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115th Congress    }                                          {   Report
                          HOUSE OF REPRESENTATIVES
 1st Session      }                                          {  115-104

======================================================================



 
            SMALL BUSINESS CAPITAL FORMATION ENHANCEMENT ACT

                                _______
                                

  May 1, 2017.--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. 1312]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 1312) to amend the Small Business Investment 
Incentive Act of 1980 to require an annual review by the 
Securities and Exchange Commission of the annual government-
business forum on capital formation that is held pursuant to 
such Act, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Small Business Capital Formation 
Enhancement Act''.

SEC. 2. ANNUAL REVIEW OF GOVERNMENT-BUSINESS FORUM ON CAPITAL 
                    FORMATION.

  Section 503 of the Small Business Investment Incentive Act of 1980 
(15 U.S.C. 80c-1) is amended by adding at the end the following:
  ``(e) The Commission shall--
          ``(1) review the findings and recommendations of the forum; 
        and
          ``(2) each time the forum submits a finding or recommendation 
        to the Commission, promptly issue a public statement--
                  ``(A) assessing the finding or recommendation of the 
                forum; and
                  ``(B) disclosing the action, if any, the Commission 
                intends to take with respect to the finding or 
                recommendation.
  ``(f) Forum Findings.--Nothing in this section shall require the 
Commission to agree to or act upon any finding or recommendation of the 
forum.''.

                          Purpose and Summary

    Introduced by Representative Poliquin on March 2, 2017, 
H.R. 1312 the ``Small Business Capital Formation Enhancement 
Act,'' requires the SEC to respond to recommendations offered 
by its annual Government Business Forum on Small Business 
Capital Formation (Forum). The Forum has met annually since 
1981 and generates a list of findings and recommendations; 
however, the SEC is under no obligation to respond to the 
Forum's recommendations and findings. H.R. 1312 would require 
the SEC to respond to any findings and recommendations put 
forth by the Forum. This statutory obligation is consistent 
with the current requirements related to the findings and 
recommendations offered by the Investor Advisory Committee as 
required by Title IX of the Dodd-Frank Act.

                  Background and Need for Legislation

    In 1980, Congress required the SEC to conduct an annual 
government-business forum to review the current status of 
problems and programs relating to small business capital 
formation. A summary of the proceedings of the forum--known as 
the Government-Business Forum on Small Business Capital 
Formation--and any related findings and recommendations are 
submitted to, among other things, the SEC and appropriate 
congressional committees for review. The Forum has generated a 
number of sound recommendations that the Financial Services 
Committee has used to develop legislation, including many 
provisions of the bipartisan JOBS Act.
    Unfortunately, the SEC is not statutorily obligated to 
respond to the Forum's recommendations and findings. Although 
Congress has deemed the recommendations worthy of response and 
action, the SEC has not. Interestingly, SEC Commissioners 
typically offer opening statements at Forum meetings that 
praise the Forum's work and the expertise of its members. For 
example, at the November 19, 2015, commencement of the forum, 
former SEC Chair White noted that:

          This is . . . the latest in a remarkable series of 
        open and direct discussions that has given the 
        Commission critical insight into the impact of our 
        rules on small businesses and on their efforts to raise 
        capital. This Forum can be counted on to be another 
        frank and productive conversation, and we welcome all 
        of your perspectives as leaders of the small business 
        community.

    Despite that acknowledgement, the SEC typically does not 
utilize the work of the Forum. As noted by now-acting SEC 
Chairman Mike Piwowar at the 2015 Forum:

          Given your tremendous efforts to develop thoughtful 
        recommendations, I believe the Commission should 
        respond to each one. By statute, the Commission is 
        required to respond to each recommendation provided by 
        the Investor Advisory Committee. It should not take a 
        law to require the Commission to respond to the Forum's 
        recommendations--it is more of a matter of common 
        courtesy and good government.

    H.R. 1312, the Small Business Capital Formation Enhancement 
Act, remedies the discrepancy pointed out by Acting Chairman 
Piwowar.

                                Hearings

    The Committee on Financial Services' Subcommittee on 
Capital Markets and Government Sponsored Enterprises held a 
hearing examining matters relating to similar legislation on 
December 2, 2015.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
March 9, 2017 and ordered H.R. 1312 to be reported favorably to 
the House as amended by a recorded vote of 58 yeas to 0 nay 
(recorded vote no. FC-33), 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. An 
amendment offered by Representative Poliquin was agreed to by a 
voice vote. The sole record vote was a motion by Chairman 
Hensarling to report the bill favorably to the House as 
amended. That motion was agreed to by a recorded vote of 58 
yeas to 0 nay (record vote no. FC-33), a quorum being present.


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of 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. 1312 
will remedy the SEC's lack of response to the Government-
Business Forum on Small Business Capital Formation's 
recommendations and findings by statutorily obligating the SEC 
to respond to any findings and recommendations put forth by the 
Forum.

   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, March 22, 2017.
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. 1312, the Small 
Business Capital Formation Enhancement Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Stephen 
Rabent.
            Sincerely,
                                             Mark P. Hadley
                                                  (For Keith Hall).
    Enclosure.

H.R. 1312--Small Business Capital Formation Enhancement Act

    H.R. 1312 would require the Securities and Exchange 
Commission (SEC) to review and assess the recommendations 
generated at an annual forum of government agencies and 
business professionals convened to discuss small business 
capital formation. The SEC also would be required to disclose 
any actions it intends to take in response to any finding or 
recommendation made by the forum.
    Based on an analysis of information from the SEC, CBO 
estimates that implementing H.R. 1312 would cost less than 
$500,000 to complete the review and assessment of 
recommendations. Under current law, the SEC is authorized to 
collect fees sufficient to offset its annual appropriation; 
therefore, CBO estimates that the net effect on discretionary 
spending would be negligible, assuming appropriation actions 
consistent with that authority.
    Enacting H.R. 1312 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply. CBO 
estimates that enacting H.R. 1312 would not increase net direct 
spending or on-budget deficits in any of the four consecutive 
10-year periods beginning in 2028.
    H.R. 1312 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 Stephen Rabent. 
The estimate was approved by H. Samuel Papenfuss, 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. 1312 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(c)(5) of rule XIII, the Committee 
states that no provision of H.R. 1312 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(i) of H. Res. 5, 115th Cong. (2017), 
the Committee states that H.R. 1312 contains no directed 
rulemaking.

             Section-by-Section Analysis of the Legislation


Section 1. Short Title.

    This section cites H.R. 1312 as the ``Small Business 
Capital Formation Enhancement Act.''

Section 2. Annual review of government-business forum on capital 
        formation.

    This section requires the Securities and Exchange 
Commission to review the findings and recommendations of the 
forum. It also requires the Commission to assess the finding 
and disclose any action the Commission intends to take with 
respect to the finding or recommendation.

         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 (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

SMALL BUSINESS INVESTMENT INCENTIVE ACT OF 1980

           *       *       *       *       *       *       *



TITLE V--CAPITAL FORMATION

           *       *       *       *       *       *       *



         ANNUAL GOVERNMENT-BUSINESS FORUM ON CAPITAL FORMATION

   Sec. 503. (a) Pursuant to the consultation called for in 
section 502, the Securities and Exchange Commission (acting 
through the Office of the Advocate for Small Business Capital 
Formation and in consultation with the Small Business Capital 
Formation Advisory Committee) shall conduct an annual 
Government-business forum to review the current status of 
problems and programs relating to small business capital 
formation.
   (b) The Commission shall invite other Federal agencies, such 
as the Department of the Treasury, the Board of Governors of 
the Federal Reserve System, the Small Business Administration, 
organizations representing State securities commissioners, and 
leading small business and professional organizations concerned 
with capital formation, to participate in the planning for such 
forums.
   (c) The Commission may request any of the Federal 
departments, agencies, or organizations such as those specified 
in subsection (b), or other groups or individuals, to prepare 
statements and reports to be delivered at such forums. Such 
departments and agencies shall cooperate in this effort.
   (d) A summary of the proceedings of such forums and any 
findings or recommendations thereof shall be prepared and 
transmitted to the participants, appropriate committees of the 
Congress, and others who may be interested in the subject 
matter.
   (e) The Commission shall--
           (1) review the findings and recommendations of the 
        forum; and
           (2) each time the forum submits a finding or 
        recommendation to the Commission, promptly issue a 
        public statement--
                   (A) assessing the finding or recommendation 
                of the forum; and
                   (B) disclosing the action, if any, the 
                Commission intends to take with respect to the 
                finding or recommendation.
   (f) Forum Findings.--Nothing in this section shall require 
the Commission to agree to or act upon any finding or 
recommendation of the forum.