WASHINGTON - the Securities and Exchange Commission is open to the relaxation of the rules for private companies issuing stock, President of the Agency said Tuesday. But he must first evaluate the benefits of these changes against a potential increase in fraudulent offers of stocks.
Private companies can keep their secret finances if they have fewer than 500 shareholders. Chairman of the SEC, Mary Schapiro said that the Agency is trying to see if it makes sense to raise this threshold.
A change would facilitate for Facebook, Twitter and others raise funds without the requirements of reporting for public companies.
Schapiro said that she supported the complaint of business that the current limit limits their ability to raise capital. But she and her staff, said looser requirements could also in the case of phony businesses more investor scams.
The most important objective is "getting the right balance between protection of investors and making access to affordable and effective capital", Schapiro told the group.
Some legislators said the current rules to discourage investment and limited economic growth.
"Effectively raise capital for the best investment opportunities in the United States is essential to the long-term viability of our position on the world market and a widespread economic recovery," said Rep. Darrell Issa, R-Calif., Chairman of the monitoring of the House and the Government Reform Committee,
After hearing testimony from Schapiro, Issa told his colleagues that he knows that the SEC should facilitate the rules.
Still, the current rules are designed to stop insider trading in the shares of information not available publicly.
Group, which finance leaders the a divisions of society of declared later this year.
The review staff is designed to develop ideas to reduce the costs of compliance without sacrificing protection of investors.
Facebook and Twitter, the rules would affect the daily refresh site together on and Zynga, the manufacturer of the online game "farmville."
Many of these companies are startups that the name. They have thousands of employees and estimated billions of dollars in annual income. But they put off the coast to make public. It is in part because they already have access to the capital of the deep-pocketed investors venture capitalists.
Sometimes groups of investors can bunch their assets together to give as if there are fewer shareholders that actually exist in a company.
Issa also wanted the SEC to take account of the exemption company employees that have actions to be taken into account in the limit. Cross stated that they are considering this change.
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