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IPA Legislative Alert: Bipartisan Financial Legislation Being Signed Into Law

By May 23, 2018May 24th, 2018No Comments

Yesterday, the House of Representatives passed by 258-159 a bipartisan bill, the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155), which is expected to be signed into law tomorrow. The Senate previously passed the bill in March. S.2155 is the most significant overhaul of bank regulatory oversight since the Dodd-Frank Act passed in 2010, and may represent Congress’ last attempt at passing a financial legislative package before the November midterm elections.

In addition to provisions concerning the banking sector, S. 2155 also includes reforms of U.S. securities laws relating to capital formation, as well as protections for senior financial exploitation. The securities-related provisions address improvements to the Regulation A+ exemption and the modernization of closed-end fund structures.

Senior Financial Exploitation (Sec. 303)
Section 303 extends qualified immunity from civil or administrative proceedings to covered financial institutions, including a broker-dealer or investment adviser, and certain covered employees of the financial institution, including compliance or legal personnel, supervisors, and registered representatives, investment adviser representatives and insurance producers, who, in good faith and with reasonable care, disclose suspected financial exploitation of a senior citizen to designated regulatory or law-enforcement agencies. As a condition to receiving immunity, financial institutions must train those personnel regarding the identification and reporting of senior financial exploitation.

Regulation A+ Expansion (Sec. 508)
Reporting companies that file annual, periodic, and other reports under the Securities Exchange Act will now qualify for the Regulation A+ securities exemption that allows issuers to sell securities to the public with limited registration and disclosure requirements. Regulation A+ currently applies only to nonreporting companies. This provision will allow companies that meet higher SEC disclosure requirements to qualify as an eligible issuer of Regulation A+ offerings. A similar provision was included in a stand-alone bill (H.R. 2864) which the House passed 403-3 on Sept. 5, 2017.

Closed-End Funds (Sec. 509)
Closed-end funds listed on an exchange or that make periodic repurchase offers will qualify for a streamlined securities registration process and other benefits available to other public reporting companies. Closed-end funds and other businesses registered under the Investment Company Act don’t currently qualify as well-known seasoned issuers or WKSIs, whose securities offerings and investor communications are governed by other securities laws. WKSIs can use streamlined procedures such as offering additional shares through a “shelf registration” process, which allows companies to delay an offering to take advantage of favorable market conditions, or incorporation by reference of previously filed documents with the SEC. This provision will allow closed-end funds to use benefits similar to those offered to companies designated as WKSIs. A similar provision was included in a stand-alone bill (H.R. 4279) the House passed 418-2 on Jan. 17.


Tony Chereso
President & CEO
Institute for Portfolio Alternatives