography at the link here.

Summary of FINRA and SEC Regulations — Reprint from OTC Markets Website by Ronald Woessner

 

See below for SEC and FINRA regulations that govern trading in securities quoted on OTC Link® ATS,  the OTC Markets SEC registered Alternative Trading System, reprinted from the OTC Markets website.

FINRA

Rule 2000 — Business Conduct

Rule 2010 — Standards of commercial honor and principles of trade

Rule 2020 — Use of manipulative, deceptive or other fraudulent devices

Rule 4320 — Short sale delivery requirements

Rule 4560 — Short interest reporting

Rule 5210 — Publication of transactions and quotations

Rule 5220 — Offers at stated prices

IM-5220.01 — Firmness of quotations

Rule 5250 — Payments for market making

Rule 5310 — Best execution and Interpositioning

Rule 5320 — Prohibition Against Trading Ahead of Customer Orders

Rule 6431 — Recording of quotation information

Rule 6432 — Compliance with the Information Requirements of SEC Rule 15c2-11

Rule 6433 — Minimum quotation size requirements for OTC equity securities

Rule 6440 — Trading and quotation halt in OTC equity securities

Rule 6450 — Restrictions on Access Fee

Rule 6460 — Display of Customer Limit Orders

Rule 6490 — Processing of Company-Related Actions

Rule 6600 — OTC Reporting Facility

Rule 6620 — Reporting Transactions in OTC Equity Securities and Restricted Equity Securities

Rule 7400 — Order Audit Trail System (OATS)

SEC

Section 3 — Definitions and applications

Rule 3a38 — Definition of ‘Market Maker’

Rule 3a51-1 — Definition of Penny Stock

Section 17B — Automated quotation systems for Penny Stocks

Section 12 — Registration requirements for securities.

Rule 12a-8 — Exemption of Depositary Shares

Rule 12b-2 — Definitions (includes the definition of a Depositary Share)

Rule 12d2-2 — Removal from listing and registration

Rule 12g-1 — Exemption from Section 12(g)

Rule 12g3-2 — Exemptions for American Depositary Receipts and certain foreign securities

Rule 12g-4 — Certification of termination of registration

Rule 12g5-1 — Definition of securities ‘Held of Record’

Rule 12g5-2 — Definition of ‘Total Assets’

Rule 12h-3 — Suspension of 15(d) reports

Rule 12h-4 — Exemption from 15(d) reports

Rule 12h-6 — Certification by a Foreign Private Issuer regarding the termination of registration of a class of securities under Section 12(g) or the duty to file reports under Section 13(a) or 15(d)

Rule 15c2-11 — Initiation or resumption of quotations without specific information

Rule 15g-“2 — Risk disclosure document relating to the OTC Market

Rule 15g-3 —Broker or dealer disclosure of quotations and other information relating to the OTC Market

Rule 15g-5 — Disclosure of compensation of associated persons in connection with Penny Stock transactions

Rule 15g-6 — Account Statements for Penny Stock customers

Rule 15g-9 — Sales practice requirements for certain low-priced securities

Rule 15g-100 — Schedule 15G: Information to be included in the document distributed pursuant to 15g-2.

For a complete list of all SEC and FINRA rules, please see:

SEC Rules — SEC.gov

FINRA Rules — FINRA.org

Mr. Woessner’s bio appears here.

Summary of FINRA and SEC Regulations — Reprint from OTC Markets Website by Ronald Woessner

See below for SEC and FINRA regulations that govern trading in securities quoted on OTC Link® ATS,  the OTC Markets SEC registered Alternative Trading System, reprinted from the OTC Markets website.

FINRA

Rule 2000 — Business Conduct

Rule 2010 — Standards of commercial honor and principles of trade

Rule 2020 — Use of manipulative, deceptive or other fraudulent devices

Rule 4320 — Short sale delivery requirements

Rule 4560 — Short interest reporting

Rule 5210 — Publication of transactions and quotations

Rule 5220 — Offers at stated prices

IM-5220.01 — Firmness of quotations

Rule 5250 — Payments for market making

Rule 5310 — Best execution and Interpositioning

Rule 5320 — Prohibition Against Trading Ahead of Customer Orders

Rule 6431 — Recording of quotation information

Rule 6432 — Compliance with the Information Requirements of SEC Rule 15c2-11

Rule 6433 — Minimum quotation size requirements for OTC equity securities

Rule 6440 — Trading and quotation halt in OTC equity securities

Rule 6450 — Restrictions on Access Fee

Rule 6460 — Display of Customer Limit Orders

Rule 6490 — Processing of Company-Related Actions

Rule 6600 — OTC Reporting Facility

Rule 6620 — Reporting Transactions in OTC Equity Securities and Restricted Equity Securities

Rule 7400 — Order Audit Trail System (OATS)

SEC

Section 3 — Definitions and applications

Rule 3a38 — Definition of ‘Market Maker’

Rule 3a51-1 — Definition of Penny Stock

Section 17B — Automated quotation systems for Penny Stocks

Section 12 — Registration requirements for securities.

Rule 12a-8 — Exemption of Depositary Shares

Rule 12b-2 — Definitions (includes the definition of a Depositary Share)

Rule 12d2-2 — Removal from listing and registration

Rule 12g-1 — Exemption from Section 12(g)

Rule 12g3-2 — Exemptions for American Depositary Receipts and certain foreign securities

Rule 12g-4 — Certification of termination of registration

Rule 12g5-1 — Definition of securities ‘Held of Record’

Rule 12g5-2 — Definition of ‘Total Assets’

Rule 12h-3 — Suspension of 15(d) reports

Rule 12h-4 — Exemption from 15(d) reports

Rule 12h-6 — Certification by a Foreign Private Issuer regarding the termination of registration of a class of securities under Section 12(g) or the duty to file reports under Section 13(a) or 15(d)

Rule 15c2-11 — Initiation or resumption of quotations without specific information

Rule 15g-“2 — Risk disclosure document relating to the OTC Market

Rule 15g-3 —Broker or dealer disclosure of quotations and other information relating to the OTC Market

Rule 15g-5 — Disclosure of compensation of associated persons in connection with Penny Stock transactions

Rule 15g-6 — Account Statements for Penny Stock customers

Rule 15g-9 — Sales practice requirements for certain low-priced securities

Rule 15g-100 — Schedule 15G: Information to be included in the document distributed pursuant to 15g-2.

For a complete list of all SEC and FINRA rules, please see:

SEC Rules — SEC.gov

FINRA Rules — FINRA.org

Mr. Woessner’s bio appears here.

Dodd-Frank’s Negative Impact on Start-Up/Emerging Company Capital Raising

Dodd-Frank crushed the valuations of start-up/emerging companies, as illuminated in the chart below:

Raising Money in a Post Dodd-Frank WorldTypical Sources of investment capital for start-up/emerging companies are:

  • Personal Loans/Credit of Founders – fund 57% of start-ups
  • Friends & Family – fund 38%
  • Venture Capital Funds – fund .05%
  • Angel Investors – fund .91%
  • “JOBS Act Crowd Funding – too new for reliable metrics, although expected to increase

The metrics above reveal that “Personal Loans/Credit” of Founders and “Friends & Family” provide the preponderance of capital for start-up/emerging companies. As these capital sources become “tapped” out, these companies need to attract “investment firm” capital to survive. Subsequent posts will illuminate the reasons why the Dodd-Frank crushed stock valuations have made it virtually impossible for start-up/emerging companies to obtain investment firm capital.

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Mr. Woessner’s bio appears here.

Raising Money in a Post Dodd-Frank World

Dodd-Frank made it extraordinarily difficult for micro-cap companies to raise money.

The chart below, excerpted from an article by noted financial analyst Michael Markowski, who predicted the demise of Lehman Brothers, Bear Stearns, and Merrill Lynch, illustrates that the Dodd-Frank legislation crushed the values of micro-cap companies. The crushing of their valuations has made it extraordinarily difficult for micro-cap companies to obtain funding from sources other than Friends & Family investors

You can read the full text of Mr. Markowski’s article here.

For most micro-cap companies,  expertise from firms such as Microcapstrategies.com is needed to help raise funding from sources other than Friends & Family investors in a post Dodd-Frank world.

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Mr. Woessner’s bio appears here.

Alternatives to the S&P 500?

Noted financial analyst Michael Markowski, who predicted the demise of Lehman Brothers, Bear Stearns, and Merrill Lynch, is predicting that the current S&P 500 stock market bubble is poised to crash in 2018.

Overvalued Stocks

You can watch his predictions in the videos here.

One of the factors cited by Mr. Markowski is the significant divergence between large cap stock valuations and small cap stock valuations.

If such a crash occurs, it could be a good opportunity for investing in microcap companies since investors will be seeking investment opportunities other than the S&P 500.