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US Securities and Exchange Commission

Dem Relief Package Would Require SEC IG to Report on Rulemaking, Oversight

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

By Bill Flook

The HEROES Act, a $3 trillion coronavirus relief package proposed this week by House Democrats, contains a provision requiring the SEC’s Inspector General to report semiannually on rulemaking activities related to the COVID-19 pandemic and oversight of entities receiving relief funds.

The bill, H.R. 6800, would require the same of the Consumer Financial Protection Bureau (CFPB), the Treasury Department, and other regulators.

Under the measure, the agencies would submit the reports to the Special Inspector General for Pandemic Recovery, the Pandemic Response Accountability Committee, and the Congressional Oversight Commission, all of which were set up under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law in late March.

While Treasury and the Federal Reserve have taken center stage in the coronavirus relief effort, the SEC has worked since the beginning of the crisis to ease requirements for companies overwhelmed by the pandemic and the resulting economic shutdown. In recent months, the commission has provided temporary relief from certain regulatory requirements for start-ups, broker-dealers, business development companies, transfer agents, registered funds, investment advisers, public companies, and other market participants.

Most recently, the market regulator on May 4 issued Release No. 33-10781Temporary Amendments to Regulation Crowdfunding, a set of tweaks to the SEC’s JOBS Act crowdfunding rules designed to speed up offerings.

The relief applies to Regulation Crowdfunding offerings through August 31. Under the changes, which carry additional eligibility and disclosure requirements, a company can begin offerings initially without financial statements in order to gauge investor interest; avoid having an independent public accountant review financial statements for smaller offerings; and sell securities sooner in the process, among other steps meant to make crowdfunded offerings smoother.Sec. 3 of pl112-106

(See SEC’s Relief Allows Small Businesses to Raise Crowdfunded Capital More Quickly in the May 6, 2020, edition of Accounting & Compliance Alert)

The House plans to vote on the HEROES Act as early as May 15, 2020. In the Senate, however, Majority Leader Mitch McConnell has indicated there is no urgency to consider the next COVID-19 relief package.

 

This article originally appeared in the May 14, 2020 edition of Accounting & Compliance Alert, available on Checkpoint.

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