House Oversight Panel Meets on Lifting '499 Cap'
The House Oversight and Government Reform Committee wants to change current private trading rules to help more companies go public and bring more capital to those companies, said Rep. Daniel Issa, its chairman.
"In the 1980s a $15 million, $16 million company with a bright future might be able to go public. Today a $100 million business with good profits is unlikely to be able to go public because it represents $2 million or $3 million of their profit disappearing just for compliance," the California Republican told CNBC Tuesday.
The committee meets today to discuss changing the rules and "allow small businesses [to] have an opportunity to get medium-sized investors," Issa said. The committee plans to work with SEC Chairman Mary Schapiro, who will testify at the hearing, to update the rules.
According to the Oversight Committee's hearing notice, there have been 126 initial public offerings since 2001 compared to about 530 during the 1990s. The number of companies listed on major American exchanges is now at 4,000 from a peak of over 7,000 in 1997.
Lifting the "499 cap" will not change the rules on who is qualified to invest, he said.
"We’re not going to lift the quality or the experience or the financial wherewithal of those who can't invest. You’re still going to have to be at least somebody who has large and disposable income," he said. "If the investor is qualified, should the company also have to be limited? I think the answer is no. The cap is artificial."
House Majority Leader Eric Cantor, R-Va., told CNBC business taxes must come down to encourage job creation. See video here.