Amendments to Senator Chris Dodd’s (D-CT) reform bill will allow for efficient capital access for entrepreneurs and also provide fraud protection for investors
East Hartford, April 21, 2010 – The Connecticut Technology Council, supports two amendments that will be offered by Sen. Christopher Dodd on the Restoring American Financial Stability Act of 2010. These amendments will ensure that high growth entrepreneurs have access to a strong pool of angel capital and that investors are better protected from fraud.
CTC has been working with Dodd’s banking staff along with a number of other national pro-entrepreneurship policy support groups, most notably the Angel Capital Association (ACA) based in Kansas City, MO, to make its members’ concerns known about earlier versions of the bill.
According to many experts and especially the Angel investor community, two of the original bill’s sections had the potential of significantly reducing the number of accredited angel investors and also of creating complicated and potentially expensive regulations for entrepreneurs raising angel financing.
“We were fortunate that two key players in the national debate, myself and Elizabeth Karter, ACA’s public policy committee chair, a former president of Connecticut’s Angel Investor Forum and a former senior consultant at the Connecticut Technology Council, were based in Connecticut and had strong connections to Senator Dodd and his staff,” noted Matthew Nemerson, who is both President of the Connecticut Technology Council and current volunteer president of the Technology Councils of North America (TECNA) group, “these relationships allowed us to cut through the many voices commenting on the bill and gave us access to key staff at a critical time to suggest improvements to the legislation.”
“There was great concern that the reform bill might seriously cripple the Angel investing world. This was voiced by many parts of the early stage financing community and by the community of 50 state and regional technology councils across the country representing over 20,000 innovation oriented member firms. We got Senator Dodd’s attention and his people were happy to make the changes suggested by the group,” noted Nemerson.
The act would also have the Securities and Exchange Commission review the thresholds at least every four years, with any adjustments considering the protection of investors, the public interest and the state of the economy.
“We appreciate the direction to consider the economic impact of any adjustments to accredited investor standards in the future, as we believe that innovative start-up businesses are some of the most important creators of high quality jobs in the country,” said ACA’s Karter. Section 926. Regulation D Offerings.
The amendment deletes all previous language and disqualifies individuals who have been determined to be “bad actors” by Federal and State authorities from using Regulation D 506 private offerings (which include angel investments, but many other types of investments as well).
This amendment increases investor protections and ensures uniform regulation of these private offerings across the United States. It also keeps the reporting requirements for entrepreneurs the same as they are currently. The current uniform system is efficient for small businesses that attract angel capital. The ACA and TECNA will be monitoring the Reform bill over the next few days and weeks as it works its way on the floor of the Senate. Assuming the language stays in as currently written the bill will o negative impact on the ability of new innovative firms to find Angel and informal funding.
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About the Connecticut Technology Council The Connecticut Technology Council is a state wide business trade association that builds community, supports innovation and growth policies and assists firms to stay and thrive in Connecticut. It speaks for a community of some 2,500 firms and nearly 200,000 technology involved employees.
About the Technology Councils of North America, TECNA The Technology Councils of North America, TECNA is the trade association representing about 45 technology councils across the USA and Canada. It provides professional development to tech council leaders, runs conferences and when appropriate is the voice of the grass roots technology community across North America.
About the Angel Capital Association The Angel Capital Association is the trade association of leading angel investment groups in North America. The mission of ACA is to support the growth, financial stability, and investments success of its member groups.
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Flashback / see also:
4/27/2010 – FYI Link to current info on the 2010 Obama – Dodd Financial Reform Bill, including full text and amendments – the proposed amendments we want aren't there yet! Visit: http://thomas.loc.gov/cgi-bin/bdquery/D?d111:6:./temp/~bss3oXd::
4/14/2010 Dodd Delivers Floor Statement on Financial Reform http://ct.typepad.com/ctc_blog/2010/04/dodd-delivers-floor-statement-on-financial-reform-.html
4/13/2010 Post: As volunteer President of the Tech Councils of North America, Matthew Nemerson worked with nine other TBED Organizations to seek changes in Financial Reform Bill in seeking revisions to the Financial Reform Bill, which will be debated soon in the U.S. Senate. In its current form, the bill could make devastating changes to the requirements for accredited U.S. investors, and complicate cross-state investment. The petitioning organizations ask that two small sections pertaining to accredited investors be removed or modified to prevent unnecessary obstacles to angel investing and entrepreneurship. See full 4/13/2010 post: http://ct.typepad.com/tecna/2010/04/orgletterfinancialreform.html
3/15/2010 Financial Reform Bill as delivered to the Senate: To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘‘too big to fail’’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes. Read the full text at: http://banking.senate.gov/public/_files/ChairmansMark31510AYO10306_xmlFinancialReformLegislationBill.pdf
11/11/2009 Senator Chris Dodd (D-CT) has released a draft of his Financial Reform Bill. http://ct.typepad.com/ctc_blog/2009/11/senator-chris-dodd-dct-has-released-a-draft-of-his-financial-reform-bill.html___