NEW YORK, MARCH 15, 2018– Thomson Reuters has released a Checkpoint special report about the Financial Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs Act of 2017 (CHOICE Act), a bill that aims to comprehensively change existing financial regulatory laws in order to ease the burden of such policies on various entities. The report provides background on the current regulatory landscape and examines the bill’s potential impact to small business capital formation and the regulation of financial institutions.
The CHOICE Act would create significant change to the Jumpstart Our Business Startups Act (JOBS Act), the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), and other financial regulatory laws. Originally introduced in September 2016 by Congress but not enacted, the CHOICE Act was later revised and approved by the House of Representatives in June 2017. It has since advanced to the Senate where its fate will be determined.
Small businesses are essential to job creation and economic growth; yet a slump in U.S. IPOs since 2000 has been largely felt among smaller entities going public. As stipulated by the JOBS Act, the SEC has issued Regulation Crowdfunding and Regulation A+, which intend to ease the capital-raising efforts of such companies while still ensuring certain investor protections.
The report explains how the CHOICE Act, if adopted, would further relax such regulations. As an example, it would eliminate both individual and aggregate investment caps, as well as the registration threshold that pertains to non-accredited investors.
Dodd-Frank seeks to prohibit what is regarded as some of the riskiest behavior of banks and financial services companies, in order to protect investors and consumers and to prevent the collapse of another major financial institution. One of its key components, the Volcker Rule, established a framework that delineates prohibited and permitted activities, and requires certain banking entities to establish a compliance program that is commensurate with the entity’s activities, size, scope and complexity.
The report addresses how the CHOICE Act proposes to, among other things, repeal the Volcker Rule and reduce the requisite Dodd-Frank supervisory stress tests that evaluate the ability of large banking organizations to withstand stressful conditions. The report also discusses additional bills that have been subsequently introduced, calling for more moderate rollbacks of Dodd-Frank, and provides search tips for related terms and phrases within SEC filings and other resources that are available on Thomson Reuters Checkpoint.
“The Financial CHOICE Act of 2017 raises uncertainties for businesses in the critical realms of capital-raising and financial regulations,” said Salim Sunderji, managing director, Checkpoint, with the Tax & Accounting business of Thomson Reuters. “While the future of the bill remains unknown, this report provides helpful context and raises important questions to help tax and accounting professionals consider its implications and to begin preparations on behalf of their clients if that is the prudent course.”
To download the special report, visit here.
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