CSPAN2 — LIVE U.S. Senate
20260806 220000 UTC
1725 transcript segments
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[00:00:00] THEY OPPOSE THE REMOVALS THAT
[00:00:03] DETENTION MAKES POSSIBLE. THEN, WHEN THE SYSTEM SHOWS ANY
[00:00:07] PRESSURE, THEY POINT TO THAT PRESSURE AS PROOF THAT
[00:00:11] ENFORCEMENT ITSELF MUST END. THE
[00:00:14] SEQUENCE NEVER CHANGES. DEFUND,
[00:00:16] OBSTRUCT INVESTIGATE, ABOLISH
[00:00:21] THE GOAL, FOR MANY DEMOCRATS IS
[00:00:23] VERY CLEAR. IT'S NOT BETTER
[00:00:25] DETENTION FACILITIES. IT'S NO DETENTION AT ALL. THE BILL DOES
[00:00:29] NOT MAKE ONE DETENTION FACILITY
[00:00:32] SAFER. IT SHUTS DOWN A FACILITY
[00:00:34] AND PUSHES THE PROBLEM SOMEWHERE
[00:00:37] ELSE. MADAM PRESIDENT, A SERIOUS
[00:00:40] SENATE WOULD NOT WOULD LET THE
[00:00:42] CURRENT INVESTIGATION RUN ITS COURSE. CORRECT FAILURES AND
[00:00:45] STRENGTHEN THE SYSTEM. AN UNSERIOUS SENATE SHUTS DOWN THE
[00:00:49] BUILDING AND PRETENDS THE LAW NO
[00:00:51] LONGER NEEDS ENFORCEMENT. I
[00:00:55] OBJECT TO USING A PENDING INVESTIGATION AS A PLOY TO
[00:00:59] DISMANTLE LAW ENFORCEMENT. I
[00:01:00] OBJECT TO DEFUNDING ICE AND THEN
[00:01:03] BLAMING ICE FOR LACKING
[00:01:06] RESOURCES, FIX WHAT'S BROKEN, HOLD WRONGDOERS ACCOUNTABLE,
[00:01:10] PROTECT EVERY PERSON IN FEDERAL CUSTODY, OF COURSE. BUT WE MUST
[00:01:13] ENFORCE THE LAW. AND FOR THOSE REASONS, MR. PRESIDENT, I
[00:01:16] OBJECT. >> OBJECTION IS HEARD.
[00:01:19] >> MR. PRESIDENT. >> RECOGNIZE THE SENATOR FROM
[00:01:23] NEW JERSEY. >> I APPRECIATE THE GOOD FAITH. UH, WORDS OF MY COLLEAGUE, AND I
[00:01:25] WILL TAKE IT TO HEART THAT HE IS AGAINST UNNECESSARY DEATHS. THAT
[00:01:29] GEO GROUP SHOULD BE INVESTIGATED THOROUGHLY AND HELD ACCOUNTABLE. I DO WANT TO MAKE A COUPLE
[00:01:33] FOLLOW UP POINTS. FIRST OF ALL,
[00:01:36] I LIVE IN NEWARK, NEW JERSEY. I USED TO RUN THE POLICE
[00:01:40] DEPARTMENT AS ITS MAYOR. THERE'S NOBODY THAT FEELS MORE
[00:01:43] URGENCY FOR PUBLIC SAFETY IN MY
[00:01:45] CITY THAN I DO. AND I HIRED AS
[00:01:49] MANY LAW ENFORCEMENT OFFICERS, WORKED WELL WITH ICE. I WORKED
[00:01:53] WELL WITH, UH, FBI, DOJ, ALL THE
[00:01:56] FEDERAL LAW ENFORCEMENT
[00:01:57] OFFICERS. IN A COORDINATED
[00:02:01] EFFORT TO PROTECT MY COMMUNITY. THIS IDEA THAT DEMOCRATS WANT TO
[00:02:03] DEFUND ICE IS WRONG. I ACTUALLY
[00:02:05] BELIEVE WE NEED LAW ENFORCEMENT IN OUR COMMUNITIES TO KEEP US
[00:02:09] SAFE. I WANT TO MAKE SURE THAT
[00:02:11] WE DO IT IN A WAY THAT COMPORTS
[00:02:14] WITH OUR VALUES AND OUR DECENCY.
[00:02:16] LET'S BE CLEAR. THERE IS NO LAW
[00:02:20] ENFORCEMENT AGENCY IN AMERICA THAT HAS MORE MONEY THAN ICE HAS
[00:02:23] RIGHT NOW. THIS IDEA THAT DEMOCRATS HAVE DONE ANYTHING TO
[00:02:27] DEFUND IT. RIGHT NOW, ICE HAS
[00:02:28] MORE THAN THE FBI, MORE THAN THE
[00:02:32] ATF, MORE THAN THE COAST GUARD
[00:02:37] COMBINED. IT IS A WEALTH MOST
[00:02:40] WELL-FUNDED AGENCY. THERE IS.
[00:02:43] AND THE IDEA THAT THEY CANNOT
[00:02:46] PROVIDE FOR THE BASIC NEEDS OF
[00:02:48] PEOPLE THAT ARE IN THEIR
[00:02:50] FACILITIES IS A LIE. THIS IS NOT A MONEY PROBLEM. ICE HAS ALL THE MONEY THEY NEED, AND THEY'RE
[00:02:54] SHOWING AN INABILITY TO KEEP
[00:02:57] THEIR INMATES ALIVE. NOW, I LIKE
[00:03:00] MY COLLEAGUES METAPHOR THAT IF A
[00:03:02] BRIDGE IS CLOSED, IS BROKEN, YOU
[00:03:05] CLOSE THE BRIDGE. I KNOW THIS
[00:03:06] BECAUSE, AGAIN, I WAS A MAYOR.
[00:03:10] IF PEOPLE WERE FALLING THROUGH
[00:03:10] HOLES IN A BRIDGE, WE CLOSED THE
[00:03:14] BRIDGE. DO THE INSPECTIONS, BUT DON'T LEAVE PEOPLE IN A
[00:03:17] HELLSCAPE WHERE PEOPLE CONTINUE TO DIE IN THAT FACILITY, TO KEEP
[00:03:20] THAT OPEN IS IRRESPONSIBLE. ICE
[00:03:23] HAS ENOUGH MONEY TO TRANSFER PEOPLE THAT ARE A REAL THREAT TO
[00:03:26] OTHER FACILITIES. ICE HAS ENOUGH
[00:03:30] MONEY TO RUN AROUND MY STATE
[00:03:33] OVERSPEND FOR REAL ESTATE, AS THEY'VE DONE IN ONE OF MY
[00:03:37] TOWNS, THROWING CASH AROUND IN A WAY THAT SHOULD OFFEND
[00:03:40] REPUBLICANS IN ANY FISCAL, ANYBODY FISCALLY PRUDENT, BUT
[00:03:43] NOT HOLD THE PEOPLE ACCOUNTABLE.
[00:03:47] YES, IF SOMETHING IS BROKEN, YOU
[00:03:48] STOP USING IT. IF PEOPLE ARE
[00:03:52] DYING BECAUSE OF A DEFECT IN A
[00:03:53] CAR, YOU DON'T USE IT. IF
[00:03:56] PEOPLE ARE FALLING THROUGH HOLES IN A BRIDGE, YOU CLOSE IT. WE
[00:04:00] HAVE A RESPONSIBILITY FOR
[00:04:02] TAXPAYERS MONEY, AND WE HAVE SHOVELED THIS AGENCY MORE MONEY
[00:04:05] THAN ANY LAW ENFORCEMENT AGENCY THERE IS. AND THEN WE'RE NOT
[00:04:09] DOING WHAT'S NECESSARY TO HOLD THESE PEOPLE, LIKE THE GAO
[00:04:13] GROUP, ACCOUNTABLE. I WILL
[00:04:19] CONTINUE TO STAND FOR LAW ENFORCEMENT. ONE OF THE REASONS
[00:04:22] WHY I GOT ELECTED BY MY STATE,
[00:04:25] BECAUSE WE DROVE CRIME DOWN IN THE CITY OF NEWARK, AND
[00:04:27] EVERYBODY SAW IT. INVESTMENT
[00:04:29] CAME BACK, POPULATION CAME BACK.
[00:04:32] I BELIEVE IN COMMUNITY, IN CREATING SAFETY IN MY COMMUNITY.
[00:04:36] THIS IS NOT ABOUT THE
[00:04:39] ACCUSATIONS THAT SOMEHOW DEMOCRATS DON'T BELIEVE WE SHOULD HAVE STRONG LAW
[00:04:42] ENFORCEMENT. IF ANYBODY BELIEVES
[00:04:44] IN THAT, I KNOW MY RECORD HERE
[00:04:48] IN THE SENATE SPEAKS TO THAT. HOW CAN WE STAND HERE AND ALLOW
[00:04:52] A FACILITY IN WHICH MULTIPLE PEOPLE HAVE DIED IN THE MOST
[00:04:56] GRUESOME WAYS? HOW CAN WE ALLOW
[00:04:57] AN ORGANIZATION THAT IS SUPPOSED TO BE PROVIDING HEALTH CARE, BUT
[00:05:01] DENYING IT? HOW CAN WE ALLOW
[00:05:04] THIS IN ACCORDANCE WITH OUR OWN
[00:05:08] VALUES? ENOUGH IS ENOUGH. DELANEY HALL IS A NIGHTMARE. I DID NOT COME TO THE FLOOR TO
[00:05:12] TALK ABOUT CLOSING FACILITIES ALL OVER THE COUNTRY. I'M
[00:05:16] TALKING ABOUT ONE FACILITY WITH
[00:05:17] A RECORD FOR PEOPLE DYING
[00:05:21] UNNECESSARILY, WITH A RECORD OF PEOPLE BEING DENIED MEDICAL CARE, WITH A RECORD, PEOPLE
[00:05:24] BEING DENIED HEALTHY FOOD. ONE
[00:05:26] FACILITY THAT IS FAILING, AND TO KEEP IT OPEN FOR THIS BODY TO
[00:05:30] KEEP IT OPEN, WAITING FOR
[00:05:31] SOMETHING TO CHANGE WHILE MORE
[00:05:34] PEOPLE ARE SUFFERING AND MAY
[00:05:35] DIE, IS IRRESPONSIBLE BEYOND
[00:05:38] COMPARE I BELIEVE THERE'S COMMON
[00:05:43] GROUND ON BOTH SIDES OF THE AISLE WHERE WE CAN ACHIEVE THE
[00:05:46] HIGHEST LEVELS OF SAFETY AND
[00:05:50] ALSO ENSURE THAT WITHIN OUR
[00:05:52] INCARCERATED FACILITIES, PEOPLE
[00:05:55] ARE TREATED WITH DIGNITY. I HAVE
[00:05:58] WORKED ACROSS THE AISLE WITH
[00:06:00] SENATOR LINDSEY GRAHAM, WITH
[00:06:03] SENATOR CHUCK GRASSLEY, WITH SENATOR MIKE LEE, TO IMPROVE
[00:06:07] CONDITIONS IN THE BUREAU OF
[00:06:08] PRISONS. I HOPE WHEN IT COMES TO
[00:06:11] ICE FACILITIES IN THIS PRIVATE,
[00:06:12] FOR PROFIT COMPANY WHERE PEOPLE
[00:06:15] ARE DYING, THAT WE CAN FIND SOME
[00:06:17] COMMON GROUND TO STOP THIS NIGHTMARE FROM HAPPENING. THANK
[00:06:21] YOU, MR. PRESIDENT.
[00:06:33] >> AND WE'RE LIVE FROM THE US SENATE, WAITING FOR A SENATOR TO
[00:06:37] COME TO THE FLOOR TO SPEAK. LAWMAKERS TODAY SCHEDULED TO
[00:06:39] WORK ON 74 EXECUTIVE AND JUDICIAL NOMINATIONS. BUT WE'VE
[00:06:42] SEEN LITTLE DEBATE ON THOSE IN THE UPPER CHAMBER. MUCH OF THE SENATE'S WORK TAKING PLACE OFF
[00:06:46] THE FLOOR AS REPUBLICANS WRESTLE WITH HOW TO PROCEED WITH A
[00:06:50] NUMBER OF ISSUES, INCLUDING THE FARM BILL, WHICH HAS RUN INTO PROBLEMS GETTING OUT OF
[00:06:54] COMMITTEE. TODD BLANCHE IS
[00:06:55] ATTORNEY GENERAL. NOMINATION AND TEMPORARY GOVERNMENT FUNDING
[00:06:59] THROUGH DECEMBER 11th. WITH SUCH A SMALL MAJORITY, REPUBLICAN LEADERS CAN ONLY LOSE A COUPLE
[00:07:03] OF VOTES IF THEY HOPE TO PASS ANY LEGISLATION. ONE MAJOR
[00:07:06] FACTOR HAS BEEN ATTENDANCE, ESPECIALLY FROM FORMER MAJORITY
[00:07:08] LEADER AND SENIOR SENATOR FROM KENTUCKY, MITCH MCCONNELL. HE'S
[00:07:12] BEEN OUT FOR MEDICAL REASONS FOR ABOUT SEVEN WEEKS WHILE
[00:07:15] REHABBING. WELL, WE'VE GOTTEN AN UPDATE. THE SENATOR'S OFFICE
[00:07:18] RELEASED THIS STATEMENT EARLIER TODAY. I WAS DISCHARGED FROM THE
[00:07:22] REHABILITATION CENTER TO CONTINUE MY RECOVERY AT HOME.
[00:07:25] ELAINE AND I ARE GRATEFUL FOR THE MANY WELL-WISHES AND SUPPORT
[00:07:29] FROM FRIENDS, COLLEAGUES, AND KENTUCKIANS, AND FOR THE
[00:07:32] ATTENTIVE CARE I'VE RECEIVED FROM EXCELLENT DOCTORS, NURSES,
[00:07:34] THERAPISTS, AND HOSPITAL STAFF. ON THE ADVICE OF MY DOCTORS,
[00:07:37] I'LL MAINTAIN AN INTENSIVE REGIMEN OF PHYSICAL THERAPY FROM
[00:07:41] HOME DURING THE STATE WORK PERIOD, AND I'LL CONTINUE TO ENGAGE WITH MY STAFF AND
[00:07:45] COLLEAGUES ON IMPORTANT SENATE
[00:07:49] BUSINESS.
[00:08:20] >> WRIGHT. UTERUS. GOOD MORNING. I CALL THIS HEARING TO ORDER.
[00:08:24] TODAY, THE COMMITTEE MEETS TO DISCUSS HOW WE CAN MAKE IT
[00:08:28] EASIER FOR ENTREPRENEURS, SMALL BUSINESSES, GROWING COMPANIES, AND EVERYDAY INVESTORS TO BUILD
[00:08:32] OPPORTUNITY IN AMERICA THROUGH
[00:08:34] CAPITAL FORMATION. CAPITAL FORMATION MAY SOUND LIKE A WALL
[00:08:37] STREET TERM, BUT AT ITS CORE,
[00:08:39] THIS IS ABOUT MAIN STREET IN
[00:08:41] AMERICA. IT GIVES LOCAL BUSINESSES AND EVERYDAY
[00:08:45] INVESTORS THE TOOLS TO TURN GOOD IDEAS INTO JOBS, GROWTH, AND A
[00:08:47] STRONGER FUTURE FOR THEIR OWN COMMUNITIES. THE BEST IDEAS IN
[00:08:50] AMERICA DO NOT COME JUST FROM
[00:08:52] NEW YORK OR SAN FRANCISCO, OR A
[00:08:56] HANDFUL OF OTHER COMMUNITIES.
[00:08:58] THEY COME FROM PLACES IN SOUTH CAROLINA, LIKE IRMO,
[00:09:02] SIMPSONVILLE, AND COMMUNITIES
[00:09:02] ALL ACROSS AMERICA. BUT TOO
[00:09:06] OFTEN, ACCESS TO CAPITAL IS CONCENTRATED IN TOO FEW PLACES
[00:09:09] AND IN TOO FEW HANDS. THAT >> THAT MEANS AN ENTREPRENEUR IN
[00:09:13] SOUTH CAROLINA MAY HAVE A HARDER
[00:09:16] TIME ACCESSING CAPITAL THAN SOMEONE WITH THE SAME IDEA. IN
[00:09:20] SILICON VALLEY. THAT SHOULD NOT BE THE CASE. OPPORTUNITY SHOULD
[00:09:23] NOT BE DICTATED BY YOUR ZIP
[00:09:24] CODE, AND IT SHOULD NOT TAKE
[00:09:29] WEALTH TO CREATE WEALTH. MY PRIORITIES ARE SIMPLE TO EXPAND
[00:09:32] INVESTMENT OPPORTUNITIES FOR EVERYDAY AMERICANS AND INCREASE
[00:09:36] WEALTH OUTSIDE OF THE HANDS OF A
[00:09:39] CONCENTRATED FEW. TO DO THIS, WE
[00:09:40] NEED HELP. TO HELP COMPANIES GO
[00:09:43] PUBLIC AND STAY COMPANY AND STAY PUBLIC. AND WE NEED TO HELP
[00:09:47] SMALL AND MEDIUM SIZED BUSINESSES ACCESS THE CAPITAL.
[00:09:50] THEY NEED TO GROW HIGHER AND COMPETE. THAT'S GOOD NEWS IN SO
[00:09:53] MANY WAYS. AND IT IS NOT
[00:09:55] STARTING FROM SCRATCH. LAST
[00:09:58] CONGRESS, I INTRODUCED THE
[00:10:00] EMPOWERING MAIN STREET IN AMERICA ACT BECAUSE TOO MANY
[00:10:04] AMERICANS LACK ACCESS TO OUR
[00:10:06] CAPITAL MARKETS. MSA WOULD HAVE
[00:10:09] EXPANDED THE WAYS EVERYDAY AMERICANS CAN INVEST IN GROWING
[00:10:11] BUSINESSES. AND IT WOULD HAVE TAILORED REGULATIONS FOR
[00:10:14] COMPANIES AT EVERY STAGE OF
[00:10:16] GROWTH. FROM A STARTUP. AND
[00:10:20] BEYOND. SINCE THEN, MEMBERS ON BOTH SIDES OF THE AISLE HAVE
[00:10:23] ALSO PUT FORWARD COMMON SENSE
[00:10:26] PROPOSALS THAT CAN HELP MOVE US
[00:10:27] IN THE RIGHT DIRECTION. I'VE
[00:10:31] TEAMED UP WITH SENATOR WARNER ON
[00:10:34] LEGISLATION TO HELP EMERGING COMPANIES, GROWTH COMPANIES
[00:10:37] SCALE, AND ULTIMATELY ACCESS THE
[00:10:40] PUBLIC MARKET. SENATOR BRITT HAS INTRODUCED LEGISLATION
[00:10:44] COSPONSORED BY SENATOR WARNOCK, TO LEVEL THE PLAYING FIELD
[00:10:46] BETWEEN 400 AND 3 B'S AND 401(K)
[00:10:48] PLANS, GIVING 15 MILLION
[00:10:52] NONPROFIT EMPLOYEES FROM HOSPITAL WORKERS TO TEACHERS
[00:10:56] ACCESS TO THE SAME LOWER COST
[00:11:00] INVESTMENT OPTIONS AS EVERYDAY 401(K) SAVERS. ALREADY, 13
[00:11:04] MEMBERS OF THIS COMMITTEE HAVE
[00:11:06] SIGNED ON AS CO-SPONSORS. SENATOR MCCORMICK AND SENATOR
[00:11:10] ALSOBROOKS HAVE INTRODUCED LEGISLATION TO ELIMINATE RED
[00:11:14] TAPE THAT INFLATES THE REPORTED
[00:11:17] COST OF BUSINESS DEVELOPMENT COMPANIES, MAKING IT MORE
[00:11:19] ATTRACTIVE FOR INVESTORS TO PUT CAPITAL INTO THE SMALL AND
[00:11:22] MIDDLE MARKET BUSINESSES THAT
[00:11:26] BDCS ARE BUILT TO SERVE. AND THERE ARE MORE IDEAS WE CAN
[00:11:29] BUILD ON. THAT IS WHY THIS
[00:11:32] COMMITTEE IS WORKING TO UPDATE THE CAPITAL FORMATION PACKAGE
[00:11:35] THAT I PUT TOGETHER. OUR CAPITAL
[00:11:39] MARKETS SHOULD HELP A COMPANY GROW FROM AN IDEA TO A SMALL
[00:11:42] BUSINESS, FROM A SMALL BUSINESS,
[00:11:43] TO A LARGER EMPLOYER, AND MAYBE ONE DAY TO THE NEXT, GREAT
[00:11:47] PUBLIC COMPANY. THAT IS THE POINT OF TODAY'S HEARING. WE
[00:11:51] WANT TO HEAR FROM OUR WITNESSES ABOUT WHAT IT IS, WHAT IS
[00:11:55] WORKING, WHAT IS NOT WORKING, AND WHERE CONGRESS SHOULD FOCUS
[00:11:58] OUR ATTENTION TO MAKE CAPITAL
[00:12:01] FORMATION EVEN EASIER. THIS COMMITTEE HAS SHOWN TIME AND
[00:12:05] TIME AGAIN THAT WE CAN WORK TOGETHER ON SERIOUS ISSUES THAT
[00:12:08] MATTER TO THE AMERICAN PEOPLE. HELPING A SMALL BUSINESS GROW IS
[00:12:12] NOT ABOUT POLITICS. GIVING
[00:12:14] FAMILIES A CHANCE TO INVEST IS
[00:12:17] NOT PARTIZAN. KEEPING AMERICA
[00:12:19] THE BEST PLACE IN THE WORLD TO
[00:12:21] BUILD THE FUTURE SHOULD NOT BE
[00:12:25] CONTROVERSIAL. CAPITAL FORMATION SHOULD UNITE US. SO TODAY,
[00:12:26] LET'S FOCUS ON PRACTICAL
[00:12:30] SOLUTIONS FOR EVERY COMMUNITY,
[00:12:31] NOT JUST A FEW ZIP CODES. I LOOK
[00:12:34] FORWARD TO HEARING OUR TESTIMONY FROM OUR WITNESSES. RANKING
[00:12:38] MEMBER, YOU ARE NOW RECOGNIZED. >> THANK YOU, MR. CHAIRMAN, AND
[00:12:41] THANK YOU FOR HOLDING THIS HEARING. I BELIEVE IN MARKETS,
[00:12:44] FAIR AND TRANSPARENT. MARKETS
[00:12:47] PROMOTE INNOVATION. THEY POWER ECONOMIC GROWTH. THEY GIVE
[00:12:50] EVERYONE A CHANCE TO THRIVE. THE
[00:12:54] CONFIDENCE THAT INVESTORS AT HOME AND AROUND THE WORLD PLACE
[00:12:58] IN THE INTEGRITY OF OUR MARKETS IS A CRITICAL PART OF WHY OUR
[00:13:02] NATION'S ECONOMY IS THE ENVY OF
[00:13:05] THE WORLD. BUT UNDER PRESIDENT
[00:13:07] TRUMP, THE CORRUPTION IS SO
[00:13:10] MASSIVE AND SO UNPRECEDENTED
[00:13:13] THAT IT IS FUNDAMENTALLY CHANGED OUR MARKETS, RIGGING THEM FOR
[00:13:17] THE WEALTHY AND THE WELL
[00:13:19] CONNECTED. THOSE WITH MONEY AND POWER GET SPECIAL TREATMENT,
[00:13:23] WHILE FAMILIES, SMALL BUSINESSES
[00:13:27] AND COMMUNITIES PAY THE PRICE. WE SHOULD BE WORKING TOGETHER TO
[00:13:29] MAKE OUR MARKET STRONGER AND TO ENSURE THAT THEY SERVE AMERICAN
[00:13:33] BUSINESSES AND AMERICAN FAMILIES. I KNOW THAT WE SHARE
[00:13:37] THAT GOAL. OUR NUMBER ONE JOB,
[00:13:40] NUMBER ONE, SHOULD BE TO PUT A
[00:13:42] STOP TO THIS CORRUPTION AND TO
[00:13:47] PROTECT INVESTORS, UNDERSTAND
[00:13:48] THE CORRUPTION IS EVERYWHERE.
[00:13:53] IT'S BEEN ABOUT 15 MONTHS SINCE PAUL ATKINS WAS SWORN IN TO LEAD
[00:13:55] THE TRUMP SEC. AT EVERY TURN. HE
[00:13:59] HAS LET SCAMMERS OFF THE HOOK
[00:14:01] AND ROLLED BACK THE RULES THAT PROTECT INVESTORS FROM GETTING
[00:14:05] CHEATED. CORRUPTION. CORRUPTION.
[00:14:07] CORRUPTION UNDER TRUMP AND CHAIR ATKINS, THERE IS NO COP ON THE
[00:14:11] BEAT TO PROTECT INVESTORS. THE
[00:14:14] SEC'S ENFORCEMENT ACTIVITY
[00:14:17] DROPPED BY 20% LAST YEAR. CHAIR
[00:14:19] ATKINS COULDN'T EVEN SAY UNDER
[00:14:21] OATH IN THIS ROOM THAT INSIDER
[00:14:24] TRADING IS BAD. FRAUDSTERS AND
[00:14:28] CHEATS. IT APPEARS THAT EVERYONE
[00:14:29] GETS A FREE PASS. CHAIR ATKINS
[00:14:33] IS ALSO MAKING MARKETS MORE SECRETIVE. HE'S SLASHING
[00:14:37] DISCLOSURE RULES SO THAT
[00:14:38] COMPANIES CAN HIDE JUST HOW
[00:14:41] RISKY THEY'VE BECOME. HE'S CUTTING OVERSIGHT AND
[00:14:43] ENFORCEMENT TOOLS THAT HELP FINANCIAL COPS ON THE BEAT GO
[00:14:47] AFTER INSIDER TRADING. AFTER
[00:14:49] MARKET MANIPULATION, AND OTHER
[00:14:53] CORPORATE CRIMES. HE'S MAKING
[00:14:54] IT EASIER FOR EXECUTIVES TO SILENCE SHAREHOLDERS AND TO
[00:14:58] STRIP THEM OF THEIR RIGHTS.
[00:15:00] HE'S EVEN MAKING IT HARDER FOR
[00:15:02] STATES TO PROTECT THEIR OWN
[00:15:05] CITIZENS FROM BEING DEFRAUDED
[00:15:07] ACROSS THE BOARD EVERY DAY,
[00:15:10] INVESTORS ARE LOSING. CHAIR
[00:15:12] ATKINS RIGS THE RULES. IT'S JUST ONE MORE EXAMPLE OF THE CORRUPTION THAT HANGS OVER THE
[00:15:16] ENTIRE TRUMP ADMINISTRATION.
[00:15:19] THIS CORRUPTION COSTS AMERICAN
[00:15:23] FAMILIES AND RETIREES. BUT WHO
[00:15:25] WINS? WELL, CORRUPTION IS REALLY
[00:15:29] PROFITABLE FOR SOME PEOPLE, COMPANIES, AND EXECUTIVES WHOSE
[00:15:32] BUSINESS MODELS ARE BUILT ON
[00:15:35] FRAUD WIN. WHILE HONEST
[00:15:38] BUSINESSES COMPETING ON THIS
[00:15:39] UNFAIR PLAYING FIELD LOSE.
[00:15:42] TRUMP'S BILLIONAIRE BUDDIES WIN, DONATING BIG TIME TO TRUMP COULD
[00:15:46] MEAN THE SEC CASE AGAINST YOU.
[00:15:48] JUST SUDDENLY DISAPPEARS.
[00:15:51] ANOTHER TRUMP FRIEND WHO WON BIG. ELON MUSK, WHO BRIEFLY
[00:15:55] BECAME THE WORLD'S FIRST
[00:15:56] TRILLIONAIRE, GOT HIS SPACEX IPO
[00:16:00] GREENLIT DESPISED DESPITE
[00:16:05] ANALYSTS CALLING THE NUMBERS NONSENSICAL. SPACEX GOT AN
[00:16:08] ADDITIONAL BOOST WHEN ELON MUSK
[00:16:10] REPORTEDLY PUSHED SOME INDEX PROVIDERS TO BEND THEIR RULES.
[00:16:13] SO TENS OF MILLIONS OF AMERICANS
[00:16:16] ARE FORCED TO HAVE SPACE IN
[00:16:19] THEIR RETIREMENT FUNDS, EVEN IF
[00:16:21] IT INJECTS SIGNIFICANT RISK. AND
[00:16:25] THEN PRESIDENT TRUMP HIMSELF IS
[00:16:26] THE ULTIMATE WINNER. HE MADE
[00:16:29] $1.4 BILLION OFF HIS MAJOR
[00:16:32] CRYPTO VENTURES JUST LAST YEAR.
[00:16:34] WHILE NEARLY A MILLION INVESTORS
[00:16:37] LOST OUT ON NEARLY $4 BILLION ON
[00:16:42] TRUMP MEME COINS ALONE. AND NOW, HIS SOCIAL MEDIA COMPANY HAS
[00:16:45] COME UP WITH A PLAN TO SELL WALL
[00:16:50] STREET FIRMS ACCESS TO HIS
[00:16:52] MARKET, MOVING POSTS ON TRUTH
[00:16:55] SOCIAL BEFORE EVERYONE ELSE GETS
[00:16:57] TO SEE THEM. AND WHO BENEFITS?
[00:17:00] WELL, ONLY PEOPLE WHO CAN PAY
[00:17:02] MORE THAN $1 MILLION A YEAR FOR
[00:17:05] THE INSIDE SCOOP ON WHAT TRUMP
[00:17:07] WILL BE DOING. THIS IS A BRAZEN
[00:17:09] SCHEME TO PROFIT OFF THE
[00:17:11] PRESIDENCY, AND IT MAY BE, AND
[00:17:15] SHOULD BE, FLATLY ILLEGAL. HOW
[00:17:18] CAN AMERICANS, OR THE WORLD, FOR THAT MATTER, TRUST THE HONESTY
[00:17:22] OF OUR MARKETS? AS TRUMP AND THE
[00:17:26] SEC BURN, OUR CREDIBILITY. STUDY
[00:17:28] AFTER STUDY SHOWS THAT CORRUPTION SIGNIFICANTLY REDUCES
[00:17:31] GROWTH AND INVESTMENT, EVEN IN
[00:17:34] AMERICA. THERE IS A COST TO THIS CORRUPTION, AND WE ALL HAVE A
[00:17:38] RESPONSIBILITY TO REIN IT IN. I
[00:17:42] HAVE NOT GIVEN UP ON THE ORIGINAL PROMISE OF OUR CAPITAL
[00:17:45] MARKETS. WE NEED TO ACT BEFORE
[00:17:47] OUR STANDING IN THE WORLD.
[00:17:51] CRATERS AND OUR PEOPLE PAY FOR THIS FOR GENERATIONS TO COME.
[00:17:55] THANK YOU, MR. CHAIRMAN. >> THANK YOU MA'AM. EACH WITNESS WILL BE GIVEN FIVE
[00:17:58] MINUTES FOR YOUR TESTIMONY, AND
[00:18:01] WE WILL TAKE YOUR WRITTEN TESTIMONY AND PUT IT IN THE
[00:18:04] RECORD. I NOW RECOGNIZE OUR
[00:18:07] FIRST WITNESS, MISS DALIA BLASS,
[00:18:11] SENIOR INVESTMENT MANAGEMENT PARTNER AT SULLIVAN AND CROMWELL. YOU MAY BEGIN YOUR
[00:18:13] TESTIMONY. THANK YOU. >> THANK YOU, MR. CHAIRMAN.
[00:18:16] CHAIRMAN SCOTT, RANKING MEMBER WARREN, AND DISTINGUISHED MEMBERS OF THIS COMMITTEE, THANK
[00:18:20] YOU VERY MUCH FOR THE OPPORTUNITY TO TESTIFY TODAY ON THIS IMPORTANT TOPIC. MY NAME IS
[00:18:24] DALIA BLASS, AND I'M THE SENIOR INVESTMENT MANAGEMENT PARTNER AT
[00:18:27] SULLIVAN AND CROMWELL. BEFORE RETURNING TO PRIVATE PRACTICE, I
[00:18:30] HAD THE HONOR OF SERVING AT THE SEC, CONCLUDING MY TENURE AS THE
[00:18:33] DIRECTOR OF THE DIVISION OF INVESTMENT MANAGEMENT. I'M
[00:18:37] TESTIFYING SOLELY IN MY PERSONAL CAPACITY AND NOT ON BEHALF OF
[00:18:41] SULLIVAN AND CROMWELL OR ANY OF ITS CLIENTS. I APPLAUD MEMBERS OF THIS COMMITTEE FOR ADVANCING
[00:18:44] KEY LEGISLATIVE PROPOSALS THAT EXPAND RETAIL ACCESS TO
[00:18:48] INVESTMENT OPPORTUNITIES, PROVIDING THEM WITH GREATER TOOLS TO SAVE FOR RETIREMENT AND
[00:18:52] OTHER FINANCIAL GOALS. MY WRITTEN TESTIMONY COVERS A BROAD
[00:18:54] SET OF TOPICS RELATED TO TODAY'S HEARING, AND I WOULD LIKE TO FOCUS MY REMARKS ON
[00:18:58] THREE MAIN POINTS. FIRST, RETAIL
[00:19:02] ACCESS IS ABOUT THOUGHTFULLY REINTRODUCING ACCESS TO PRIVATE
[00:19:06] MARKET INVESTMENTS FOR ALL,
[00:19:07] RATHER THAN A SUBSET OF RETAIL
[00:19:10] INVESTORS. COVERAGE OF RETAIL ACCESS AND THE USE OF
[00:19:14] DESCRIPTORS SUCH AS RETAIL IZATION, HAVE LEFT THE IMPRESSION THAT WE'RE BUILDING
[00:19:18] BRIDGES TO NEW, UNCHARTED TERRITORIES, AND THAT IS NOT THE
[00:19:20] CASE. THE HISTORICAL SHIFT FROM
[00:19:22] DEFINED BENEFIT TO DEFINED
[00:19:25] CONTRIBUTION PLANS HAS SIGNIFICANTLY CURTAILED RETAIL
[00:19:28] ACCESS TO PRIVATE MARKET INVESTMENTS. COMPOUNDING THIS IS
[00:19:31] THE DECISION BY MORE COMPANIES TO REMAIN PRIVATE LONGER. THE
[00:19:35] RESULT IS THAT RETAIL INVESTORS INCREASINGLY ARE MISSING OUT ON
[00:19:37] OPPORTUNITIES FOR EARLY
[00:19:40] COMPOUNDING RETURNS. SECOND, I BELIEVE CURRENT REGULATIONS
[00:19:43] UNDERMINE RETAIL INVESTOR ACCESS
[00:19:44] TO PRIVATE MARKETS. FOR EXAMPLE,
[00:19:48] RETIREMENT FOCUSED PRODUCTS THAT ARE UNNECESSARILY LIMITED, LIMITED TO DAILY LIQUID
[00:19:52] PRODUCTS, PERMITTING, PRODUCTS THAT ARE MORE TAILORED TO THE
[00:19:55] LIQUIDITY NEEDS OF PLANS WOULD
[00:19:57] PROVIDE ACCESS TO MORE DIVERSIFIED INVESTMENT
[00:20:00] OPPORTUNITIES, WHILE MAINTAINING IMPORTANT INVESTOR PROTECTIONS
[00:20:04] OUTSIDE THE RETIREMENT SPACE. THE SEC STAFF PRIOR PRACTICE OF
[00:20:08] LIMITING PRIVATE FUND
[00:20:08] INVESTMENTS IN PUBLICLY OFFERED
[00:20:13] CLOSED END FUNDS, COMBINED WITH ACTIVIST TARGET INVESTORS TARGETING THOSE FUNDS, HAS SIGNIFICANTLY LIMITED THE NUMBER
[00:20:17] OF LISTED FUNDS ON THE MARKET.
[00:20:20] THESE FUNDS CAN PROVIDE MEANINGFUL ACCESS TO PRIVATE INVESTMENTS UNDER IMPORTANT
[00:20:24] INVESTOR PROTECTIONS. THE RESULT HAS BEEN THE GROWTH IN TWO
[00:20:27] RELATED TRENDS. FIRST, INCREASING USE OF RETAIL FOCUSED
[00:20:30] VEHICLES THAT OPERATE OUTSIDE THE PROTECTIONS OF THE
[00:20:33] INVESTMENT COMPANY ACT. WHILE INNOVATIVE, THESE WILL ALWAYS
[00:20:37] HAVE LIMITATIONS BECAUSE THEY LACK THE PROTECTIONS OF THE ACT. SECOND IS THE INCREASING USE OF
[00:20:41] PERIODIC LIQUIDITY STRUCTURES,
[00:20:43] LOOSELY CALLED SEMI LIQUID. THESE FUNDS HAVE BEEN AROUND FOR
[00:20:46] DECADES, BUT HAVE SEEN A RESURGENCE IN THE ALTERNATIVE
[00:20:50] SPACE. I HAVE A FEW OBSERVATIONS
[00:20:51] ABOUT THEM. DESPITE ASSERTIONS BY THE PRESS, THEY DO NOT HAVE
[00:20:55] GATES THE REGULATIONS REQUIRE THEM TO PROVIDE PERIODIC
[00:20:58] LIQUIDITY SUBJECT TO A PRE DISCLOSED LIMIT. ALSO, THE USE
[00:21:01] OF THE TERM SEMI-LIQUID. WHILE
[00:21:03] PLAIN ENGLISH MAY CREATE A FALSE
[00:21:05] SENSE OF AN ABILITY TO RELIABLY
[00:21:08] ACCESS LIQUIDITY, AND THESE FUNDS OFFER PERIODIC LIQUIDITY
[00:21:11] UNDER RULES THAT ARE, FRANKLY, NOT FIT FOR PURPOSE. WITH
[00:21:14] RESPECT TO PUBLICLY OFFERED FUNDS, KEY PIECES OF LEGISLATION
[00:21:18] PROPOSED BY THIS COMMITTEE WOULD PROVIDE MUCH NEEDED REFORMS. FOR
[00:21:22] EXAMPLE, THEY WOULD PROTECT THE STATUTORY RIGHT OF CLOSED END FUNDS TO INVEST IN ALTERNATIVE
[00:21:26] ASSETS, AND THEY WOULD CORRECT
[00:21:28] THE AFPS TECHNICAL ERROR. THAT
[00:21:30] DOUBLE COUNTS BDC EXPENSES AND INVESTOR DISCLOSURES. BUT
[00:21:33] OPPORTUNITIES FURTHER EXIST TO ENHANCE RETAIL ACCESS. ONE IS
[00:21:37] FOR THE SEC TO TAKE ACTION TO PROTECT LISTED CLOSED END FUNDS FROM ACTIVIST INVESTOR
[00:21:40] CAMPAIGNS. ANOTHER IS REVISING THE REALLY HIGH QUORUM REQUIREMENT FOR SHAREHOLDER
[00:21:45] MEETINGS FOR FUNDS, WHICH EFFECTIVELY JUST ADD COST TO
[00:21:48] FUND INVESTORS. THIS BRINGS ME
[00:21:50] TO MY THIRD AND FINAL POINT.
[00:21:52] EMPOWERING RESPONSIBLE PRODUCT INNOVATION UNDER THE INVESTMENT
[00:21:55] COMPANY ACT, WHICH REQUIRES AN
[00:21:58] OVERHAUL OF THE SEC'S EXEMPTIVE PROCESS. NOVEL APPLICATIONS CAN
[00:22:03] TAKE ANYWHERE FROM 5 TO 10 YEARS FROM START TO FINISH, IMPOSING SIGNIFICANT COSTS, UNCERTAINTY,
[00:22:06] AND A MATERIAL BARRIER TO ENTRY
[00:22:08] AND INNOVATION. CONGRESS
[00:22:11] ADDRESSED A VERY SIMILAR ISSUE IN 2010, WHEN AMENDED SECTION 92
[00:22:14] OF THE EXCHANGE ACT FOR SELF-REGULATORY ORGANIZATION
[00:22:17] FILINGS. THAT PROCESS IS TRANSPARENT. IT PROMOTES CERTAINTY AND HOLDS BOTH
[00:22:21] REGULATORS AND MARKET PARTICIPANTS ACCOUNTABLE. CONGRESS CAN LOOK TO THAT
[00:22:25] PROCESS FOR A SIMILAR FRAMEWORK UNDER THE 1940 ACT, AND MY
[00:22:29] WRITTEN TESTIMONY EXPLAINS HOW THAT CAN WORK. THANK YOU AGAIN
[00:22:31] FOR THE OPPORTUNITY TO SHARE MY VIEWS WITH YOU, AND I VERY MUCH
[00:22:34] LOOK FORWARD TO ANSWERING YOUR QUESTIONS.
[00:22:37] >> THANK YOU MA'AM. WE WILL NOW HEAR FROM THE HONORABLE KENNETH BENSON, PRESIDENT AND CEO OF
[00:22:41] SIFMA. YOU ARE NOW RECOGNIZED FOR FIVE MINUTES.
[00:22:45] >> CHAIRMAN SCOTT, RANKING MEMBER WARREN, AND DISTINGUISHED MEMBERS OF THE COMMITTEE, THANK YOU FOR THE OPPORTUNITY TO
[00:22:49] TESTIFY TODAY. MY NAME IS KEN BENSON. I'M THE PRESIDENT AND CEO OF THE SECURITIES INDUSTRY
[00:22:52] AND FINANCIAL MARKETS
[00:22:54] ASSOCIATION. SEPA HAS LONG SUPPORTED LEGISLATIVE AND
[00:22:57] REGULATORY EFFORTS TO ENCOURAGE COMPANIES TO GO PUBLIC BY
[00:22:59] ENSURING THE COSTS AND REQUIREMENTS ASSOCIATED ARE
[00:23:02] APPROPRIATELY TAILORED, ALLOWING ISSUANCE TO FLOURISH WITHOUT INTRODUCING UNNECESSARY RISK TO
[00:23:06] INVESTORS OR THE BROADER MARKET. THE JOBS ACT, PASSED BY THE
[00:23:10] CONGRESS IN 2012 WITH OUR SUPPORT, IS A PRIME EXAMPLE OF
[00:23:12] HOW LEGISLATION CAN HELP COMPANIES ACCESS PUBLIC MARKETS
[00:23:16] AND SECURE FUNDING FOR GROWTH. WE BELIEVE THIS BENEFITS NOT
[00:23:18] ONLY ISSUERS, BUT ALSO INVESTORS BY PROVIDING GREATER
[00:23:22] OPPORTUNITIES TO PARTICIPATE IN LONG TERM WEALTH CREATION,
[00:23:25] SUPPORTING STRONGER PUBLIC MARKETS DOES NOT MEAN DIMINISHING THE ROLE OF PRIVATE
[00:23:27] MARKETS. BOTH PLAY AN IMPORTANT
[00:23:30] AND COMPLEMENTARY ROLES IN CAPITAL FORMATION. WHILE PRIVATE
[00:23:33] MARKETS PROVIDE VALUABLE FINANCING OPTIONS, POLICYMAKERS
[00:23:36] SHOULD SEEK TO REVERSE THE LONG DECLINE IN PUBLIC COMPANY
[00:23:40] LISTINGS LIKE IPOS. BY CONDUCTING AN INITIAL PUBLIC OFFERING, A COMPANY GAINS ACCESS
[00:23:44] TO A BROADER POOL OF CAPITAL THAT CAN BE USED TO FUND GROWTH
[00:23:48] INITIATIVES, INVEST IN INNOVATION, PURSUE ACQUISITIONS,
[00:23:51] AND STRENGTHEN ITS OVERALL FINANCIAL POSITION. LIQUIDITY,
[00:23:54] AND PUBLIC PRICE FORMATION. FURTHER, DISTINGUISHED PUBLIC
[00:23:56] MARKETS. SHARES CAN BE. GENERALLY. SHARES CAN GENERALLY
[00:24:00] BE BOUGHT AND SOLD WITH RELATIVE EASE IN SECONDARY MARKETS AT
[00:24:02] TRANSPARENT PRICES, GIVING
[00:24:05] INVESTORS THE FLEXIBILITY TO REALLOCATE CAPITAL AS THEIR
[00:24:07] FINANCIAL NEEDS OR MARKET CONDITIONS CHANGE. IN ADDITION,
[00:24:10] PUBLIC COMPANIES ENJOY BROADER ACCESS TO CAPITAL MARKETS FOR
[00:24:14] FOLLOW ON EQUITY OFFERINGS AND DEBT ISSUANCE. WHILE MARKET.
[00:24:18] WHILE THE MARKET VALUE OF U.S. LISTED EQUITIES HAS INCREASED
[00:24:21] MORE THAN FIVEFOLD OVER THE PAST QUARTER CENTURY, THE NUMBER OF PUBLICLY LISTED COMPANIES HAS
[00:24:25] MOVED IN THE OPPOSITE DIRECTION. THE U.S. PUBLIC COMPANY UNIVERSE
[00:24:29] IS CONTRACTED FROM APPROXIMATELY
[00:24:31] 7200 FIRMS TO 5500 FIRMS OVER
[00:24:33] THE SAME PERIOD, A DECLINE OF
[00:24:35] NEARLY 25%. WHEREAS U.S. AVERAGE
[00:24:38] 459 IPOS ANNUALLY. DURING THE 1990s, THE AVERAGE SINCE 2020
[00:24:42] HAS FALLEN TO JUST 196. EVEN SO,
[00:24:46] THERE IS AMPLE EVIDENCE THAT THE JOBS ACT HAS EXPANDED ACCESS TO PUBLIC CAPITAL MARKETS FOR
[00:24:50] SMALLER COMPANIES, FACILITATING
[00:24:52] CAPITAL FORMATION THROUGH A MORE EFFICIENT AND LESS BURDENSOME
[00:24:55] IPO PROCESS. THE JOBS ACT HAS EXPANDED ACCESS TO PUBLIC
[00:24:58] MARKETS FOR. SINCE ITS
[00:25:01] ENACTMENT, EMERGING GROWTH
[00:25:03] COMPANIES HAVE RAISED NEARLY
[00:25:07] $440 BILLION ACROSS 2100 OFFERINGS. NOTWITHSTANDING THE
[00:25:09] SUCCESS OF THE JOBS ACT, WE BELIEVE POLICYMAKERS SHOULD
[00:25:12] CONTINUE TO EVALUATE WHETHER
[00:25:14] EXISTING REGULATIONS APPROPRIATELY BALANCE INVESTOR PROTECTION WITH THE COSTS AND
[00:25:18] COMPLEXITIES ASSOCIATED WITH BECOMING AND REMAINING A PUBLIC
[00:25:21] COMPANY. SIFMA SUPPORTS THE
[00:25:24] RECENT LEGISLATIVE AND REGULATORY STEPS, INCLUDING THE
[00:25:26] HOUSE'S PASSAGE OF THE INVEST ACT AND SEVERAL MEASURES INTRODUCED BY MEMBERS OF THIS
[00:25:30] COMMITTEE. WE ALSO SUPPORT THE
[00:25:33] SEC'S PROPOSED REFORMS TO
[00:25:36] EXPAND SHELF REGISTRATION, ELIGIBILITY AND EMERGING GROWTH COMPANY STATUS, AS WELL AS SEC
[00:25:40] AND FINRA EFFORTS TO EXPAND
[00:25:43] RESEARCH COVERAGE. CONGRESS SHOULD ALSO CONSIDER POLICIES
[00:25:47] THAT BROADEN INVESTMENT OPPORTUNITIES FOR RETAIL INVESTORS. TARGETED REFORMS IN
[00:25:50] THESE AREAS CAN STRENGTHEN THE COMPETITIVENESS OF U.S. CAPITAL
[00:25:53] MARKETS, WHILE PRESERVING ROBUST INVESTOR PROTECTIONS. I THANK
[00:25:57] THE COMMITTEE FOR HOLDING THIS HEARING AND THE WORK BY THE
[00:26:01] MEMBERS TO ADVANCE IMPORTANT LEGISLATION. SIFMA STANDS READY TO WORK WITH THIS COMMITTEE,
[00:26:04] CONGRESS AND THE SEC AND OTHER POLICYMAKERS TO ADVANCE THOUGHTFUL REFORMS.
[00:26:09] >> THANK YOU. WE'LL NOW
[00:26:10] RECOGNIZE MR. MIKE FLOOD, SENIOR
[00:26:14] VICE PRESIDENT OF THE CENTER FOR CAPITAL MARKETS COMPETITIVENESS
[00:26:16] AT THE U.S. CHAMBER OF COMMERCE. YOU'RE NOW RECOGNIZED FOR UP TO
[00:26:20] FIVE MINUTES.
[00:26:35] >> CHAIRMAN SCOTT, RANKING MEMBER WARREN, AND MEMBERS OF
[00:26:39] THE COMMITTEE, THANK YOU FOR THE OPPORTUNITY TO TESTIFY AND THE NEED TO EMPOWER MAIN STREET BY
[00:26:42] ENHANCING AND GROWING OUR CAPITAL MARKETS. THE CHAMBER OF
[00:26:45] COMMERCE, THE WORLD'S LARGEST BUSINESS ORGANIZATION,
[00:26:48] REPRESENTS BUSINESSES OF ALL SIZES. THE SUBSTANTIAL MAJORITY
[00:26:51] OF WHICH ARE SMALL BUSINESSES.
[00:26:53] WE THANK CHAIR SCOTT FOR LEADING THE CHARGE ON CAPITAL FORMATION
[00:26:56] WITH THE EMPOWERING MAIN STREET AMERICA ACT AND THE BROAD
[00:27:00] BIPARTISAN EFFORT BY SENATORS OF THIS COMMITTEE ON CAPITAL REFORM, CAPITAL FORMATION
[00:27:04] LEGISLATION, MAIN STREET AMERICA
[00:27:08] DEPENDS UPON VIBRANT AND ACCESSIBLE CAPITAL MARKETS FOR
[00:27:11] ECONOMIC GROWTH, INNOVATION, JOB
[00:27:13] CREATION, RETIREMENT, SECURITY, AND AMERICA'S ABILITY TO LEAD IN
[00:27:17] THE GLOBAL ECONOMY. WHEN BUSINESSES CAN ACCESS CAPITAL
[00:27:21] EFFICIENTLY, THEY HIRE MORE WORKERS, INVEST IN NEW TECHNOLOGIES, AND BUILD THE
[00:27:24] PRODUCTS AND SERVICES THAT DRIVE
[00:27:27] THE AMERICAN ECONOMY. WHEN
[00:27:29] INVESTORS, INCLUDING EVERYDAY AMERICANS, CAN PARTICIPATE IN
[00:27:32] THAT GROWTH, WEALTH IS BUILT
[00:27:34] BROADLY, NOT JUST AT THE TOP.
[00:27:37] THE WEALTH CHANGES LIVES AND ENABLES PARENTS TO SEND THEIR
[00:27:41] KIDS TO COLLEGE, FAMILIES TO BUY HOMES, AND ENTREPRENEURS TO
[00:27:45] START NEW BUSINESSES. CHAMBERS IS HERE TODAY BECAUSE WE BELIEVE
[00:27:47] CONGRESS HAS A CRITICAL AND TIME SENSITIVE OPPORTUNITY TO ENACT
[00:27:51] MEANINGFUL CAPITAL FORMATION POLICY THAT REFLECTS THE NEEDS
[00:27:54] OF TODAY'S SMALL BUSINESSES,
[00:27:57] INVESTORS, AND THE OVERALL
[00:27:59] ECONOMY. STRONG CAPITAL MARKETS ARE ESSENTIAL TO AMERICAN
[00:28:03] LEADERSHIP. THE UNITED STATES IS THE DEEPEST, MOST LIQUID, AND MOST INNOVATIVE CAPITAL MARKETS
[00:28:07] IN THE WORLD, REPRESENTING
[00:28:10] APPROXIMATELY 45% OF GLOBAL
[00:28:11] PUBLIC EQUITY AND FIXED INCOME
[00:28:14] CAPITALIZATION, AND NEARLY 75% OF ALL U.S. CORPORATE FINANCE
[00:28:16] COMES FROM U.S. CAPITAL MARKETS.
[00:28:19] HOWEVER, THE CAPITAL MARKETS MUST BE ENHANCED IN ORDER TO
[00:28:22] COMPETE. THE NUMBER OF U.S.
[00:28:24] PUBLIC COMPANIES HAS FALLEN BY
[00:28:27] NEARLY 40% SINCE THE 1990s, FROM
[00:28:29] OVER 7800 COMPANIES IN 1997 TO
[00:28:31] 4700 TODAY. LET'S PUT THAT IN
[00:28:33] PERSPECTIVE. THERE AREN'T ENOUGH
[00:28:37] PUBLIC COMPANIES TO FULLY COMPRISE THE WILSHIRE 5000. THE
[00:28:39] DECLINE IS NOT A MARKET ANOMALY.
[00:28:42] IT IS EVIDENCE THAT THE CURRENT FRAMEWORK IS NOT WORKING, THAT
[00:28:45] THE COSTS AND COMPLEXITY OF ACCESS PUBLIC OF ACCESSING
[00:28:48] PUBLIC MARKETS HAS OUTPACED THE BENEFITS FOR FAR TOO MANY
[00:28:51] COMPANIES. AND JUST AS IMPORTANTLY, FOREIGN CAPITAL
[00:28:55] MARKETS ARE OFFERING EFFECTIVE SOLUTIONS. IF THE TREND
[00:28:57] CONTINUES, YOUR CONSTITUENTS WILL LOSE OUT ON ACCESS TO
[00:29:01] POTENTIAL JOBS THROUGH PUBLIC COMPANIES, AND ALSO OPTIONS TO
[00:29:04] SAVE FOR THEIR FUTURES. ANOTHER
[00:29:08] ANSWER IS EXPANDING SMALL BUSINESS ACCESS TO CAPITAL. I'D LIKE TO SAY THE CHAMBER
[00:29:11] REPRESENTS NEARLY 3 MILLION BUSINESSES. WHILE MANY ARE
[00:29:14] RECOGNIZED IN THE FORTUNE 500,
[00:29:17] THE OTHER 2,999,500 ARE SMALL
[00:29:21] AND MEDIUM SIZED ENTERPRISES.
[00:29:26] SMALL BUSINESSES COMPRISE 99.9% OF ALL COMPANIES IN THE UNITED STATES, 47% OF THE WORKFORCE,
[00:29:30] AND HAVE COMPRISED 62% OF NET
[00:29:34] JOB CREATION SINCE 1995. FROM START UP TO IPO, AND EVERY STEP
[00:29:37] IN BETWEEN, THE REGULATORY
[00:29:39] FRAMEWORK SHOULD FACILITATE, NOT OBSTRUCT, ACCESS TO CAPITAL,
[00:29:43] SMART REFORMS LIKE HALOS, AND RAISING THE INVESTMENT ADVISER
[00:29:47] THRESHOLD. FOR EXAMPLE, FOR INFLATION, CAN EXPAND THE
[00:29:49] NETWORKS THAT ARE CRUCIAL TO
[00:29:51] ENTREPRENEURSHIP. AND FINALLY, ANOTHER SOLUTION IS TO
[00:29:55] STRENGTHEN AND CREATE MORE PUBLIC COMPANIES, INVESTOR
[00:29:59] PROTECTION AND CAPITAL FORMATION ARE COMPLEMENTARY GOALS. THE
[00:30:01] REFORMS PROPOSED BY THIS
[00:30:04] COMMITTEE, SUCH AS ELEVATE, AND ALLOWING COMPANIES TO SUBMIT
[00:30:06] DRAFT IPO DOCUMENTS TO THE SEC,
[00:30:09] ACHIEVE BOTH. AND FINALLY, WE
[00:30:13] SHOULD EXPAND INVESTMENT OPPORTUNITIES FOR AMERICAN INVESTORS, WORKERS, AND
[00:30:17] RETIREES. CAPITAL FORMATION IS MORE THAN JUST HELPING COMPANIES
[00:30:21] RAISE MONEY. IT IS ABOUT PROVIDING AMERICAN. EVERY
[00:30:24] AMERICAN THE OPPORTUNITY TO INVEST IN THE GROWTH OF BOTH
[00:30:28] U.S. PUBLIC AND PRIVATE MARKETS.
[00:30:29] FOR TOO LONG, THE MOST DYNAMIC INVESTMENT OPPORTUNITIES HAVE
[00:30:33] BEEN AVAILABLE ONLY TO THOSE WHO
[00:30:37] WHO ALREADY HAVE WEALTH. SMART LEGISLATION CAN TARGET THIS
[00:30:41] FUNDAMENTAL SOCIETAL INEQUALITY WHILE MAINTAINING STRONG
[00:30:43] INVESTOR PROTECTIONS. SO,
[00:30:45] SENATOR WARREN, WE AGREE THAT MONEY AND POWER AND SPECIAL
[00:30:48] SHOULD NOT EQUATE TO SPECIAL
[00:30:51] TREATMENT. AND THAT'S WHY WE WANT TO PROVIDE RESPONSIBLE ACCESS TO RETAIL INVESTORS, TO
[00:30:54] THE PRIVATE MARKET. WE, THEREFORE, ASK THE COMMITTEE TO
[00:30:58] CONTINUE ITS BIPARTISAN MOMENTUM
[00:31:02] TO PASS LEGISLATION THAT WILL HELP MILLIONS FIND AN AFFORDABLE HOME. IT WAS NOT EASY, BUT YOU
[00:31:06] PREVAILED, AS YOU ALWAYS DO. BIPARTISAN SUPPORT FOR CAPITAL
[00:31:08] FORMATION LEGISLATION IS JUST AS
[00:31:11] AS OVERWHELMING, INCLUDING WITH THE ADMINISTRATION. THE SENATE
[00:31:15] WORK PRODUCT HAS MUCH IN COMMON WITH THE HOUSE PASSED INVEST
[00:31:18] ACT, WHICH PASSED WITH A WHOPPING 302 VOTES. THERE'S
[00:31:22] ABSOLUTELY NO REASON WHY CONGRESS CAN'T COME TOGETHER
[00:31:24] AGAIN TO PASS BIPARTISAN LEGISLATION THIS YEAR TO PROVIDE
[00:31:28] MAIN STREET BUSINESSES BETTER OPPORTUNITIES TO GROW AND THRIVE, INCREASE PUBLIC COMPANY
[00:31:32] JOBS IN AMERICA, AND ALLOW EVERY
[00:31:34] NEW INVESTOR, NOT BECAUSE OF THEIR INCOME OR WEALTH, BUT
[00:31:37] PRECISELY BECAUSE OF THEIR APTITUDE, A BETTER OPPORTUNITY
[00:31:40] TO SAVE FOR THEIR FUTURES. IF WE ACCOMPLISH THIS TOGETHER, YOUR
[00:31:44] CONSTITUENTS WILL BE MUCH CLOSER TO LIVING THE AMERICAN DREAM.
[00:31:47] THANK YOU, AND I LOOK FORWARD TO YOUR QUESTIONS.
[00:31:50] >> THANK YOU. FINALLY, WE WILL HEAR FROM MR. CANTRELL. DUMARCE,
[00:31:54] SENIOR RESEARCH FOR FINANCIAL REGULATION AND POLICY AT THE
[00:31:57] JOINT CENTER FOR POLITICAL AND ECONOMIC STUDIES. YOU ARE NOW
[00:32:01] RECOGNIZED FOR UP TO FIVE
[00:32:02] MINUTES.
[00:32:06] >> CHAIRMAN SCOTT, RANKING MEMBER WARREN, AND MEMBERS OF THE COMMITTEE, THANK YOU FOR THE
[00:32:10] OPPORTUNITY TO TESTIFY. MY NAME IS KENTRELL DUMAS. I'M A SENIOR
[00:32:14] RESEARCHER AT THE JOINT CENTER FOR POLITICAL AND ECONOMIC
[00:32:16] STUDIES, FOUNDED IN 1970, THE
[00:32:18] JOINT CENTER IS A NONPROFIT,
[00:32:22] NONPARTISAN ORGANIZATION KNOWN AS AMERICA'S BLACK THINK TANK. WE DEVELOP EVIDENCE BASED
[00:32:25] POLICIES TO IMPROVE THE ECONOMIC AND CIVIC WELL-BEING OF BLACK
[00:32:28] AMERICANS. MY WORK FOCUSES ON RETIREMENT SECURITY, FINANCIAL
[00:32:32] REGULATION, AND THE POLICIES THAT AFFECT HOW BLACK FAMILIES
[00:32:35] BUILD WEALTH. I HAVE MORE THAN A DECADE OF PUBLIC SERVICE
[00:32:39] EXPERIENCE, INCLUDING WORK AT THE COMMODITY FUTURES TRADING COMMISSION AND SERVICE AT THE
[00:32:41] FEDERAL DEPOSIT INSURANCE
[00:32:44] CORPORATION DURING THE 2008 FINANCIAL CRISIS. I'VE ALSO WORKED IN PRIVATE PRACTICE AS AN
[00:32:48] ATTORNEY, ADVISING CLIENTS ON FINANCIAL TRANSACTIONS,
[00:32:52] EXPANDING ACCESS TO CAPITAL IS
[00:32:53] IMPORTANT. SMALL BUSINESSES NEED AFFORDABLE FINANCING TO START,
[00:32:57] GROW, AND HIRE. AT THE SAME TIME, WORKERS AND FAMILIES
[00:33:00] SUPPLY CAPITAL THROUGH SAVINGS AND RETIREMENT ACCOUNTS. MAIN
[00:33:04] STREET IS ON BOTH SIDES OF OUR
[00:33:05] CAPITAL MARKETS, PAST DEREGULATORY EFFORTS MAY HAVE
[00:33:09] MADE IT EASIER FOR SOME FIRMS AND INVESTMENT FUNDS TO RAISE CAPITAL, BUT THE AMOUNT RAISED
[00:33:13] TELL US LITTLE ABOUT WHETHER CAPITAL REACHED BLACK OWNED BUSINESSES AND UNDERSERVED
[00:33:17] ENTREPRENEURS ARE. WHETHER LOW
[00:33:19] WEALTH FAMILIES GAIN MEANINGFUL OPPORTUNITIES TO BUILD WEALTH.
[00:33:23] BLACK ENTREPRENEURS CONTINUE TO FACE A SIGNIFICANT SCALING GAP.
[00:33:26] THEY OWN 40% OF BUSINESSES
[00:33:27] WITHOUT PAY EMPLOYEES, BUT ONLY
[00:33:31] 3% WITH PAID EMPLOYEES. AND THE FEDERAL RESERVE'S LATEST
[00:33:34] SURVEY, ONLY 35% OF BLACK OWNED
[00:33:38] BUSINESSES THAT APPLIED FOR FINANCING RECEIVED ALL THE FINANCING THEY SOUGHT, COMPARED
[00:33:40] WITH 56% OF WHITE OWNED FIRMS. THESE DISPARITIES SHOW WHY
[00:33:44] CAPITAL MARKETS POLICIES SHOULD BE JUDGED NOT ONLY BY HOW MUCH
[00:33:47] CAPITAL HELPS BUSINESSES RAISE,
[00:33:49] BUT ALSO WHO RECEIVES IT, WHAT TERMS AND WHAT ARE THE WORKERS
[00:33:52] AND FAMILIES WHO ARE PROTECTED,
[00:33:55] CAPITAL FORMATION AND INVESTOR
[00:33:57] PROTECTION ARE NOT COMPETING OBJECTIVES. RELIABLE
[00:34:01] INFORMATION, FAIR MARKETS, PROTECTION AGAINST FRAUD AND
[00:34:04] ABUSE. BUILD CONFIDENCE THAT MAKES CAPITAL FORMATION
[00:34:08] POSSIBLE. THESE PROTECTIONS ARE
[00:34:09] ESPECIALLY IMPORTANT TO BLACK HOUSEHOLDS, AND 2022 MEDIAN
[00:34:12] BLACK FAMILY WEALTH WAS
[00:34:16] APPROXIMATELY $44,900, COMPARED
[00:34:18] WITH APPROXIMATELY $285,000 FOR WHITE FAMILIES WITH LESS WEALTH
[00:34:21] TO FALL BACK ON, BLACK
[00:34:24] HOUSEHOLDS HAVE LESS CAPACITY TO ABSORB INVESTMENT LOSSES,
[00:34:26] EXCESSIVE FEES, AND FINANCIAL MISCONDUCT. FINANCIAL POLICIES
[00:34:30] SHOULD THEREFORE HELP LOW WEALTH HOUSEHOLDS BUILD ASSETS WHILE
[00:34:33] PROTECTING THE ASSETS THEY ARE WORKING TO ACCUMULATE. WHEN
[00:34:37] INFORMATION BECOMES LESS AVAILABLE, INVESTMENTS BECOME
[00:34:38] HARDER TO EVALUATE OR ENFORCEMENT WEAKENS. FAMILY
[00:34:42] RELEASE FINANCIAL CUSHION HAVE THE MOST TO LOSE. WITH THAT IN
[00:34:46] MIND, I WANT TO HIGHLIGHT THREE PRINCIPLES THAT SHOULD GUIDE
[00:34:49] CAPITAL MARKETS POLICY. FIRST,
[00:34:50] DISCLOSURES SHOULD REDUCE
[00:34:53] INFORMATION GAPS. LARGE INSTITUTIONAL INVESTORS MAY HAVE ACCESS TO COMPANY MANAGEMENT.
[00:34:57] PROFESSIONAL ANALYSTS, AND PRIVATE DATA SERVICES. ORDINARY
[00:35:01] INVESTORS RELY MORE HEAVILY ON PUBLIC DISCLOSURES, MOVING FROM
[00:35:05] QUARTERLY TO SEMIANNUAL REPORTING COULD HAVE THEM MAKING DECISIONS WITH LESS CURRENT
[00:35:08] INFORMATION. THE ANSWER SHOULD BE CLEAR. MORE INFORMATION.
[00:35:12] ANSWER SHOULD BE CLEAR INFORMATION, NOT LESS. SECOND,
[00:35:16] WE SHOULD BE CAUTIOUS ABOUT
[00:35:18] PLACING PRIVATE MARKET INVESTMENTS IN DIGITAL ASSETS AND WORKERS RETIREMENT ACCOUNTS,
[00:35:22] PRIVATE EQUITY AND PRIVATE CREDIT MAY INVOLVE LIMITED
[00:35:25] DISCLOSURE, SUBJECTIVE VALUATIONS, LAYERED FEES, CONFLICTS OF INTEREST, AND
[00:35:28] LIMITS ON WHEN INVESTORS CAN
[00:35:30] ACCESS THEIR MONEY. DIGITAL ASSETS RAISES A DIFFERENT
[00:35:34] CONCERN. EVEN IF CONGRESS ESTABLISHED CLEAR RULES FOR
[00:35:37] DIGITAL ASSET MARKETS, THERE IS LITTLE EVIDENCE THAT CRYPTO IS A
[00:35:41] RELIABLE WEALTH BUILDING MECHANISM FOR ORDINARY FAMILIES. REGULATORY CLARITY SHOULD NOT BE
[00:35:45] CONFUSED WITH EVIDENCE THAT
[00:35:46] CRYPTO BELONGS IN WORKERS RETIREMENT ACCOUNTS. EXPANDING
[00:35:50] ACCESS TO RISK IS NOT THE SAME AS EXPANDING ACCESS TO WEALTH.
[00:35:54] THIRD, CONSISTENT ENFORCEMENT STRENGTHENS CONFIDENCE IN OUR
[00:35:58] MARKETS. RULES MATTER ONLY WHEN THEY ARE ENFORCED, AND INVESTORS
[00:36:02] MUST BELIEVE THEY APPLY TO EVERY PARTICIPANT. WITHOUT THAT CONFIDENCE, CAPITAL FORMATION
[00:36:05] SUFFERS. BUT PROTECTING
[00:36:09] INVESTORS IS ONLY PART OF THE ANSWER. EMPOWER MAIN STREET ALSO MEANS DIRECTING CAPITAL TO BUSINESSES THAT HAVE
[00:36:13] HISTORICALLY FACED BARRIERS. CONGRESS SHOULD STRENGTHEN
[00:36:17] MINORITY DEPOSITORY INSTITUTIONS, COMMUNITY DEVELOPMENT, FINANCIAL
[00:36:20] INSTITUTIONS, AND FEDERAL SMALL
[00:36:21] BUSINESS PROGRAMS SO THAT BLACK
[00:36:25] OWNED BUSINESSES AND OTHER UNDERSERVED BUSINESSES CAN OBTAIN THE CAPITAL THEY NEED TO GROW. OUR GOAL SHOULD BE TO ENSURE THAT CAPITAL REACHES
[00:36:29] BUSINESSES THAT NEED IT, AND THAT WORKERS AND FAMILIES CAN
[00:36:32] BUILD AND PRESERVE WEALTH. THAT
[00:36:34] REQUIRES TRANSPARENT MARKETS, STRONG INVESTOR PROTECTION, CONSISTENT ENFORCEMENT, AND
[00:36:38] CLEAR RULES OF THE ROAD. THANK YOU. I LOOK FORWARD TO YOUR QUESTIONS.
[00:36:42] >> THANK YOU SIR. SENATOR ROUNDS WILL KICK OFF OUR QUESTION AND
[00:36:46] ANSWER. EACH SENATOR GETS UP TO FIVE MINUTES TO ASK AND GET THE
[00:36:49] ANSWERS FROM YOU ALL. AND WE ARE
[00:36:52] PRETTY CONSISTENT ON KEEPING 5 MINUTES TO 5 MINUTES. SENATOR
[00:36:56] ROUNDS, YOU'RE RECOGNIZED FOR YOUR FIRST FIVE MINUTES. >> THANK YOU, MR. CHAIRMAN. FIRST OF ALL, THANK YOU TO ALL
[00:37:00] OF YOU FOR BEING HERE TODAY. AND I THINK THIS IS A REALLY
[00:37:03] IMPORTANT OPPORTUNITY FOR US TO
[00:37:04] REALLY KIND OF RETHINK A LITTLE
[00:37:08] BIT ABOUT WHETHER OR NOT THE EXISTING REGULATIONS ARE APPROPRIATE FOR TODAY, AND WHAT
[00:37:11] IMPROVEMENTS WE CAN MAKE. I, I'VE APPRECIATED THE FACT THAT
[00:37:15] THE HOUSE OF REPRESENTATIVES HAS
[00:37:16] PASSED OUT A PRODUCT ON A
[00:37:19] BIPARTISAN BASIS THAT I BELIEVE WILL HELP TO ALLOW MORE
[00:37:23] INDIVIDUALS TO INVEST IN EQUITY
[00:37:25] TO, TO ACTUALLY INVEST IN BUSINESSES THAT ARE NOT THEIRS,
[00:37:29] PER SE. AND AT THE SAME TIME,
[00:37:32] FOR BUSINESSES TO BE ABLE TO ACCUMULATE, UM, RESOURCES THAT
[00:37:34] THEY CAN USE TO BUILD THOSE
[00:37:38] BUSINESSES. WHAT I DON'T WANT TO DO IS TO RESTRICT ANYONE FROM
[00:37:41] BEING ABLE TO INVEST IN IT. IF THEY HAVE THE RESOURCES, THE
[00:37:45] SAVINGS THAT THEY PUT TOGETHER
[00:37:46] TO DO SO. UM, MR. BENSON, JUST
[00:37:49] TO BEGIN WITH, YOU, THE IT,
[00:37:51] THERE IS NO QUESTION BUT THAT AS
[00:37:55] TIMES CHANGE, AS DIFFERENT
[00:37:56] TECHNOLOGIES COME FORWARD AND, AND AS WE LEARN ABOUT WHAT
[00:37:59] REGULATIONS WORK CORRECTLY AND WHICH ONES NEED TO BE TWEAKED,
[00:38:03] THERE'S NO QUESTION, BUT THAT THERE HAS TO BE A REVIEW OF
[00:38:07] REGULATIONS ON A REGULAR BASIS. I BELIEVE IN YOUR OPENING
[00:38:11] STATEMENTS, YOU'VE INDICATED THAT THE JOBS ACT IS PROBABLY ONE OF THE LAST TIMES THAT WE'VE
[00:38:14] ACTUALLY LOOKED AT THIS WITH REGARD TO CAPITAL FORMATION. THAT WAS IN 2012. SO HERE WE
[00:38:18] ARE, 16 YEARS OR 14, 14 YEARS
[00:38:25] LATER, WE'RE NOW LOOKING AT IT AGAIN. AND ON A BIPARTISAN
[00:38:28] BASIS. CAN YOU TALK A LITTLE BIT ABOUT THE REASON WHY THOSE
[00:38:32] REGULATIONS THAT WERE THERE AT THAT TIME VERSUS WHAT THEY ARE
[00:38:36] NOW, WHY THERE WOULD BE A REASON
[00:38:37] WHY WE SHOULD TAKE A LOOK AT AT
[00:38:41] THOSE REGULATIONS. >> UH, THANK YOU, SENATOR, AND
[00:38:43] THAT'S A GREAT QUESTION. THE SECURITIES INDUSTRY IS ONE OF THE MOST REGULATED INDUSTRIES IN
[00:38:47] THE IN THE AMERICAN ECONOMY. UH,
[00:38:50] AND WE OPERATE UNDER A RULE BOOK
[00:38:53] THAT WAS REALLY SET IN PLACE 80 YEARS AGO, RIGHT? COMING OUT OF THE GREAT DEPRESSION. AND OVER
[00:38:57] THE YEARS, CONGRESS HAS MADE
[00:38:59] CHANGES TO THAT THROUGH MULTIPLE
[00:39:01] STATUTES, APPROPRIATELY SO. BUT
[00:39:05] I DO THINK THAT IT'S IMPORTANT FOR CONGRESS TO GO BACK ON A PERIODIC BASIS, NOT JUST TO LOOK
[00:39:08] AT THE RULE BOOK THAT THE REGULATORS PUT IN PLACE, BUT TO LOOK AT THE OWN THEIR OWN LAWS
[00:39:12] THAT THEY PUT IN PLACE. BECAUSE
[00:39:16] MARKETS CHANGE, PRODUCTS CHANGE, TECHNOLOGY COMES INTO PLACE. YOU KNOW, SOME OF THE THINGS WE'RE
[00:39:19] DEALING WITH TODAY, UH, IN TERMS
[00:39:20] OF THE CAPITAL FORMATION, EDGAR,
[00:39:24] FILINGS AT THE SEC, THOSE WERE ORIGINALLY DONE WITH PAPER. NOW
[00:39:27] THEY'RE DONE ELECTRONICALLY. AND, YOU KNOW, UM, HOW WE
[00:39:30] DELIVER CONFIRMS AND PROXIES TO,
[00:39:33] TO CLIENTS IS CHANGED AND WHERE WE'RE GOING MORE AND MORE TO
[00:39:37] E-DELIVERY AND MANY IN THIS, ON THIS COMMITTEE ARE PROPOSING GOING TO E-DELIVERY, THE SEC, ET
[00:39:41] CETERA.. SO I DO THINK IT'S APPROPRIATE FOR CONGRESS TO GO
[00:39:44] BACK AND LOOK. THEY DO THE BEST JOB THEY CAN AT THE TIME, BUT
[00:39:47] THEY HAVE TO GO BACK AND SEE, DID IT WORK? AND WHAT'S CHANGED
[00:39:51] IN THE MARKET? >> AND THE VAST MAJORITY OF THAT COULD BE DONE ON A BIPARTISAN
[00:39:54] BASIS, I SUSPECT. >> ABSOLUTELY. >> MR. FLOOD, UH, I APPRECIATED
[00:39:58] YOUR COMMENTS. I THINK IT'S IMPORTANT THAT WE TALK ABOUT
[00:40:01] BOTH THE INDIVIDUALS WHO ARE, ARE TRYING TO INVEST THAT WANT
[00:40:04] TO FIND SOMETHING OTHER THAN SIMPLY INVESTING IN A SAVINGS
[00:40:07] ACCOUNT. AND THEY LOOK AT WHERE
[00:40:10] REAL WEALTH IS DEVELOPED. AND PART OF IT IS YOU START OUT WITH SAVINGS. AND ONCE YOU HAVE SOME
[00:40:13] SAVINGS, WHERE, WHERE YOUR, BECAUSE OF THE WORK YOU'RE DOING
[00:40:17] AS A FAMILY, AS AN INDIVIDUAL, UH, AT THE END OF THE MONTH,
[00:40:21] YOU'VE GOT MORE IN YOUR, IN YOUR ACCOUNT THAN WHAT YOU HAD
[00:40:25] TO BEGIN WITH. AND YOU'VE PAID YOUR BILLS. AND AT SOME POINT
[00:40:26] YOU WANT TO TAKE THAT AS WEALTH,
[00:40:29] AS, AS, AS AN OPPORTUNITY TO GROW YOUR OWN WEALTH. AND YOU
[00:40:32] WANT TO PUT IT SOMEPLACE WHERE IT COULD PERHAPS GAIN INTEREST,
[00:40:35] OR IN SOME CASES, EQUITY. THE
[00:40:39] MARKETS TODAY ALLOW FOR TWO DIFFERENT TYPES. ONE IS FOR INDIVIDUALS TO INVEST IN
[00:40:43] PRIVATELY OWNED BUSINESSES. UH, IT MIGHT BE THEIR OWN BUSINESS,
[00:40:46] OR IT MIGHT BE WITH A SMALL GROUP. AND THOSE SEEM TO HAVE A
[00:40:50] REAL OPPORTUNITY FOR DEVELOPMENT. THE OTHER IS IN
[00:40:52] THE, THE, THE MARKETS THEMSELVES, THE PUBLIC MARKETS.
[00:40:55] BUT THERE'S A BIG COST INVOLVED IN THAT BECAUSE WE'RE TRYING TO
[00:40:57] MAKE THEM AS SAFE AS POSSIBLE FOR AVERAGE INVESTORS. CAN YOU
[00:41:01] TALK A LITTLE BIT ABOUT WHAT THE REAL OPPORTUNITIES ARE FOR
[00:41:04] SOMEONE TO INVEST, PERHAPS A LITTLE BIT EASIER IN SOME OF
[00:41:08] THOSE, THOSE IPO OR PRE IPO
[00:41:11] PROGRAMS VERSUS IN THE MARKETS
[00:41:13] THAT WE SUPPOSEDLY PUT OUT FOR
[00:41:16] THE GENERAL PUBLIC, BUT THAT ARE REGULATED TO THE POINT WHERE
[00:41:18] THERE'S ADDED COSTS AND PERHAPS A LITTLE BIT LOWER RATE OF RETURN ON INVESTMENTS IN THEM.
[00:41:22] AND THE REASON WHY WE WANT TO
[00:41:25] PERHAPS PROVIDE MORE OPPORTUNITY
[00:41:26] FOR SMALL INVESTORS TO LOOK AT BOTH THOSE THAT ARE PRIVATE TYPE
[00:41:30] COMPANIES AND THOSE THAT ARE PUBLICLY TRADED
[00:41:34] >> TAKE EVERY ON THIS. >> NO, IT'S NOT WORKING. >> SLIDE.
[00:41:38] >> SLIDE, SLIDE, SLIDE IT UP TO YOU. YEAH.
[00:41:41] >> I PROMISE YOU. THERE WE GO. I CAN STRING A SENTENCE TOGETHER.
[00:41:44] UM, BUT WHEN I THINK ABOUT THAT, I THINK THERE ARE A FEW
[00:41:48] OPPORTUNITIES. ONE IS ON THE INVESTMENT SIDE, BUT YOU TALKED ABOUT TWO TECHNICAL FIXES THAT I
[00:41:52] THINK BRING THINGS INTO TODAY'S
[00:41:55] WORLD. ONE IS, UM, WHEN YOU. >> THINK I'M GOING TO RUN OUT
[00:41:59] OF TIME, SO YOU MIGHT WANT TO MAKE IT QUICK.
[00:42:01] >> CLOSED END FUNDS, ALLOWING
[00:42:03] ACCESS. UM, BY CHANGING THE
[00:42:05] EXEMPTION. AND THEN TWO, UM,
[00:42:09] MAKING SURE THAT WHEN WE TALK
[00:42:12] ABOUT, UM, WELL, SOME CALL IT DOUBLE COUNTING FEES, BUT WITH A
[00:42:16] F A, MAKING SURE THAT WE RATIONALIZE THE DISCLOSURE. BECAUSE RIGHT NOW THE DISCLOSURE
[00:42:19] IS WRONG. THANK YOU. UM, SO THOSE WOULD BE MY TWO FIXES. >> SENATOR WARREN.
[00:42:23] >> UH, THANK YOU, MR. CHAIRMAN. SO THIS IS A HEARING ABOUT
[00:42:26] MAKING CAPITAL MARKETS STRONGER.
[00:42:28] LET'S START WITH SOME RECENT
[00:42:30] MARKET NEWS. ON SATURDAY,
[00:42:34] PRESIDENT TRUMP'S SOCIAL MEDIA COMPANY BEGAN OFFERING FASTER
[00:42:37] ACCESS TO HIS SOCIAL MEDIA POSTS
[00:42:41] TO INVESTORS WHO PAY UP TO
[00:42:43] $100,000 A MONTH. THAT'S OVER $1
[00:42:47] MILLION A YEAR PER INVESTOR. SO
[00:42:48] LET ME ASK ALL OF OUR WITNESSES
[00:42:51] HERE. RAISE YOUR HAND IF YOU
[00:42:53] BELIEVE THAT PRESIDENT TRUMP
[00:42:56] SELLING INFORMATION ABOUT OUR
[00:42:59] ECONOMY AND FOREIGN POLICY TO
[00:43:00] WALL STREET BEFORE EVERYONE ELSE
[00:43:03] GETS ACCESS TO THAT INFORMATION,
[00:43:04] IS GOOD FOR THE INTEGRITY OF OUR
[00:43:08] CAPITAL MARKETS. WELL, THERE WE GO. I SEE NO HANDS. SO MAYBE IF
[00:43:12] THE REPUBLICANS ON THIS COMMITTEE WANT TO STRENGTHEN THE
[00:43:14] CAPITAL MARKETS, WE CAN START BY
[00:43:17] OUTLAWING WHAT PRESIDENT TRUMP
[00:43:19] IS DOING. UM, WE ALL KNOW THAT THIS IS WRONG. LET'S LOOK AT
[00:43:23] ANOTHER SCAM. TRUMP'S PRIVATE EQUITY BUDDIES HAVE A PROBLEM.
[00:43:27] BIG INVESTORS ARE STARTING TO HEAD FOR THE EXITS. TRUMP'S
[00:43:31] CRYPTO BUDDIES ALSO HAVE A
[00:43:34] PROBLEM WITH BILLIONS IN LOSSES
[00:43:35] FOR INVESTORS. SO LAST AUGUST,
[00:43:40] PRESIDENT TRUMP THREW THEM A LIFELINE. HE DIRECTED FEDERAL
[00:43:43] AGENCIES TO MAKE IT EASIER FOR PRIVATE EQUITY, PRIVATE CREDIT,
[00:43:47] CRYPTO, AND OTHER RISKY ASSETS
[00:43:48] TO BE SHOVELED INTO RETIREMENT
[00:43:52] ACCOUNTS. THE IDEA IS TO GIVE
[00:43:56] ALL OF THOSE SKETCHY DEALERS
[00:43:58] ACCESS TO FAMILIES. 401 K'S.
[00:44:00] NOW, MR. DUMAS, YOU'RE AN
[00:44:03] EXPERT ON FINANCIAL REGULATION
[00:44:05] AND ITS IMPACT ON WORKING
[00:44:09] FAMILIES AND BLACK COMMUNITIES IS PUSHING THESE RISKY ASSETS
[00:44:10] LIKE CRYPTO AND PRIVATE EQUITY,
[00:44:13] INTO RETIREMENT ACCOUNTS, LIKELY
[00:44:16] TO HELP FAMILIES. >> SO THE QUESTION, SENATOR, NOT
[00:44:20] LIKELY. PUSHING PRIVATE EQUITY INTO RETIREMENT ACCOUNTS CREATES
[00:44:23] A CERTAIN RISK. PRIVATE EQUITY
[00:44:26] HAS, UM, LESS IS IT'S RISKY BECAUSE LESS TRANSPARENT
[00:44:30] NONDISCLOSURE. AND THERE AREN'T ANY CUSTOMER PROTECTION. DIGITAL
[00:44:33] ASSETS ALSO IS A VOLATILE ASSET AS WELL. UH, THERE IS EVIDENCE
[00:44:37] OUT THERE CURRENTLY THAT SAYS THAT CRYPTOCURRENCY PROVIDES ANY
[00:44:40] TYPE OF WEALTH BUILDING, UM, GROWTH FOR, ESPECIALLY FOR
[00:44:44] FAMILIES, FOR ORDINARY FAMILIES. UM, SO I THINK THAT OBVIOUSLY,
[00:44:48] UH, IT CAN, THESE VOLATILE
[00:44:52] ASSETS CAN DEFINITELY PROVIDE A LESS WEALTH OPPORTUNITY FOR FAMILIES. >> ALL RIGHT. THANK YOU. YOU
[00:44:56] KNOW, LET'S LOOK AT ANOTHER
[00:44:59] TRUMP ADMINISTRATION POLICY. WHEN YOU INVEST IN A PUBLIC
[00:45:02] COMPANY, YOU KNOW, LIKE PEPSI OR APPLE, THOSE COMPANIES ARE
[00:45:05] REQUIRED TO FILE BASIC FINANCIAL
[00:45:08] AND BUSINESS INFORMATION WITH THE SEC FOUR TIMES A YEAR. IN
[00:45:11] MAY, THE SEC PROPOSED REDUCING
[00:45:14] THOSE DISCLOSURES TO TWO TIMES A
[00:45:17] YEAR. DAYS LATER, THE SEC
[00:45:18] PROPOSED RULES THAT EXEMPT 80%
[00:45:22] OF PUBLIC COMPANIES FROM DISCLOSURES AND ACCOUNTABILITY
[00:45:24] ON WHAT EXECUTIVES GET PAID. THE
[00:45:28] SEC EVEN EXEMPTED MOST COMPANIES
[00:45:30] FROM THE REQUIREMENT THAT THEIR
[00:45:32] AUDITOR MUST SWEAR THAT THE
[00:45:35] COMPANY HAS SYSTEMS IN PLACE TO PRODUCE ACCURATE FINANCIAL
[00:45:39] INFORMATION. SO MR. DUMAS IS
[00:45:42] GETTING LESS INFORMATION, LESS OFTEN, ABOUT A COMPANY'S
[00:45:45] OPERATIONS, HELPFUL FOR WORKING
[00:45:47] PEOPLE, FOR MOM AND POP
[00:45:49] INVESTORS, OR FOR BLACK COMMUNITIES.
[00:45:53] >> NO, SENATOR, IT'S NOT HELPFUL AT ALL. DISCLOSURE AND
[00:45:56] TRANSPARENCY IS VITAL FOR
[00:45:59] CONFIDENCE IN INVESTMENT. UM, LESS INFORMATION LEADS ORDINARY
[00:46:03] INVESTORS IN THE DARK. WHAT WE NEED IS BETTER INFORMATION IN
[00:46:06] ORDER FOR IN ORDER FOR INVESTORS
[00:46:10] TO, UM, HAVE THE SAME AMOUNT OF
[00:46:13] INFORMATION AS SOPHISTICATED INVESTORS HAVE, WITHOUT THAT, THERE WOULD BE INFORMATION GAP
[00:46:17] BETWEEN THE SOPHISTICATED INVESTORS AND ORDINARY INVESTORS. >> SO THANK YOU, MR. DUMAS. LET
[00:46:20] ME DO ONE MORE. IN ADDITION TO
[00:46:22] WEAKENING THE RULES, TRUMP'S SEC
[00:46:26] IS SIMPLY TAKING THE COP OFF THE BEAT. LAST YEAR, ENFORCEMENT
[00:46:29] ACTIVITY DROPPED BY OVER 20% TO
[00:46:35] ITS LOWEST LEVEL IN NEARLY 20 YEARS. MR. DUMAS, WHO BENEFITS
[00:46:37] WHEN THE SEC FAILS TO ENFORCE THE LAW.
[00:46:41] >> SENATOR, I BELIEVE BAD ACTORS WOULD BENEFIT. UH, ACTUALLY, I BELIEVE THAT WHAT OUR STRONG
[00:46:45] ENFORCEMENT, UH, YOU HAVE A MORE
[00:46:48] OF AN OPPORTUNITY FOR SCAMMERS AND FOSTERS TO TAKE ADVANTAGE OF
[00:46:52] EVERYDAY AMERICANS, STRONG ENFORCEMENT PROVIDES CONFIDENCE IN THE MARKETPLACE SO PEOPLE CAN
[00:46:55] PUT MORE INTO THE CAPITAL MARKETS AS WELL. >> THANK YOU. YOU KNOW, EVERY
[00:46:58] ONE OF THESE STEPS IS DESIGNED TO HELP WALL STREET INSIDERS,
[00:47:02] BIG CORPORATIONS, AND PRESIDENT
[00:47:05] TRUMP HIMSELF, NOT AMERICAN
[00:47:07] FAMILIES. CONGRESS NEEDS TO CLEAN THIS UP. THANK YOU, MR.
[00:47:10] PRESIDENT. MR. CHAIRMAN, I YIELD BACK.
[00:47:13] >> THANK YOU, MADAM. OR
[00:47:17] CONDOLENCES. AT THIS POINT YEAH.
[00:47:19] UH, LET ME JUST THINK ABOUT WHAT
[00:47:23] MR. FLOOD SAID EARLIER. NOT WEALTH, BUT APTITUDE. I WANT TO
[00:47:26] ASK A QUESTION OF MR. BENSON. AS
[00:47:27] RELATES TO THE DEFINITION OF AN
[00:47:31] ACCREDITED, ACCREDITED INVESTOR. WHEN I LOOK AT IT, I GREW UP IN
[00:47:33] POVERTY IN A SINGLE PARENT HOUSEHOLD. I WILL SAY THAT
[00:47:36] WITHOUT ANY QUESTION, WEALTH CREATING WEALTH SEEMS TO BE
[00:47:39] SOMETHING THAT IS CONSISTENT BUT NOT NECESSARY. THERE ARE A LOT
[00:47:42] OF BRIGHT FOLKS WITH GREAT IDEAS
[00:47:47] WHO NEED EARLY ACCESS. AND WHEN
[00:47:48] YOU LOOK AT THE ACCREDITED
[00:47:52] INVESTOR DEFINITION, I THINK IT ACTUALLY SHOULD BE UPDATED. I
[00:47:54] THINK THIS IS A BIPARTISAN CONVERSATION THAT WE ARE NOW
[00:47:57] HAVING. BOTH REPUBLICANS AND
[00:48:00] DEMOCRATS SEEM TO UNDERSTAND AND APPRECIATE THE IMPORTANCE OF NOT
[00:48:03] JUST HAVING A WEALTH DEFINITION FOR WHETHER OR NOT YOU HAVE THE
[00:48:06] APTITUDE TO BE AN ACCREDITED INVESTOR. I'D LOVE TO GET YOUR
[00:48:10] THOUGHTS ON THAT TOPIC. AND, MR. FLOOD, I MAY COME TO YOU NEXT.
[00:48:12] >> THANK YOU, MR. CHAIRMAN. YOU KNOW, CONGRESS OVER THE YEARS
[00:48:15] HAS GONE BACK AND FORTH AND LOOKED AT HOW THEY SHOULD DEFINE
[00:48:19] ACCREDITED INVESTOR, AND THEY'VE LOOKED AT IT IN TERMS OF A QUANTITATIVE TEST. BUT ALSO NOW
[00:48:22] THERE'S EFFORTS IN LEGISLATION, AS YOU REFERENCED, TO LOOK AT IT
[00:48:24] IN A QUALITATIVE. AND THERE ARE. AND I THINK IT IS APPROPRIATE.
[00:48:28] WE THINK IT'S APPROPRIATE TO LOOK AT IT IN TERMS OF OF OTHER
[00:48:32] TYPES OF, OF SOPHISTICATION AND ACCREDITATION THAT AN INVESTOR
[00:48:36] MAY HAVE. FOR INSTANCE, WHEN I WAS AN INVESTMENT BANKER, I WAS
[00:48:38] A SERIES SEVEN, SERIES 63, UH,
[00:48:42] REGISTRANT THAT REQUIRES YOU TO GO THROUGH MULTIPLE FINANCIAL TESTING AND THE LIKE. YOU CAN
[00:48:45] HAVE CFAS, ONE OF THE MOST
[00:48:47] INTENSE, UH, FINANCIAL TESTINGS
[00:48:50] THAT GO ON. YOU MAY NOT NECESSARILY HAVE MILLIONS OF DOLLARS, BUT YOU ARE A
[00:48:54] SOPHISTICATED PARTY AT THAT POINT IN TIME. SO WE DO THINK
[00:48:58] IT'S APPROPRIATE FOR CONGRESS TO TAKE A LOOK AT THAT AND MAKE ADJUSTMENTS BASED UPON THE
[00:49:01] INDIVIDUAL INVESTORS, ACCREDITED OTHER ACCREDITATIONS.
[00:49:04] >> YEAH. MR. FLOYD, ANY THOUGHTS
[00:49:06] ON THAT?
[00:49:11] >> THE PROPOSALS THAT THE DIOCESE PUT TOGETHER, IT ATTEMPTS TO ALLOW RETAIL
[00:49:15] INVESTORS TO ACCESS THE PRIVATE MARKETS IN THREE RESPONSIBLE
[00:49:19] WAYS. ONE, SHOW YOUR APTITUDE BY PASSING A TEST. CLEARLY, SOMEONE
[00:49:22] WHO'S GOING TO TAKE THE TIME TO DO THAT IS INTERESTED IN THE
[00:49:24] MARKET, IS GOING TO UNDERSTAND THE RISKS. TWO, IF YOU ALLOW FOR
[00:49:28] A THREE B ACCESS LIKE WE ALLOW IN FOR ONE K, LET'S NOT FORGET
[00:49:32] THAT THERE WILL BE A PLAN ADMINISTER. THEY WILL LOOK AT
[00:49:36] THE INVESTMENTS. THEY WILL LOOK
[00:49:37] AT THE RISKS AND THEY WILL
[00:49:40] CURATE THEM AND DISPLAY THOSE TO THE RETAIL INVESTOR. AND THEN
[00:49:44] THREE UM YOU, IF YOU CAN USE AN ADVISOR, YOU CAN GO THAT ROUTE
[00:49:47] TOO. SO IF YOU HAVE, YOU HAVE ALL THREE ROUTES AND ALL THREE
[00:49:50] COME WITH THE EXACT SAME PROTECTIONS THAT YOU WOULD HAVE IF YOU INVESTED IN THE STOCK
[00:49:54] MARKET. AND IF YOU THINK ABOUT IT, WE WILL ALLOW AN INDIVIDUAL
[00:49:57] TO INVEST IN PENNY STOCKS, OTC,
[00:49:58] AND EQUITIES. AND WE'RE
[00:50:02] ACTUALLY ENHANCING THE CONTROLS TO ALLOW PEOPLE TO INVEST IN THE
[00:50:04] PRIVATE MARKETS. SO I THINK
[00:50:07] PEOPLE UNDERSTAND THE RISKS. >> ABSOLUTELY. MISS BLAS, THE
[00:50:10] STRENGTH OF OUR ECONOMY DEPENDS ON GETTING CAPITAL TO THE INNOVATORS AND ENTREPRENEURS WHO
[00:50:14] ARE WILLING TO TAKE RISKS, BUILD NEW BUSINESSES, AND CREATE JOBS.
[00:50:17] BUT TALENT AND GOOD IDEAS ARE DISTRIBUTED ACROSS AMERICA, NOT
[00:50:21] JUST IN BIG CITIES. IN MANY COMMUNITIES, ENTREPRENEURS RELY
[00:50:24] ON SMALLER, SPECIALIZED INVESTORS TO GET THEIR FIRST
[00:50:27] REAL SHOT AT TURNING AN IDEA INTO A COMPANY. BUT THE RULES
[00:50:31] WERE WRITTEN FOR A DIFFERENT TIME. WHEN SMALL VENTURE CAPITAL
[00:50:34] FUNDS WERE EXPECTED TO STAY SMALL, AND WHEN CAPITAL WAS FAR
[00:50:38] MORE CONCENTRATED IN MAJOR
[00:50:40] CITIES. THAT'S WHY I'M PROUD TO WORK WITH SENATORS MORAN,
[00:50:44] WARNER, GALLIANO AND MANY OTHERS. ON THE EXPANDING
[00:50:46] AMERICAN ENTREPRENEURSHIP ACT.
[00:50:48] OUR BILL WOULD MODERNIZE THEIR.
[00:50:51] THESE OUTDATED RULES SO MORE MONEY CAN REACH ENTREPRENEURS
[00:50:55] AND SMALL BUSINESSES IN SOUTH CAROLINA. ACROSS THE COUNTRY.
[00:50:58] GIVEN HOW MUCH FUN SIZES AND
[00:51:00] PRIVATE INVESTING HAVE CHANGED, HOW WOULD MODERNIZING THESE
[00:51:04] OUTDATED RULES HELP MORE CAPITAL REACH ENTREPRENEURS,
[00:51:08] PARTICULARLY IN RURAL AND TRADITIONALLY UNDERSERVED
[00:51:12] REGIONS OF OUR COUNTRY? >> THANK YOU, MR. CHAIRMAN. SO VENTURE CAPITAL FUNDS PROVIDE
[00:51:15] CRITICAL FUNDING FOR STARTUPS, UNLOCKING THEIR INVESTMENT AND
[00:51:19] CAPITAL FLOW FOR THE SMALLER FUNDS WOULD ENABLE ENABLE THEM
[00:51:22] TO UNLOCK CRITICAL CAPITAL
[00:51:25] FUNDING FOR SMALLER ENTITIES, FOR MORE STARTUPS, AND IN TURN, FOR OUR COMMUNITIES. AND THESE
[00:51:29] STARTUPS, BY THE WAY, THEY ESSENTIALLY BECOME OUR SMALL
[00:51:32] BUSINESSES, WHICH BECOME THE BACKBONE OF THE AMERICAN ECONOMY. SO THE PROPOSALS THAT
[00:51:36] YOU HAVE THAT WOULD UNLOCK THE INVESTMENT AND CAPITAL FLOW, AS
[00:51:39] WELL AS DEAL WITH THE LIQUIDITY ISSUES THAT INVESTMENTS FOR SOME
[00:51:42] OF THESE FUNDS WOULD BE CRITICAL
[00:51:45] TO CAPITAL FORMATION. AND I WOULD ALSO NOTE, MR. CHAIRMAN, THAT WHEN YOU LOOK AT THAT AND
[00:51:48] YOU LOOK AT UPDATING THRESHOLDS
[00:51:51] FOR ALL SMALL ENTITIES, NOT JUST
[00:51:53] VC FUNDS, THAT IN TURN, WOULD REALLY UNLOCK INVESTMENTS AND
[00:51:56] CAPITAL FLOW FOR, FOR SMALLER COMMUNITIES. >> I THINK MISS BLANCHE MAKES A REALLY GOOD POINT THAT I HOPE
[00:52:00] THIS COMMITTEE, UH, HAS THE
[00:52:01] COURAGE TO TAKE ON, WHICH IS THE CONVERSATION AROUND INDEXING.
[00:52:05] UH, WE HAVE NOT GOTTEN THERE YET, BUT IT'S SUCH AN IMPORTANT PART OF THE CONVERSATION. I
[00:52:09] THINK MYSELF AND THE RANKING MEMBER WOULD BE ABLE TO LEAD THE CHARGE ON LOOKING AT WAYS TO
[00:52:13] INDEX EVERYTHING FROM BSA TO
[00:52:16] CAPITAL FORMATION. WE HAVE A LITANY OF LEGISLATION THAT WAS
[00:52:18] WRITTEN FOR A DIFFERENT TIME THAT REQUIRES, IN MY OPINION,
[00:52:22] FOR US TO TAKE A SERIOUS LOOK AT
[00:52:26] WAYS TO INDEX OUR THRESHOLDS
[00:52:30] >> YOU. THANK YOU, MR. CHAIRMAN, AND THANK YOU FOR HAVING A
[00:52:34] HEARING FOCUSING ON THESE
[00:52:36] ISSUES. IT'S IMPORTANT TO MAKE SURE THAT OUR CAPITAL MARKETS
[00:52:39] SERVE AMERICANS EFFECTIVELY, BOTH SAVERS LOOKING TO BUILD UP
[00:52:43] RETIREMENT AND COMPANIES LOOKING
[00:52:44] TO RAISE MONEY. I JUST WANT TO
[00:52:48] FLAG FOR OUR COLLEAGUES A BIPARTISAN BILL THAT'S BEEN
[00:52:50] INTRODUCED, AND I WOULD HOPE THAT WE COULD MOVE FORWARD AT
[00:52:53] SOME POINT, ENTITLED THE
[00:52:56] ENCOURAGING PUBLIC OFFERINGS ACT. I'VE INTRODUCED THAT WITH SENATOR BUDD, SENATOR WARNOCK,
[00:52:59] SENATOR TILLIS, AND SENATOR ALSOBROOKS, AND IT WOULD HELP
[00:53:02] MAKE IT EASIER FOR COMPANIES TO
[00:53:05] GO PUBLIC AND SUPPORT STRONG MARKETS. SO I HOPE WE CAN WORK
[00:53:09] ON THAT TOGETHER. UH, MR.
[00:53:11] BENSON, YOU WOULD AGREE THAT IN
[00:53:14] GENERAL, BUSINESSES THAT DO THE
[00:53:17] SAME KIND OF ACTIVITIES IN THE
[00:53:19] MARKET SHOULD BE SUBJECT TO THE
[00:53:22] SAME KIND OF REGULATIONS, RIGHT
[00:53:24] >> UH, YEAH. FIRST, I SHOULD SAY WE SUPPORT YOUR LEGISLATION. UM,
[00:53:28] BUT. YES, SIR, THANK YOU.
[00:53:31] >> I MEAN, WE WANT TO HAVE AN EVEN PLAYING FIELD. I WOULD
[00:53:35] ANYBODY DISAGREE WITH THAT. >> WE HAVE A RULE BOOK. THE RULE
[00:53:37] SHOULD APPLY. IT MAY BE, YOU
[00:53:39] KNOW, REGULATIONS OFTEN WRITTEN BASED UPON SIZE AND STUFF LIKE THAT. BUT THERE SHOULD BE A
[00:53:43] BASELINE RULE BOOK. YES, EXACTLY.
[00:53:46] >> AND THAT'S HOW YOU PREVENT LOOPHOLES. THAT'S HOW YOU
[00:53:50] CREATE AN EVEN PLAYING FIELD. UH, AS I'M SURE YOU'RE AWARE,
[00:53:54] SEC CHAIR ATKINS HAS SAID THAT
[00:53:57] HE'D LIKE TO PUT OUT WHAT HE
[00:53:58] CALLS AN INNOVATION EXEMPTION
[00:54:02] FROM THE SECURITY LAWS. WE DON'T KNOW ALL THE DETAILS YET, BECAUSE THE SEC HASN'T RELEASED
[00:54:06] THEM. BUT IT DOES SEEM THAT THIS
[00:54:10] EXEMPTION WOULD CARVE OUT CERTAIN CRYPTO BUSINESSES LIKE
[00:54:13] DEFI PLATFORMS, FROM THE RULES THAT APPLY TO EVERYBODY ELSE.
[00:54:17] UH, MR. BENSON, IN A COMMENT
[00:54:21] ABOUT THIS INNOVATION EXEMPTION TO THE D. TO THE SEC, YOU WROTE
[00:54:24] THAT MANY CRYPTO FIRMS, INCLUDING DEFI PLATFORMS,
[00:54:28] PERFORM THE SAME FUNCTIONS AS TRADITIONAL BROKERS AND
[00:54:32] EXCHANGES. THAT MEANS, AND I'M QUOTING THE CRYPTO
[00:54:34] INTERMEDIARIES SHOULD BE SUBJECT
[00:54:37] TO IDENTICAL, OR AT LEAST
[00:54:39] SUBSTANTIALLY SIMILAR RULES AND
[00:54:41] OVERSIGHT, END QUOTE. IN OTHER
[00:54:43] WORDS, IF THE FCC EXEMPTS CRYPTO
[00:54:49] AND DEFI PLATFORMS FROM SECURITY LAWS, WE'D GET AN UNEVEN
[00:54:51] PLAYING FIELD THAT UNDERMINES THE MARKETS, RIGHT?
[00:54:55] >> YES. THAT WAS IN ONE OF THE DOZEN LETTERS WE'VE WRITTEN ON
[00:54:58] THE ISSUE, THAT IF WE BELIEVE YOU CAN, IF YOU'RE ENGAGED IN
[00:55:02] THE SECURITIES BUSINESS, YOU'RE BEING COMPENSATED TO ENGAGE IN SIMILAR SECURITIES ACTIVITIES,
[00:55:06] WHETHER IT'S ORDER, ROUTING, CUSTODY, WHATEVER IT MAY BE. UH,
[00:55:09] THEN THE SAME RULE SHOULD APPLY.
[00:55:13] >> THAT SEEMS LIKE COMMON SENSE
[00:55:13] TO MAKE SURE WE PROTECT A LEVEL
[00:55:17] PLAYING FIELD. UM, THE CHALLENGE WE HAVE RIGHT HERE IS THE
[00:55:21] CLARITY ACT, WHICH IS PROPOSED LEGISLATION BEFORE THE SENATE
[00:55:24] HAS THE SAME PROBLEM. AND
[00:55:29] HERE'S HOW A WALL STREET JOURNAL EDITORIAL BOARD PUT IT
[00:55:30] ON TUESDAY. AND, UM, NO LEFT
[00:55:35] WING OUTLET, THE WALL STREET JOURNAL. AND I'M JUST PUTTING
[00:55:38] UP THE HEADLINE CLARITY FOR
[00:55:40] CRYPTO COMMA SORT OF. AND THEN
[00:55:43] THEY SAY THE SENATE BILL TO REGULATE THE DIGITAL CURRENCY
[00:55:47] NEEDS CHANGES TO REDUCE RISKS TO
[00:55:50] THE FINANCIAL SYSTEM. AND I
[00:55:55] THINK THIS IS A WARNING FOR ALL
[00:55:56] OF US THAT THAT BILL IS NOT
[00:56:00] READY FOR PRIME TIME. THEY SAY
[00:56:03] RIGHT NOW THAT IF YOU IF YOU READ IT, YOU'LL FIND THAT THE
[00:56:07] ARGUMENT IS THAT IT WILL MIGRATE
[00:56:09] TO SHADOW MARKETS. MORE INVESTMENTS WILL MIGRATE TO
[00:56:12] SHADOW MARKETS WITH FEW OR NO
[00:56:17] INVESTOR PROTECTIONS. UM, YOU, YOU WOULD AGREE THAT THAT WOULD
[00:56:18] BE A CONCERN, WOULD YOU NOT?
[00:56:21] >> UH, YES, SENATOR. SO IF I
[00:56:23] COULD SAY TWO THINGS. ONE IS WE
[00:56:26] HAVE LONG SAID, I'VE LONG SAID CONGRESS SHOULD ACT IN THIS
[00:56:29] SPACE. SO, SO GOOD FOR CONGRESS
[00:56:31] TO BE ACTING. UM, WE THINK SOME OF THE, WE THINK THE BILL THAT
[00:56:35] CAME OUT OF THE SENATE BANKING COMMITTEE HAD A NUMBER OF GOOD
[00:56:38] THINGS IN IT. UH, OR THEY WERE CLARIFICATIONS THAT NEEDED TO BE
[00:56:41] MADE, THINGS LIKE BANK PERMISSIBILITY, UH, PORTFOLIO,
[00:56:45] UH, PORTFOLIO HEDGE, UM,
[00:56:50] NETTING, UM, BUT, UH, AND TRYING
[00:56:52] TO ADDRESS SOME OF THE CONCERNS
[00:56:54] AROUND WHAT RULES APPLY TO DEFI WHEN YOU, WHEN YOU DETERMINE
[00:56:58] BETWEEN A PROGRAMMER, A COMPUTER PROGRAMMER VERSUS SOMEBODY WHO'S ACTUALLY IN THE BUSINESS.
[00:57:02] SO THAT'S GOOD. THE BILL GOT TO THE AG COMMITTEE. SOME OF THOSE THINGS DIDN'T CARRY OVER. AND
[00:57:05] SO WE DO HAVE CONCERNS WITH THE BILL AS WE UNDERSTAND IT TODAY,
[00:57:08] BUT WE HAVEN'T QUITE SEEN IT. SO WE DON'T REALLY KNOW. UH, BUT
[00:57:11] WE DO THINK THAT IT IS IMPORTANT FOR CONGRESS TO SET THE RULES.
[00:57:15] BUT WE AGREE. I AGREE WITH THE WALL STREET JOURNAL EDITORIAL
[00:57:19] FROM YESTERDAY. I THINK IT'S VERY WELL WRITTEN THAT WHERE THE
[00:57:22] YOU CAN APPLY THE EXISTING RULEBOOK FOR THE SECURITIES AND
[00:57:26] COMMODITIES MARKETS FOR, FOR ACTIVITIES THAT ARE BEING DONE
[00:57:28] IN THAT SPACE. HOWEVER, THEY'RE BEING DONE, WHETHER THEY'RE
[00:57:32] BEING DONE DIGITALLY, ON PAPER, WHATEVER IT SHOULD BE.
[00:57:35] >> I AGREE. IT SHOULD BE TECHNOLOGY NEUTRAL. AND THAT WAS
[00:57:38] THE POINT YOU WERE MAKING WITH RESPECT TO THE, QUOTE,
[00:57:41] INNOVATION EXCEPTION. AND I
[00:57:44] THINK THAT SAME PRINCIPLE APPLIES. AND THAT'S BEFORE EVEN GETTING TO THE CONFLICT OF
[00:57:47] INTEREST AND ETHICS ISSUES, WHICH IS ANOTHER HUGE LOOPHOLE.
[00:57:49] SO EVEN IF WE WERE ABLE TO FIX THAT. >> OR IN THE.
[00:57:53] >> OVERTIME, WE STILL HAVE THIS OTHER PROBLEM. THANK YOU, MR. CHAIRMAN.
[00:57:57] >> ABSOLUTELY. I WILL NOTE THAT THE WALL STREET ARTICLE, WALL
[00:58:00] STREET JOURNAL OP ED, UH,
[00:58:03] FOCUSED MUCH OF ITS ATTENTION ON
[00:58:06] THE DEPOSIT FLIGHT RISK THAT IS
[00:58:10] EMBEDDED IN THE PSYCHE OF THE SOME OF THE COMMUNITY BANKS.
[00:58:12] AND, FRANKLY, SPOKEN MORE ABOUT BY THE LARGER BANKS. BUT
[00:58:16] ULTIMATELY, IF YOU LOOK AT THE DATA, ONCE AGAIN, REINFORCES THE
[00:58:18] FACT THAT DEPOSIT GROWTH IS
[00:58:20] OCCURRING AT ABOUT 3% YEAR OVER
[00:58:24] YEAR, EVEN AFTER THE PASSAGE OF THE GENIUS ACT, SENATOR BRITT.
[00:58:27] >> THANK YOU, MR. CHAIRMAN. APPRECIATE YOU HOLDING THIS
[00:58:29] HEARING. AND THANK YOU TO ALL THE WITNESSES FOR BEING HERE.
[00:58:33] UM, MR. DUMAS, I HEAR YOU GRADUATED FROM THE UNIVERSITY OF
[00:58:37] SOUTH ALABAMA. IT IS ON FIRE.
[00:58:40] UH, PRESIDENT BONNER IS DOING
[00:58:41] SUCH A GREAT JOB. SO GO, JAGS.
[00:58:45] WHEN WE TALK ABOUT CAPITAL FORMATION, WE ARE TALKING ABOUT
[00:58:48] PUTTING AMERICANS SAVINGS TO
[00:58:50] WORK AND HELPING BUSINESSES GROW
[00:58:53] AND HELPING FAMILIES BUILD A
[00:58:55] SECURE FUTURE. LOOK, TODAY, MANY
[00:58:59] TEACHERS, NURSES, HOSPITAL EMPLOYEES, NONPROFIT WORKERS ARE
[00:59:03] STILL BEING TREATED UNFAIRLY BECAUSE CONGRESS LEFT A
[00:59:05] TECHNICAL FIX UNFINISHED. THESE
[00:59:08] WORKERS OFTEN HAVE TO SAVE FOR RETIREMENT THROUGH 403(B) PLANS,
[00:59:12] WHICH WE'VE DISCUSSED TODAY, WHICH IS ESSENTIALLY THE
[00:59:14] NONPROFIT AND PUBLIC SCHOOL
[00:59:16] VERSION OF A 401(K). THESE
[00:59:20] WORKERS SAVE AND WORK HARD, BUT
[00:59:22] UNFORTUNATELY, UM, WE'VE LEFT
[00:59:25] SOME THINGS UNFIXED. CONGRESS
[00:59:27] INTENDED TO ALLOW 403(B) PLANS
[00:59:29] TO OFFER COLLECTIVE INVESTMENT
[00:59:32] TRUST, AND WE MADE THE NECESSARY
[00:59:33] TAX LAW CHANGE TO SECURE 2.0.
[00:59:37] BUT THE MATCHING CHANGE TO THE SECURITIES LAW WAS LEFT OUT.
[00:59:41] ULTIMATELY, IT'S TIME FOR US TO DO OUR JOB. AS A RESULT, IT'S
[00:59:44] STILL NOT WORKING. AND SO WHEN
[00:59:46] WE LOOK AT THIS, I THINK
[00:59:50] LOWERING FEES MEANS MORE OF
[00:59:51] WORKERS MONEY STAYING IN THEIR
[00:59:55] ACCOUNT AND GROWING OVER TIME. AND THESE SITS WHY SOME PEOPLE
[00:59:58] SAY COLLECTIVE INVESTMENT TRUST. WHAT IS THAT? THAT SOUNDS COMPLICATED. UM, THIS IS
[01:00:01] ACTUALLY A VERY SIMPLE FIX AND A VERY SIMPLE THING. WORKERS CAN
[01:00:05] POOL THEIR RETIREMENT SAVINGS SO THAT THEY CAN RECEIVE LOWER
[01:00:09] PRICES, MUCH LIKE BUYING IN BULK AT SAM'S OR COSTCO OR WHEREVER
[01:00:13] IT IS THAT YOU GO. SO I WANT TO
[01:00:16] SEE THIS FIX. MY GUESS IS, IS THAT EVERY SINGLE PERSON ON THIS
[01:00:20] DAIS USES A CIT, WHETHER THEY REALIZE IT OR NOT. AND MY WHOLE
[01:00:23] THING IS, IS IF IT'S AVAILABLE TO US, IT SHOULD BE AVAILABLE TO
[01:00:26] NURSES AND FIREFIGHTERS AND TEACHERS AND PUBLIC SERVANTS. SO
[01:00:30] IT'S TIME TO GET THIS FIXED. I'VE ASKED FOR IT TO BE
[01:00:34] INCLUDED IN THE N, D, A, A WHEN
[01:00:40] CLARITY COMES TO THE FLOOR.
[01:01:03] BENSON, I'LL START WITH YOU. MY BILL WOULD NOT
[01:01:07] REQUIRE ANY EMPLOYER TO OFFER A C, I T OR A
[01:01:09] IN ONE. IT WOULD JUST SIMPLY PROVIDE THE SAME CHOICE ALREADY
[01:01:13] AVAILABLE THROUGH 401 K PLANS. IS THERE ANY REASON CONGRESS SHOULD CONTINUE DENYING THESE CHOICES TO TEACHERS AND NURSES AND NONPROFIT WORKERS?
[01:01:16] >> SENATOR. NOT AT ALL. AND. AND THANK YOU AND SENATOR WARNOCK FOR PURSUING THIS LEGISLATION. THIS IS A GAP THAT NEEDS TO BE
[01:01:20] CORRECTED. CONGRESS HAS WORKED ON FOR THREE BEES FOR A LONG TIME. WHY THIS WASN'T DONE
[01:01:23] BEFORE, I DON'T KNOW. UM, BUT, BUT, UH, AND ULTIMATELY, IT'S UP
[01:01:27] TO THE, UP TO THE PLAN SPONSOR TO DETERMINE WHAT'S GOING TO BE
[01:01:30] IN THE PLAN. SO, AND THEY HAVE A FIDUCIARY RESPONSIBILITY TO THE,
[01:01:33] TO THE PARTICIPANTS. SO WE THINK THIS IS VERY GOOD LEGISLATION.
[01:01:37] WE HOPE THE CONGRESS WILL PASS IT.
[01:01:38] >> I APPRECIATE IT. THANK YOU SO
[01:01:41] MUCH. UM, MRS. BLASS, CONGRESS.
[01:01:46] REMOVED THE TAX LAW BARRIER TO CITIES AND SECURED 2.0, BUT LEFT
[01:01:49] THAT OUTDATED SECURITY LAW BARRIER IN PLACE THAT I JUST
[01:01:52] DISCUSSED. CAN YOU EXPLAIN WHY
[01:01:54] THE TAX FIX IS NOT SUFFICIENT? WE'VE GOTTEN SOME PUSHBACK ON
[01:01:58] THIS, AND MORE CONGRESSIONAL ACTION IS ACTUALLY NEEDED TO FINISH THE JOB AND ALLOW PEOPLE
[01:02:02] TO UTILIZE THIS IN THE WAY THAT IT WAS INTENDED.
[01:02:05] >> THANK YOU. SENATOR. CORRECT. THE SECURE, SECURE 2.0 FIX THE
[01:02:09] TAX BARRIER. BUT AS YOU NOTED,
[01:02:10] IT DID NOT FIX TWO SECURITIES
[01:02:14] LAW BARRIERS. SO RIGHT NOW, FOR
[01:02:16] CITIES, IF THEY WOULD LOSE THEIR
[01:02:19] EXEMPTION UNDER THE INVESTMENT COMPANY ACT AND BECOME UNREGISTERED INVESTMENT
[01:02:22] COMPANIES, AND THEY WOULD LOSE AN EXEMPTION UNDER THE
[01:02:25] SECURITIES ACT AND BE ENGAGED IN UNREGISTERED OFFERINGS. SO CONGRESS NEEDS TO FIX TWO
[01:02:29] STATUTORY SECTIONS UNDER BOTH OF
[01:02:31] THESE STATUTES TO ENABLE TO MAKE
[01:02:35] SURE THAT FOR ONE AND FOUR ONE K PLANS AND FOUR THREE B PLANS
[01:02:37] HAVE A LEVEL PLAYING FIELD,
[01:02:40] BECAUSE CITIES ARE MORE COST EFFECTIVE, IN SOME CASES,
[01:02:43] DIVERSIFY INVESTMENT OPTIONS, AND CAN IMPROVE PERFORMANCE. AND
[01:02:45] I WOULD JUST NOTE, AS YOU
[01:02:49] PROVIDE PARITY BETWEEN 401(K) AND 403(B), IT'S ALSO IMPORTANT TO PROVIDE PARITY BETWEEN
[01:02:53] DEFINED CONTRIBUTION PLANS AND DEFINED BENEFIT PLANS. DEFINED
[01:02:55] BENEFIT PLANS. TODAY, 70% OF
[01:02:58] THEM INVEST IN PRIVATE MARKETS. ONLY 4% DEFINED CONTRIBUTION
[01:03:02] PLANS HAVE THAT PRIVILEGE. IT ALSO NEEDS TO BE EQUALIZED. >> THANK YOU VERY MUCH. AND, MR.
[01:03:06] FLOOD, HOW WOULD YOU ALLOW HOW WOULD ALLOWING SCHOOLS,
[01:03:09] HOSPITALS AND CHARITIES TO OFFER
[01:03:11] THE SAME RETIREMENT OPTIONS AS PRIVATE COMPANIES, HELP THEM
[01:03:14] RECRUIT WORKERS, STRENGTHEN RETIREMENT SECURITY, AND PUT A
[01:03:18] MORE AMERICAN SAVINGS TO WORK IN OUR ECONOMY? >> IT'S AS SIMPLE AS SAYING, I
[01:03:21] GET TO OFFER WHAT EVERYBODY ELSE DOES, AND I'M GIVING YOU THE
[01:03:24] SAME RISK PROFILE TO LOOK AT.
[01:03:25] AND BY THE WAY, THE PERSON WHO
[01:03:28] IS CURATING THESE CHOICES FOR YOU HAS A FIDUCIARY
[01:03:31] RESPONSIBILITY. SO WE'RE NOT CHANGING THE PROCESS BY WHICH WE
[01:03:35] CHOOSE THE INVESTMENTS TO SHOW TO YOU. WE'RE JUST CHANGING THE AMOUNT OF INVESTMENTS YOU GET TO
[01:03:39] INVEST. >> WELL THANK YOU. I THINK CONGRESS NEEDS TO FINISH THE JOB. WE'VE ALREADY DECIDED ON
[01:03:42] THE POLICY. LET'S DO IT. >> THAT'S GREAT. SENATOR BLUNT
[01:03:46] ROCHESTER. >> THANK YOU, MR. CHAIRMAN AND RANKING MEMBER, WARREN, AND
[01:03:50] THANK YOU SO MUCH TO THE
[01:03:51] PANELISTS THAT ARE HERE. I APPRECIATE TODAY'S HEARING,
[01:03:55] BECAUSE CAPITAL MARKETS ARE ULTIMATELY ABOUT OPPORTUNITY.
[01:03:59] THEY'RE ABOUT HELPING
[01:04:02] BUSINESSES AND HELPING FAMILIES BUILD WEALTH AND STRENGTHENING
[01:04:04] OUR ECONOMY. WE TALK A LOT ABOUT
[01:04:08] MAIN STREET IN OUR COMMITTEE,
[01:04:10] AND MAKING SURE THAT OUR FOCUS
[01:04:12] IS HERE, NOT JUST WALL STREET.
[01:04:14] AND THIS IS IMPORTANT BECAUSE ENTREPRENEURS OR SMALL
[01:04:18] BUSINESSES ARE SEEKING INVESTMENT. AMERICANS WHO
[01:04:22] SAVINGS ARE MAKE THOSE INVESTMENTS POSSIBLE. AND SO,
[01:04:26] MR. DUMAS, AS CONGRESS LOOKS TO MODERNIZE OUR CAPITAL MARKETS,
[01:04:29] WHAT SHOULD WE BE DOING TO MAKE
[01:04:31] SURE EVERY DAY, INVESTORS
[01:04:34] BENEFIT ALONGSIDE BUSINESSES SEEKING INVESTMENT? AND HOW
[01:04:37] SHOULD WE MEASURE WHETHER WE'RE SUCCEEDING? >> THANKS FOR THE QUESTION,
[01:04:41] SENATOR. I'M ALL FOR ASSETS. I THINK THAT IN PROVIDING ACCESS
[01:04:45] TO EVERYDAY INVESTORS, I THINK, FIRST, WE SHOULD STOP, TAKE A STEP BACK AND MAKE SURE THAT
[01:04:49] THERE'S PROPER GUARDRAILS IN PLACE. INVESTMENT PROTECTION,
[01:04:53] TRANSPARENCY. PEOPLE ARE FAMILIAR WITH THE RISK PROFILE.
[01:04:55] I THINK THAT THAT'S IMPORTANT.
[01:04:59] ANY TIME WE TALK ABOUT PROVIDING ACCESS TO ANYONE. UH, SECOND, I
[01:05:03] THINK THAT A GOOD WAY TO MEASURE IS ALSO, UM, THERE SHOULD BE
[01:05:06] SOME TYPE OF DATA I MENTIONED IN MY WRITTEN STATEMENT WHERE
[01:05:09] THERE'S TRANSPARENCY THAT WE
[01:05:11] SEE WHETHER OR NOT RAISING
[01:05:15] CAPITAL GOES TO PARTICULAR BUSINESSES, SPECIFICALLY BLACK OWNED BUSINESSES OR, UM, OR
[01:05:19] UNDERSERVED BUSINESSES. I THINK THAT THE IDEA THAT RAISING
[01:05:22] CAPITAL WITHOUT ANY TYPE OF
[01:05:24] TRANSPARENCY CAN GIVE AN INDICATION THAT THERE'S INCLUSION. AND I WANT TO MAKE
[01:05:28] SURE THAT, YOU KNOW, WHEN CAPITAL IS RAISED, IT'S DISTRIBUTED TO THOSE WHO
[01:05:32] ACTUALLY NEED IT. >> THANK YOU. AND HELPING
[01:05:35] FAMILIES BUILD WEALTH INCREASINGLY MEANS UNDERSTANDING HOW TECHNOLOGY IS CHANGING, THE
[01:05:39] WAY FINANCIAL DECISIONS ARE
[01:05:41] MADE. WE'RE SEEING ARTIFICIAL
[01:05:44] INTELLIGENCE TRANSFORM HEALTH CARE, OUR WORKPLACE, AND NOW
[01:05:47] INVESTING. MILLIONS OF AMERICANS
[01:05:50] ARE ALREADY USING AI TO ANSWER
[01:05:52] FINANCIAL QUESTIONS. MR. DUMAS,
[01:05:54] AS THESE TOOLS BECOME MORE SOPHISTICATED, WHAT ROLE SHOULD
[01:05:58] CONGRESS PLAY IN MAKING SURE
[01:06:00] THEY HELP FAMILIES BUILD WEALTH
[01:06:03] WITHOUT EXPOSING THEM TO NEW RISKS? >> IT'S A GREAT QUESTION,
[01:06:06] SENATOR. I THINK AI HAS AN OPPORTUNITY TO TRANSFORM OUR
[01:06:10] ECONOMY. IT HAS AN OPPORTUNITY
[01:06:12] TO, UM, TO EXPAND OPPORTUNITY
[01:06:15] FOR EVERYONE. BUT AT THE SAME TIME, I THINK THAT, YOU KNOW, ESPECIALLY IN THE FINANCIAL
[01:06:18] MARKETS, WE SHOULD BE CAREFUL
[01:06:20] USING AI WITHOUT UNDERSTANDING
[01:06:24] THE BACKGROUND. AI HAS THE POTENTIAL TO HAVE CERTAIN
[01:06:26] BIASES, RIGHT? SO WE JUST NEED TO, FOR CONGRESS, NEED TO
[01:06:29] UNDERSTAND AI, PROVIDE CERTAIN GUARDRAILS, PROVIDE SOME TYPE OF
[01:06:33] PROTECTION, AND INFORM INVESTORS OR PEOPLE WHO LOOK TO AI FOR
[01:06:37] INVESTMENT ADVICE TO BE SOME TYPE OF DISCLOSURE, SOME TYPE OF INFORMATION TO LET THEM KNOW
[01:06:41] THAT AI COULD BE WRONG. >> I'M GOING TO OPEN THAT QUESTION UP TO THE REST OF THE
[01:06:45] PANEL. IF ANYONE ELSE HAS ANY
[01:06:46] OPINIONS ON HOW WE, AGAIN, CREATE THOSE SAFEGUARDS, WHAT WE
[01:06:50] CAN DO IN CONGRESS. MR. FLOOD. >> FROM THE CHAMBER'S
[01:06:54] PERSPECTIVE, AI IS A TOOL THAT'S BEING USED, AND WE'VE
[01:06:58] CALLED FOR PUBLICLY CONVERSATIONS, SOLVES A LOT OF
[01:07:00] PROBLEMS, BUT PUBLIC PRIVATE ROUNDTABLES WITH AGENCIES TO
[01:07:05] TALK ABOUT THE THE WAY AI IS BEING USED IN DIFFERENT INDUSTRIES.
[01:07:08] >> THANK YOU, MISS BLASS. OUR TODAY'S SECURITIES LAWS,
[01:07:12] FLEXIBLE ENOUGH TO ADAPT AS AI
[01:07:14] BEGINS PLAYING A LARGER ROLE IN
[01:07:18] INVESTMENT ADVICE. >> SO ONE OF THE THINGS ABOUT THE FEDERAL SECURITIES LAWS IS
[01:07:21] HOW ENDURING THEY HAVE BEEN, RIGHT? YOU LOOK AT A BODY OF LAW THAT WAS ADOPTED BACK IN THE 30s
[01:07:25] AND 40s, AND UNTIL TODAY, THEY ARE THE BACKBONE OF THE OF OUR
[01:07:29] CAPITAL MARKETS. SO IN SOME, IN
[01:07:31] MANY WAYS, YES. UM, BUT, YOU
[01:07:33] KNOW, WITH, WITH AI, UM, IT'S A TOOL, IT'S STILL A TOOL IN
[01:07:37] PROGRESS. IT'S GOING TO HAVE GREAT POTENTIAL, AS MR. DUMAS
[01:07:40] SAID. UM, AND AS, AS MR. FLOOD SAID, HAVING A PRIVATE PUBLIC
[01:07:43] ROUNDTABLES TO BETTER UNDERSTAND THE IMPACT AND ANY SHORTCOMINGS
[01:07:47] WOULD BE FANTASTIC FOR THE CAPITAL MARKETS. >> YES. MR..
[01:07:51] >> I JUST ADD, IT IS A GREAT
[01:07:53] TOOL. IT DOESN'T ABSOLVE YOU OF
[01:07:56] YOUR RESPONSIBILITIES UNDER THE
[01:08:00] 40 ACT OR REG BY. IN THOSE INSTANCES OF GIVING FINANCIAL
[01:08:03] ADVICE. AND SO FIRMS UNDERSTAND
[01:08:06] THAT. AND THEY NEED TO TAKE THAT INTO ACCOUNT.
[01:08:09] >> I'M GLAD YOU SAID THAT. I ASKED THE QUESTION, BECAUSE I
[01:08:12] THINK ABOUT THE FACT THAT A LOT OF PEOPLE ARE GOING TO CHAT BOTS
[01:08:16] AND OTHER PLACES TO GET HEALTH
[01:08:18] CARE INFORMATION, AND YOU CAN'T
[01:08:22] DEPEND ON AI NECESSARILY FOR THAT. AND WE HAVE, YOU KNOW, PROTECTIONS. AND SO WE'RE
[01:08:25] LOOKING AT HOW DO WE PROTECT
[01:08:27] CONSUMERS AS WELL. UM, I,
[01:08:30] ANOTHER AREA THAT WE'VE DISCUSSED IS TOKENIZATION AND
[01:08:33] OTHER INNOVATIONS IN MARKET INFRASTRUCTURE. TECHNOLOGY WILL
[01:08:36] CONTINUE TO EVOLVE. BUT MR. BENSON, WHAT INVESTOR
[01:08:40] PROTECTIONS OR MARKET AND MARKET INTEGRITY PRINCIPLES SHOULD
[01:08:43] NEVER CHANGE, REGARDLESS OF HOW SECURITY IS ISSUED, TRADED, OR
[01:08:46] HELD. >> WELL, I WOULD TAKE ABOUT 10 SECONDS. >> TO ANSWER.
[01:08:50] >> THAT QUESTION. YOU CAN NOT.
[01:08:51] TOKENIZATION IS JUST IN MANY OF EQUITIES AND SECURITIES. IS JUST
[01:08:55] THE LATEST ITERATION GOING FROM PAPER TO BOOK, ENTRY TO
[01:08:59] DIGITIZATION TO TOKENIZATION. AND IN THAT SENSE, THE SAME RULES SHOULD APPLY.
[01:09:01] >> SAME RULES. THANK YOU, I YIELD BACK.
[01:09:04] >> SENATOR RICKETTS.
[01:09:06] >> THANK YOU, MR. CHAIRMAN NEBRASKA BUSINESSES ARE THE
[01:09:09] ECONOMIC CENTER OF COMMUNITIES
[01:09:12] ACROSS MY STATE. EXCESSIVE FEDERAL RED TAPE FORCES, MANY
[01:09:16] MAIN STREET BUSINESSES TO COMPETE ON AN UNLEVEL PLAYING
[01:09:18] FIELD. THAT'S WHY I INTRODUCED THE ELEVATE ACT WITH SENATOR
[01:09:22] CORTEZ MASTO AND PARTNER WITH SENATOR GALLEGO TO INTRODUCE THE
[01:09:25] HALOS ACT. BOTH BILLS WILL MAKE IT EASIER FOR SMALL ENTERPRISES
[01:09:28] TO UNLOCK AVAILABLE CAPITAL AND
[01:09:30] DRIVE OUR LOCAL ECONOMIES FORWARD. AND AS HAS BEEN
[01:09:33] MENTIONED HERE TODAY, YOU KNOW, THE UNITED STATES HAS THE
[01:09:36] STRONGEST, MOST TRUSTED CAPITAL
[01:09:38] MARKETS IN THE WORLD, AND IT'S BECAUSE OF THE REGULATORY STRUCTURE THAT WE HAVE IN PLACE.
[01:09:42] OUR SYSTEM RELIES ON CLEAR
[01:09:43] RULES, RELIABLE DISCLOSURES, AND ENFORCEMENT THAT IS PREDICTABLE
[01:09:47] AND GROUNDED IN LAW, FAIR AND TRANSPARENT REGULATIONS ALLOW OUR COUNTRY TO HAVE THE MOST
[01:09:51] LIQUID, TRANSPARENT MARKETS IN THE WORLD, AND THOSE STANDARDS
[01:09:55] MATTER EVEN MORE IN A TIME OF STRATEGIC COMPETITION AGAINST
[01:09:59] COMMUNIST CHINA. COMMUNIST CHINA IS NOT JUST ANOTHER FOREIGN MARKET PARTICIPANT. COMMUNIST
[01:10:03] CHINA IS OUR GREATEST EXISTENTIAL THREAT. THEY ARE A
[01:10:07] STRATEGIC COMPETITOR WITH A STATE DIRECTED ECONOMY. ACCORDING TO THE US-CHINA
[01:10:11] ECONOMIC AND SECURITY REVIEW
[01:10:14] COMMISSION, ROUGHLY 286 CHINA BASED COMPANIES WERE LISTED ON
[01:10:17] U.S. EXCHANGES AS OF MARCH 2025.
[01:10:19] COMBINED TOGETHER, THAT REPRESENTS ABOUT $1.1 TRILLION
[01:10:22] IN MARKET CAPITALIZATION. THAT
[01:10:25] MEANS THAT A MEANINGFUL SHARE OF AMERICAN RETIREMENT ACCOUNTS,
[01:10:28] MUTUAL FUNDS, AND INDEX FUNDS ROUTINELY HAVE EXPOSURE AND HOLD
[01:10:32] THESE SECURITIES IN THEIR PORTFOLIOS. AMERICAN RETIREMENT
[01:10:35] SAVINGS ARE FLOWING INTO CHINA BACKED COMPANIES OPERATING
[01:10:37] OUTSIDE THE REACH OF U.S.
[01:10:39] REGULATORY OVERSIGHT AND PROTECTIONS. IT MEANS AMERICANS
[01:10:42] RETIREMENT DOLLARS AND OUR
[01:10:45] MARKETS ARE USED TO PROMOTE COMMUNIST CHINA'S BUSINESSES.
[01:10:49] THAT'S WHY I INTRODUCED THE NO.
[01:10:51] CHINA INTO IN INDEX FUNDS ACT LAST JUNE, BECAUSE THE RETIREMENT SAVINGS OF EVERYDAY
[01:10:55] AMERICANS SHOULD NEVER BE FUNNELED INTO COMPANIES
[01:10:57] CONTROLLED BY COMMUNIST CHINA BY DEFAULT. WITHOUT THOSE AMERICANS
[01:11:01] EVER HAVING MADE THAT CHOICE,
[01:11:04] 151 OF THOSE 286 CHINA BASED
[01:11:07] ISSUERS REPRESENT ABOUT 90% OF THE TOTAL MARKET CAP USED, AND
[01:11:10] THEY USE VARIABLE INTEREST ENTITY WRIGHT. THERE ARE
[01:11:14] VARIABLE INTEREST ENTITY V
[01:11:16] ARRANGEMENTS. THEY USE THESE STRUCTURES BECAUSE CHINA LAW
[01:11:20] RESTRICTS FOREIGN OWNERSHIP IN KEY SECTORS, SO THEY CAN'T SELL
[01:11:23] EQUITY IN THE OPERATING COMPANY DIRECTLY TO U.S. INVESTORS.
[01:11:27] INSTEAD, INVESTORS BUY SHARES IN AN OFFSHORE HOLDING COMPANY THAT
[01:11:30] RELIES ON CONTRACTS, NOT
[01:11:32] OWNERSHIP. MR. BENSON, MR. FLOOD, MR. DUMAS, YES OR NO? DO
[01:11:36] YOU BELIEVE THAT THE AVERAGE AMERICAN RETAIL INVESTOR
[01:11:40] UNDERSTANDS THAT DIFFERENCE TODAY? MR. BENSON, WE'LL START WITH YOU.
[01:11:44] >> FIRST OF ALL, WE DON'T REPRESENT THE INDEX PROVIDERS, BUT I DON'T. BUT I THINK
[01:11:47] PROBABLY A LOT OF INVESTORS DON'T UNDERSTAND HOW THE INDEX
[01:11:50] MODELS WORK AND WHAT'S INCLUDED
[01:11:52] IN THAT.
[01:11:55] >> MR. FLOOD. >> IMPORTANT THING IS TRANSPARENCY. >> AND DISCLOSURE. SO WE GOT TO
[01:11:58] MAKE SURE THAT THE APPROPRIATE DISCLOSURES ARE THERE FOR PEOPLE TO UNDERSTAND. >> I THINK THE AVERAGE INVESTOR
[01:12:02] KNOWS THAT WHEN THEY'RE INVESTING IN THESE INDEX FUNDS, THAT IT'S GOING OFF TO
[01:12:05] COMMUNIST CHINA, BECAUSE THAT'S PART OF THE INDEX, AND IT'S NOT
[01:12:09] EVEN A DIRECTLY INVESTED IN A COMPANY. IT'S DRESSED IN ONE OF THESE VIES.
[01:12:13] >> NOT WITHOUT READING DISCLOSURES. >> RIGHT. MR.. DUMARCE.
[01:12:16] >> GOOD QUESTION. SO I ACTUALLY
[01:12:17] HAVE YOU AN INVESTOR. AND IF MY
[01:12:22] FUNDS GOING CHINA WITHOUT PROPER DISCLOSURE OR INFORMATION, I WOULDN'T HAVE ANY IDEA.
[01:12:25] >> YEAH. THANK YOU. UH, MISS
[01:12:27] BLAS AND MR. BENSON, IN YOUR VIEW, OUR EXISTING DISCLOSURE
[01:12:31] REQUIREMENTS ADEQUATE, ADEQUATE TO CLEARLY EXPLAIN THOSE
[01:12:33] OWNERSHIP DIFFERENCES TO INVESTORS.
[01:12:36] >> SO THE DISCLOSURES THEMSELVES. YES, BUT THEY ARE DENSE. AND OUR INVESTORS GOING
[01:12:40] TO ACTUALLY LOOK FOR THEM. THE ANSWER IS NO. UM, WHEN YOU LOOK
[01:12:44] AT THE INDEX ERS AND THE RULES OF THE ROAD THERE AND HOW THEY
[01:12:47] INCLUDE THESE COMPANIES AND WHETHER THESE COMPANIES HAVE THE
[01:12:50] SAME OBLIGATIONS LIKE U.S. COMPANIES IN TERMS OF DISCLOSURES, THAT IS SOMETHING ACTUALLY THAT WAS LOOKED AT AND
[01:12:54] HAS BEEN CONTINUED TO LOOK AT. AND DEFINITELY THE POLICYMAKERS
[01:12:57] AND REGULATORS NEED TO CONTINUE LOOKING AT THAT TO SAFEGUARD
[01:13:01] AMERICAN INVESTMENTS AND RETIREMENT SAVINGS. >> I HAVE NOTHING I AGREE WITH YOU.
[01:13:04] >> AGREE WITH HER. OKAY, GREAT.
[01:13:07] UM, I HAVE CONCERNS ABOUT HOW THESE VIE STRUCTURES ALLOW CHINESE COMPANIES TO RAISE
[01:13:10] CAPITAL IN U.S. MARKETS WITHOUT BEING SUBJECT TO THE SAME
[01:13:13] ONGOING DISCLOSURE, GOVERNANCE, AND OVERSIGHT STANDARDS THAT AMERICAN COMPANIES FACE. UNDER
[01:13:17] THE CURRENT RULES, CHINESE COMPANIES USING VIE STRUCTURES
[01:13:20] CAN STILL QUALIFY AS FOREIGN
[01:13:23] PRIVATE ISSUERS. MR. BENSON, AMONG ALL FOREIGN PRIVATE
[01:13:25] ISSUERS, IS IT FAIR TO SAY VIE
[01:13:28] ISSUERS BASED IN COMMUNIST CHINA ARE THE ONES RAISING THE MOST
[01:13:32] SERIOUS OVERSIGHT AND ENFORCEMENT CONCERNS FOR AMERICAN INVESTORS? I. >> I DON'T KNOW THAT I CAN
[01:13:36] ANSWER THAT, BUT WHAT I CAN SAY IS, WHERE WE DO HAVE CONCERNS,
[01:13:38] AND I KNOW YOU BROUGHT THIS UP, IS ON LOW PRICED, UH, THE LOW
[01:13:42] PRICED SECURITIES AND THE IMPACT THAT IT'S HAD ON INVESTORS AND
[01:13:44] ISSUES AND WHERE THE LISTING STANDARDS HAVE NOT BEEN. YEAH. AND THE PUMP AND DUMP SCHEMES.
[01:13:48] AND WE THANK YOU FOR BRINGING
[01:13:50] THAT UP. WE HAVE RAISED THAT
[01:13:53] WITH THE EXCHANGES AND THE SEC REPEATEDLY. TO BE FAIR, NASDAQ
[01:13:56] RECENTLY CAME OUT WITH REVISIONS. AND AND THEY WE DON'T REPRESENT THEM THERE, YOU
[01:13:59] KNOW, BUT, UH, THEY CAME OUT WITH REVISED LISTING STANDARDS,
[01:14:03] WHICH WE THINK IS A STEP IN THE RIGHT DIRECTION TO ADDRESS THE
[01:14:06] LOW PRICE ISSUE. >> WELL, THIS IS AN ISSUE THAT'S IMPORTANT TO ME, AND
[01:14:09] I'VE RAISED IT WITH CHAIRMAN ATKINS. UH, IT'S CRUCIAL THAT WE GET THIS RIGHT, BECAUSE WE
[01:14:13] ARE PUTTING, I THINK, INVESTORS
[01:14:16] DOLLARS AT RISK WITHOUT THEIR UNDERSTANDING WHAT THAT RISK IS.
[01:14:18] AND WE'RE ALSO HELPING TO FUND
[01:14:22] COMPANIES IN OUR CHIEF ADVERSARY IN THE WORLD. AND, UH, THEY ARE
[01:14:26] NOT PLAYING BY THE SAME RULES WE ARE. >> THANK YOU. MR. CHAIRMAN.
[01:14:29] THANK YOU, KIM.
[01:14:32] >> THANK YOU, CHAIRMAN, FOR BRINGING THIS HEARING TOGETHER.
[01:14:36] IT'S VERY IMPORTANT, AND I THANK YOU ALL FOR JOINING UP
[01:14:39] HERE. UM, YOU KNOW, MR. FLOOD, I
[01:14:41] WANTED TO START WITH YOU. UH, WHAT I'VE BEEN TRYING TO WORK
[01:14:44] ON AND ACTUALLY WORKING WITH THE CHAMBER ON IN NEW JERSEY, FOR
[01:14:48] INSTANCE, IS ABOUT REALLY TRYING TO CREATE THIS NEW INNOVATION
[01:14:51] HUB, YOU KNOW, REALLY TRYING TO BOLSTER THE TYPE OF, UH, YOU
[01:14:55] KNOW, TECHNOLOGY DEVELOPMENT AND INNOVATION WE'RE TRYING TO DO IN OUR STATE. I'VE CALLED IT,
[01:14:59] YOU KNOW, CREATING THIS EINSTEIN CORRIDOR BETWEEN PHILADELPHIA
[01:15:03] AND NEW YORK. AND, YOU KNOW, AS WE'VE BEEN GOING THROUGH THIS
[01:15:06] PROCESS, I'VE BEEN, YOU KNOW, TRYING TO THINK THROUGH THINGS. AND, YOU KNOW, THE CHAIRMAN RAISED THIS EARLIER ABOUT, YOU
[01:15:10] KNOW, HOW WE SEE SO MUCH OF THE
[01:15:12] VENTURE CAPITAL FUNDS, FOR INSTANCE, CONCENTRATED IN
[01:15:15] SILICON VALLEY, NEW YORK AND BOSTON. AND I GUESS I JUST WANT
[01:15:19] TO PULL ON THIS A LITTLE BIT
[01:15:21] FURTHER FROM THE CHAMBER'S PERSPECTIVE, WHAT POLICIES DO
[01:15:24] YOU, UH, DO YOU THINK WOULD BE
[01:15:25] MOST HELPFUL IN, YOU KNOW,
[01:15:29] DIRECTING MORE PRIVATE CAPITAL TOWARDS EMERGING INNOVATION HUBS
[01:15:32] RATHER THAN THE PLACES WHERE IT'S ALREADY BEEN ESTABLISHED
[01:15:36] >> SENATOR KIM, THANK YOU FOR YOUR QUESTION. I WANT TO START BY BACKING UP A LITTLE BIT IN
[01:15:40] SAYING, I THINK WHEN IT COMES TO
[01:15:42] INNOVATION, WE HAVE TO REALIZE THAT YOU NEED A NETWORK IN
[01:15:46] ALMOST EVERY AREA. YOU NEED A PLACE WHERE YOU CAN PITCH DEALS,
[01:15:48] YOU NEED A PLACE WHERE YOU HAVE
[01:15:51] OTHERS WHO, WHO HAVE LIKE MINDS, LIKE A HEALTH CARE HUB, AND YOU
[01:15:54] NEED FUNDERS TO BE THERE TO TALK
[01:15:56] ABOUT IT. SO WHEN I LOOK AT THE
[01:15:58] PROPOSALS THAT HAVE BEEN PUT
[01:16:01] FORTH BY THIS, UH, BY THIS COMMITTEE, AS WELL AS IN THE
[01:16:04] INVEST ACT, I SEE A FEW THAT CAN BE VERY HELPFUL. AND A LOT OF
[01:16:08] THEM ARE VERY TECHNICAL, JUST COMMON SENSE FIXES. UM, AGAIN,
[01:16:12] I'LL GO BACK TO THE A F E. UM, IF WE CAN SOLVE THAT, I WOULD
[01:16:16] HONESTLY, SOME PEOPLE SAY WE'RE DOUBLE COUNTING. I ACTUALLY SAY
[01:16:18] IT'S A, IT'S, IT'S BECAUSE WE
[01:16:20] ARE DOUBLE COUNTING. THAT IS A
[01:16:23] MISREPRESENTED DISCLOSURE. SO IF WE TECHNICALLY FIX THAT, IT WILL
[01:16:27] ALLOW THESE FUNDS TO MAKE IT INTO INDICES AND MAKE MORE LIQUID INVESTORS, NOT ONLY FOR
[01:16:31] RETAIL INVESTORS, BUT FOR THOSE
[01:16:33] FUNDS THEMSELVES. UM, TWO, WE SHOULD LOOK AT SOME OF THE
[01:16:36] DEFINITIONS. AND YOU ALL HAVE TALKED ABOUT IT HERE, MAKING
[01:16:40] SURE THAT THE RULES FOR EMERGING GROWTH FUNDS, THE RULES FOR
[01:16:44] VENTURE CAPITAL FUNDS HAVE MET INFLATION. YOU KNOW, LET'S RAISE
[01:16:47] SOME OF THE THRESHOLDS SO THAT THE BUSINESSES THAT WERE AT $125
[01:16:51] MILLION CAN STILL INVEST AS THEY WERE TEN YEARS AGO. THEIR ASSETS
[01:16:55] HAVE GONE PAST THAT VALUE. SO WE'VE LOST THE ABILITY FOR
[01:16:58] PEOPLE TO INVEST SIMPLY BECAUSE INFLATION HAS TAKEN THE ASSET
[01:17:02] VALUES HIGHER. UM, AND THEN THREE, THERE'S SOME REALLY
[01:17:06] COMMON SENSE THINGS. UM, IF SOMEONE WANTS TO GO PUBLIC AS WE
[01:17:10] DEVELOP THESE INNOVATION HUBS
[01:17:12] AND CREATE A DEEPER MARKET FOR SMALLER VENTURE CAPITAL FUNDS
[01:17:16] WHO WANT TO GO TO THE LOCAL
[01:17:18] AREAS, UM, AS WE BRING COMPANIES
[01:17:21] TO COME PUBLIC, THERE ARE SIMPLE
[01:17:23] THINGS WE CAN DO TO, UM, LIKE
[01:17:27] MAKING SURE THAT THERE'S AN ALIGNMENT BETWEEN THE FINANCIAL
[01:17:30] STATEMENTS THEY NEED TO RELEASE AS THEY GO PUBLIC, MAKING SURE
[01:17:33] THAT WE ASK OURSELVES THE APPROPRIATE QUESTION, DO WE NEED
[01:17:37] AN AUDITED FINANCIAL STATEMENT? THEY'RE EXCEPTIONALLY
[01:17:40] IMPORTANT. BUT IF WE'RE TRYING TO DEEPEN THE AMOUNT OF COMPANIES WE HAVE, WHERE SHOULD
[01:17:44] WE DRAW THAT LINE ON AN AUDITED FINANCIAL STATEMENT? PRE IPO,
[01:17:47] THERE'S AN IPO. OF COURSE, THERE SHOULD BE ONE. BUT WHERE DO WE DRAW THAT LINE ON COST BENEFIT. >> YEAH.
[01:17:52] >> THERE ARE A LOT OF COMMON SENSE APPROACHES THAT GET US HOME. >> WELL, I'D LOVE TO BE ABLE TO
[01:17:55] CONTINUE TALKING WITH YOU AND OTHERS ABOUT THAT AS WE TRY TO
[01:17:57] BUILD ON. I WANT TO KIND OF SCOPE OUT A LITTLE BIT EVEN
[01:18:01] FURTHER. I MEAN, WE'RE TALKING
[01:18:02] ABOUT HOW DO WE TRY TO GET THAT
[01:18:05] INVESTMENT, THAT WEALTH, DEVELOP MORE ACROSS THIS COUNTRY, BUT
[01:18:08] ALSO JUST TRYING TO THINK ABOUT IT IN TERMS OF AMERICAN
[01:18:11] FAMILIES. SO, YOU KNOW, WE SEE GREAT STRENGTH WHEN IT COMES TO
[01:18:14] OUR MARKETS. YET WE'RE SEEING STILL TOO MANY AMERICANS,
[01:18:18] PARTICULARLY THOSE IN RURAL AND UNDERSERVED COMMUNITIES, UH,
[01:18:22] DISCONNECTED FROM SOME OF THOSE OPPORTUNITIES. AND SO, MR.
[01:18:25] FLOOD, I GUESS WHEN I'M THINKING THROUGH ROUGHLY HALF OF
[01:18:28] AMERICANS STILL NOT PARTICIPATING IN THE STOCK
[01:18:31] MARKET FROM THE CHAMBER'S PERSPECTIVE, WHAT ARE THE
[01:18:34] BIGGEST BARRIERS KEEPING FAMILIES, PARTICULARLY IN RURAL
[01:18:37] AND UNDERSERVED COMMUNITIES, FROM BECOMING LONG TERM
[01:18:41] INVESTORS? AND WHAT POLICIES
[01:18:42] COULD SAFELY EXPAND THAT PARTICIPATION?
[01:18:45] >> THAT'S A VERY FAIR QUESTION. I THINK WE SHOULD ALL REMIND.
[01:18:49] REMEMBER THAT, UM, ACCESS TO, 401 PLANS IS ALMOST AT AN ALL
[01:18:52] TIME HIGH. SO THE ABILITY TO
[01:18:56] ACCESS SAVINGS PLANS IS
[01:18:57] RELATIVELY HIGH. THE ABILITY TO
[01:19:02] KNOW THAT YOU CAN IS NOT THAT HIGH OR HOW TO DO IT. AND OF COURSE, MAKING SURE WE HAVE THE
[01:19:05] MONEY TO INVEST IS, IS PROBLEM NUMBER ONE. BUT WHAT WE CAN TALK
[01:19:07] ABOUT IS CREATING THAT ACCESS. SO I THINK THERE'S THREE
[01:19:10] ASPECTS. ONE, FINANCIAL LITERACY IS EXCEPTIONALLY IMPORTANT. TWO,
[01:19:15] I THINK IT'S REALLY IMPORTANT TO
[01:19:17] SEE WHAT THE SEC SMALL BUSINESS ADVISORY COUNCIL IS DOING. IT IS
[01:19:21] PUTTING OUT A LOT OF INFORMATION ABOUT NOT ONLY HOW CAN WE HELP
[01:19:24] SMALL BUSINESSES AND STATE AND LOCAL AREAS, BUT HOW CAN WE HELP INVESTORS GET INVOLVED? THREE, I
[01:19:28] THINK YOU HAVE A BILL ON CROWDFUNDING. IT'S A IT'S A
[01:19:31] SMALL WAY TO INCREASE THE POOL, TO ALLOW PEOPLE TO, TO
[01:19:33] PARTICIPATE IN INVESTMENTS. UH,
[01:19:36] AND FOR, AS WE'VE ALL TALKED
[01:19:38] ABOUT TODAY, MAKING SURE THAT NO MATTER WHAT AMERICAN YOU ARE,
[01:19:41] YOU HAVE THE ABILITY TO INVEST IN THE PRIVATE MARKETS, THAT
[01:19:45] MONEY THEN GETS RECYCLED BACK OUT IN THE ECONOMY. >> THANK YOU, I YIELD BACK.
[01:19:48] >> THANK YOU, SENATOR MORENO.
[01:19:50] >> THANK YOU, MR. PRESIDENT.
[01:19:57] >> GOT JOKES, I LIKE IT. THIS IS GOOD, THIS IS GOOD. THIS IS A
[01:20:01] STIMULATING PART OF THE CONVERSATION WE'RE ABOUT TO HAVE. UH.
[01:20:04] >> I'LL START WITH YOU, BECAUSE, I MEAN, I'M SURE WE'VE
[01:20:07] TURNED THIS INTO MUST WATCH TV ALREADY, BUT, UH, FOR THE
[01:20:11] AVERAGE AMERICAN THAT COULD BE WATCHING THIS, COULD YOU JUST EXPLAIN IN VERY SIMPLE TERMS,
[01:20:15] WHAT DOES THIS MEAN TO BE AN
[01:20:19] ACCREDITED INVESTOR? >> UM, BASICALLY, AN ACCREDITED
[01:20:20] INVESTOR IS A SOPHISTICATED INVESTOR THAT HAS THE
[01:20:24] OPPORTUNITY TO PARTICIPATE IN PRIVATE OFFERINGS.
[01:20:27] >> BUT SOPHISTICATED INVESTORS, SUBJECTIVE IS THEIR OBJECTIVE MEASUREMENT.
[01:20:31] >> THE ABSOLUTE ONLY ONE THAT YOU HAVE ON THE TABLE RIGHT NOW
[01:20:34] IS A SIMPLE WEALTH AND INCOME TEST. AND IS THAT, YOU KNOW, SO IF YOU THINK. >> ABOUT IT, WHAT IS WHAT IS THE
[01:20:37] WEALTH? UM. >> IT'S, IT'S HOW MUCH, HOW MUCH HOUSEHOLD MONEY. >> AND HOW.
[01:20:41] >> MUCH IS THAT? HOW MUCH INCOME? >> WHAT'S THE NUMBER?
[01:20:43] >> IT'S LIKE 200, THOUSAND AND A. >> MILLION, 250,000. YEAH. OUT
[01:20:47] OF ANY HOME EQUITY. >> YEAH.
[01:20:48] >> SO, SO $250,000 OF NET NET
[01:20:52] WORTH, $200,000. INCOME, 350,000 HOUSEHOLD COMBINED. DOES THAT SOUND RIGHT?
[01:20:55] >> IT'S. YEAH, IT'S, IT'S PRETTY LOW. >> SO SOMEBODY WHO MAKES 50
[01:20:58] GRAND A YEAR IS NOT SOPHISTICATED. >> SO I WOULD SAY THAT IF YOU
[01:21:02] COULD HAVE A PORTFOLIO MANAGER WHO RUNS MILLIONS AND MILLIONS OF DOLLARS, BUT IT'S.
[01:21:06] >> NOT, I'M JUST, I'M JUST SAYING SO THAT IF YOU'RE A WORKING CLASS AMERICAN, IF
[01:21:09] YOU'RE A POLICE OFFICER OR A NURSE WHO MAKES 50, 60, 75 GRAND
[01:21:13] A YEAR, THE GOVERNMENT OF THE UNITED STATES IS NOT CONSIDERED YOU SOPHISTICATED.
[01:21:16] >> CORRECT >> DO YOU GUYS AGREE WITH THAT?
[01:21:19] THAT THAT SOMEBODY WHO MAKES 75 GRAND A YEAR GOES TO WORK EVERY
[01:21:22] DAY, IS RAISING A FAMILY, IS STRUGGLING, HASN'T BUILT A NET
[01:21:25] WORTH UP LIKE THAT, LIKE A
[01:21:28] PEJORATIVE TO SAY THAT THE U.S. GOVERNMENT DOESN'T THINK THEY'RE SOPHISTICATED.
[01:21:32] >> IT SOUNDS LIKE A SYSTEM. WE LEFT TO CREATE ONE OF APTITUDE.
[01:21:35] SO IT SEEMS LIKE WE OUGHT TO CREATE A WAY TO ALLOW ANYBODY WHO'S WILLING TO PUT IN THE
[01:21:39] WORK TO LEARN THE RISKS THEY'RE TAKING ON. >> SO THAT SMART, SO, SO YOU
[01:21:43] MAKE 75 GRAND A YEAR AS A POLICE
[01:21:46] OFFICER OR A NURSE, EMT AUTO
[01:21:49] MECHANIC, SALES CONSULTANT
[01:21:52] YOU'RE NOT SMART OR SOPHISTICATED. IS THAT WHAT, MR. DUMAS? WOULD YOU AGREE WITH
[01:21:56] THAT? >> SO I THINK WE SHOULD TAKE A
[01:21:59] STEP BACK. UM, SO ACCORDING TO THE CURRENT DEFINITION, UH, IF
[01:22:02] YOU HAVE HOUSEHOLD WHO HAS OVER 200,050 THOUSAND, WHATEVER THE
[01:22:06] CASE MAY BE, RIGHT? THE LOSS IS NOT THE SAME. SO IF YOU'RE A POLICE OFFICER AND YOU WERE TO
[01:22:09] INVEST IN THESE ASSETS THAT ARE PROBABLY MORE RISKY THAN A
[01:22:13] TYPICAL ASSET, YOU WILL HAVE AN
[01:22:14] ORDINARY INVESTOR, YOU KNOW, LOSING $50,000 TO A
[01:22:18] SOPHISTICATED INVESTOR MAY BE COST OF DOING BUSINESS. >> NO, NO, THAT WASN'T THE
[01:22:21] QUESTION. I'M SAYING. DOES, IT
[01:22:23] DOES. IS THAT DEFINITIONALLY MAKE YOU NOT VERY SMART OR NOT VERY SOPHISTICATED?
[01:22:27] >> I DON'T THINK SO. I DON'T, I DON'T THINK ANY TYPE OF. >> SO THEN WHY WOULD WE DEFINE
[01:22:30] IT THAT WAY? WHAT'S THE POINT OF THE DEFINITION? IS IT IS IT MEAN
[01:22:34] THAT THE THAT THE. SOME BUREAUCRAT IS SMARTER THAN YOU ARE. >> IT DOESN'T MEAN THAT, SIR,
[01:22:38] BUT I THINK ALSO YOU SHOULD THINK OF THE FACT THAT, YOU
[01:22:40] KNOW, THERE'S, THERE'S DEFINITELY RISK ASPECT TO. >> IT, BUT THEY'RE NOT ABLE TO
[01:22:44] UNDERSTAND THE RISK BECAUSE OF THEIR LEVEL OF INCOME. >> I DON'T KNOW. I CAN'T SPEAK
[01:22:47] ON WHAT LEVEL OF RISK. >> BUT THAT'S THE RULE. THAT'S
[01:22:50] THE LAW TODAY. CORRECT.
[01:22:54] >> ACCORDING TO. MR. >> BUT I JUST, I JUST THINK I JUST THINK THAT'S AN
[01:22:58] EXTRAORDINARILY, UM, PATERNALISTIC VIEW OF THE
[01:23:00] AMERICAN PEOPLE. AND I THINK THE AMERICAN PEOPLE NEED TO KNOW THAT THEY HAVE A GOVERNMENT THAT
[01:23:04] DOESN'T THINK THAT THEY'RE VERY SMART OR VERY SOPHISTICATED BASED ON HOW MUCH MONEY OR NET WORTH THEY HAVE. AND I THINK
[01:23:08] THAT'S, THAT'S ACTUALLY DECENTLY GROTESQUE. FROM MY
[01:23:11] PERSPECTIVE. I THINK THAT'S, UM, YOU KNOW, WE TALK A LOT ABOUT
[01:23:15] WANTING TO ADVOCATE FOR WORKING AMERICANS. I THINK WE SHOULD
[01:23:17] START BY NOT DEMEANING THEM. UH, MR. DUMAS, YOU TALKED ABOUT
[01:23:21] DIGITAL ASSETS. YOU CALL IT CRYPTO. I MEAN, I'M GOING TO I'M GOING TO ASSUME, YOU KNOW,
[01:23:25] THE DIFFERENCE BETWEEN ALL THESE DIGITAL ASSETS. WHAT PERCENTAGE
[01:23:29] OF BLACK AMERICANS HOLD DIGITAL ASSETS?
[01:23:31] >> UH, ACCORDING TO, UH, I THINK A RECENT STUDY IS A LOW
[01:23:34] PERCENTAGE. I THINK OVERALL, NOT JUST BLACK PEOPLE, I THINK.
[01:23:37] >> NO, NO, I'M JUST TALKING ABOUT BLACK AMERICANS. UH, WHAT
[01:23:39] WOULD YOU GUESS? >> I'D PROBABLY SAY 2%.
[01:23:42] >> 2%. AND HOW ABOUT HISPANIC AMERICANS? >> SO I DON'T KNOW THE
[01:23:45] STATISTICS. >> YES. NO. WHITE AMERICANS.
[01:23:49] >> WELL, OVERALL, ACCORDING TO FEDERAL STUDY, UH, FEDERAL RESERVE STUDY, 9% OF AMERICANS,
[01:23:53] ALL AMERICANS OWN.
[01:23:54] >> WOULD YOU BE WOULD YOU BE,
[01:23:58] UH, COMPLETELY AND UTTERLY FLUMMOXED TO KNOW THAT, UH, BLACK AMERICANS HOLD MORE
[01:24:02] DIGITAL ASSETS THAN ANY OTHER
[01:24:04] ETHNIC GROUP? AND IT'S 20%, 19%
[01:24:08] FOR HISPANICS, 18% FOR WHITES. AND WOULD YOU BE EQUALLY
[01:24:11] FLUMMOXED, UH, TO KNOW THAT 66% OF WHITES HOLD STOCKS, 39% OF
[01:24:15] BLACKS HOLD STOCKS, 28% OF
[01:24:18] HISPANICS HOLD STOCKS, MEANING THAT YOU THINK IT'S RISKIER FOR
[01:24:23] THE 6.6 MILLION BLACKS, BLACK AMERICANS THAT HOLD CRYPTO
[01:24:26] ASSETS THAT YOU DON'T THINK
[01:24:28] THEY SHOULD. AND WHO ARE YOU TO
[01:24:31] DECIDE WHETHER THEY SHOULD OR SHOULD NOT?
[01:24:34] >> FIRST, I WOULD SAY I WOULD QUESTION THE ACTUAL STUDY. >> IT'S FROM PEW. YOU CAN LOOK IT UP.
[01:24:38] >> WELL, I'M SURE I WOULD QUESTION WHETHER OR NOT THE 20%,
[01:24:40] YOU KNOW, I WOULD OBVIOUSLY SEE HOW THEY DETERMINED THAT
[01:24:43] DETERMINED, MAKE DETERMINATION. MY WHOLE POINT IS THAT, YOU
[01:24:46] KNOW, IT'S THE IDEA OF CRYPTO PROVIDING THIS ACCESS TO. ALL
[01:24:49] RIGHT. UH, IN A SENSE, WHERE YOU
[01:24:52] PRODUCE THIS TYPE OF PREDATORY INCLUSION TO WHERE SOME PEOPLE
[01:24:56] ARE THINKING THAT THEY CAN HIT IT BIG, RIGHT? >> WELL, BUT SO, SO 6.6 MILLION
[01:24:59] AMERICAN BLACK AMERICANS ARE NOT SOPHISTICATED OR INTELLIGENT
[01:25:03] ENOUGH TO KNOW THAT THEY SHOULD, THEY SHOULD OR SHOULD NOT HAVE BOUGHT DIGITAL ASSETS.
[01:25:07] >> I'M NOT SAYING THAT, SIR. I'M JUST SAYING THAT I FIRST HAVE TO QUESTION THAT NUMBER YOU'RE USING. AND SECOND, I
[01:25:10] WOULD SAY THAT, YOU KNOW, I THINK PEOPLE NEED TO APPRECIATE
[01:25:14] THE RISK, RIGHT? I DON'T KNOW IF THERE'S ENOUGH DISCLOSURE, ENOUGH INFORMATION FOR PEOPLE TO
[01:25:17] UNDERSTAND, APPRECIATE THE RISK, BECAUSE CRYPTO IS A VERY VALUABLE ASSET.
[01:25:21] >> ON BEHALF OF THE 6.6 MILLION BLACK AMERICANS WHO DO. I
[01:25:23] DISAGREE WITH YOU. I WOULD ALSO LIKE, MR. CHAIRMAN, I WILL PRODUCE THE PEW RESEARCH STUDY
[01:25:27] TO BE IN THE RECORD SO THAT
[01:25:29] EVERYBODY CAN VIEW IT.
[01:25:32] >> WITHOUT OBJECTION. SENATOR
[01:25:39] ALSOBROOKS. >> THANK YOU SO MUCH, CHAIR SCOTT, AND RANKING MEMBER
[01:25:43] WARREN, FOR HOLDING THIS IMPORTANT HEARING. THANK YOU, AS
[01:25:45] WELL TO ALL OF OUR WITNESSES WHO ARE HERE TODAY. UH, MY FIRST
[01:25:48] PRIORITY IN OUR COMMITTEE IS PURSUING POLICIES THAT WILL
[01:25:52] CREATE REAL ECONOMIC OPPORTUNITY, ESPECIALLY FOR
[01:25:56] THOSE WHO HAVE NOT HISTORICALLY HAD THAT OPPORTUNITY. THIS MEANS
[01:25:59] ACCESS TO CAPITAL, CREDIT, AND
[01:26:01] MARKETS. AND IT ALSO MEANS
[01:26:04] ROBUST INVESTOR PROTECTIONS. MY
[01:26:06] FIRST QUESTION IS FOR MR. BENSON AND FOR MR. FLOOD. I JOIN MY
[01:26:10] COLLEAGUE, SENATOR MCCORMICK, IN
[01:26:13] INTRODUCING S 1808, WHICH IS THE ACCESS TO SMALL BUSINESS
[01:26:17] INVESTOR CAPITAL ACT, WHICH
[01:26:18] WOULD SUPPORT SMALL AND MEDIUM SIZED BUSINESSES BY MAKING IT,
[01:26:22] UM, BY MAKING IT EASIER FOR BUSINESS DEVELOPMENT COMPANIES
[01:26:25] TO ATTRACT AND DEPLOY CAPITAL.
[01:26:28] BDCS HAVE INVESTED, FOR EXAMPLE,
[01:26:31] OVER $3.3 BILLION IN MARYLAND BUSINESSES OVER THE YEARS. AND
[01:26:34] IF YOU JUST TAKE, FOR EXAMPLE, PLANET FITNESS, WHICH WAS FORMED
[01:26:38] BY REALLY INNOVATIVE COUPLE WHO MET AT TOWSON UNIVERSITY AND NOW
[01:26:41] OPERATE 30 PLANET FITNESS GYMS
[01:26:45] IN THE DMV AREA. WELL, IN AUGUST
[01:26:48] OF 2019, IT WAS A BDC THAT
[01:26:50] PROVIDED A $50 MILLION LOAN TO
[01:26:53] PLANET FITNESS TO FINANCE GROWTH
[01:26:55] AND HIRING. AND UNFORTUNATELY,
[01:26:57] THERE'S A 2006 SEC RULE THAT
[01:27:00] UNINTENTIONALLY LEADS TO DOUBLE COUNTING AND INFLATING OPERATING
[01:27:04] EXPENSES. AND THIS HAS MADE BDC
[01:27:06] LESS ATTRACTIVE TO INVESTORS. MARYLAND IS HOME TO MANY, MANY
[01:27:10] BDCS IN. THIS PROBLEM MEANS THAT LESS CAPITAL IS GOING TO
[01:27:13] MARYLAND BUSINESSES. UM, OUR BILL PRESENTS A VERY SIMPLE FIX.
[01:27:17] AND SO I'M AWARE OF RECENT REPORTING ABOUT RISKS IN THE
[01:27:21] PRIVATE CREDIT MARKETS AND FULLY SUPPORT ROBUST SUPERVISION,
[01:27:24] OVERSIGHT, AND TRANSPARENCY THERE. BUT THIS BILL, I BELIEVE,
[01:27:27] ADDRESSES A DIFFERENT AND UNINTENDED PROBLEM. SO MR. FLOOD
[01:27:31] AND MR. BENSON, IF YOU COULD JUST EACH DESCRIBE IN SIMPLE
[01:27:35] TERMS HOW THIS BILL WOULD RESULT IN MORE CAPITAL FLOWING TO SMALL
[01:27:39] AND MEDIUM SIZED BUSINESSES IN MARYLAND, AND WHY THIS SOURCE OF
[01:27:43] CAPITAL IS IMPORTANT.
[01:27:46] >> SURE. I'LL I'LL START WITH IT'S THIS IS A LOT OF PEOPLE
[01:27:50] CALL IT COMMON SENSE. SOME CALL
[01:27:51] IT, UH, DOUBLE COUNTING, BUT I
[01:27:54] CALL IT RIGHT NOW. WE HAVE A, A
[01:27:57] MISREPRESENTED DISCLOSURE TO
[01:27:59] INVESTORS BY REGULATION. AND IF
[01:28:02] WE FIX IT, TWO THINGS HAPPEN. WE ACTUALLY HAVE A DISCLOSURE THAT
[01:28:05] MEANS SOMETHING TO INVESTORS. TWO, WE LOWER THE ACTUAL, WE
[01:28:08] SHOW THE ACTUAL COSTS OF THE
[01:28:11] BDC, WHICH THEN ALLOWS THESE
[01:28:13] FUNDS TO BE INCLUDED IN INDICES,
[01:28:16] WHICH MAKES THEM MORE VALUABLE, MORE INVESTORS AND MORE MONEY TO
[01:28:19] PUT OUT IN THE ECONOMY
[01:28:23] >> I AGREE WITH WITH MR. FLOOD, AND I JUST ADD, BDCS HAVE PROVEN
[01:28:25] TO BE A REALLY TREMENDOUS SOURCE OF FUNDING FOR MEZZANINE
[01:28:29] FUNDING, IN PARTICULAR FOR SMALL
[01:28:32] AND EMERGING COMPANIES. UM, AND
[01:28:35] MARYLAND, I MIGHT ADD, IS ALSO BEEN HOME TO A NUMBER OF THE
[01:28:38] MORE PROMINENT BDC, UH,
[01:28:40] COMPANIES. SO, UH, I THINK THE,
[01:28:43] YOUR LEGISLATION MAKES A LOT OF SENSE IN CORRECTING THAT ERROR.
[01:28:46] >> THANK YOU. MR. DUMAS. UM,
[01:28:50] I'M ALL FOR CUTTING RED TAPE, AND I BELIEVE IT'S IMPORTANT
[01:28:54] THAT WE MAINTAIN REALLY IMPORTANT, ROBUST INVESTOR
[01:28:57] PROTECTIONS THAT HAVE MADE OUR FINANCIAL MARKETS THE ENVY OF THE WORLD. AND I'D LIKE TO
[01:29:00] THANK MY COLLEAGUE, SENATOR REID, FOR HIS LEADERSHIP IN
[01:29:03] INTRODUCING LEGISLATION TO CODIFY OUR INSIDER TRADING LAWS.
[01:29:07] AND SO I'M A PROUD CO-SPONSOR OF THIS BILL, AS ARE MANY OF MY
[01:29:11] COLLEAGUES. AND SO CAN YOU
[01:29:14] EXPLAIN WHY STRONGER GUARDRAILS, LIKE INSIDER TRADING, PROHIBITIONS AND MARKET
[01:29:17] TRANSPARENCY MEASURES, ARE
[01:29:20] ESSENTIAL FOR CAPITAL FORMATION TO HAPPEN?
[01:29:22] >> THANK YOU FOR THE QUESTION,
[01:29:24] SENATOR. YOU CANNOT HAVE CAPITAL FORMATION WITHOUT INVESTOR
[01:29:28] CONFIDENCE. SO IF YOU HAVE INSIDER TRADING, YOU HAVE
[01:29:31] ORDINARY INVESTORS WHO BELIEVE THAT, UM, THEY'RE NOT IN THE
[01:29:34] SAME LEVEL PLAYING FIELD AS A SOPHISTICATED INVESTOR. SO YOU
[01:29:37] HAVE TO HAVE INVESTOR CONFIDENCE IN ORDER TO BUILD CAPITAL
[01:29:41] FORMATION. >> THANK YOU. UM, ALSO, MR.
[01:29:43] DUMAS, AS I SAID IN MY OPENING REMARKS, I WANT MY CONSTITUENTS
[01:29:46] TO BE ABLE TO BUILD A GENERATIONAL WEALTH. AND I'VE
[01:29:49] OFTEN SAID THAT I'M NOT OFFENDED
[01:29:52] BY WEALTH. I JUST WANT MORE PEOPLE TO HAVE ACCESS TO WEALTH.
[01:29:55] AND SO THIS MEANS THAT WE MUST OPEN AND BE MORE THOUGHTFUL IN
[01:29:59] CONSIDERING MEASURES THAT BROADEN ACCESS TO INVESTING IN
[01:30:02] CERTAIN PRODUCTS. SO MAIN STREET
[01:30:05] INVESTORS ARE CAPITAL PROVIDERS
[01:30:07] THEMSELVES. AND IF CONGRESS CONSIDERS LEGISLATION THAT
[01:30:10] BROADENS ACCESS TO INVESTING, WHAT GUARDRAILS DO YOU BELIEVE
[01:30:14] THAT CONGRESS SHOULD INCLUDE >> THANKS FOR YOUR QUESTION, SENATOR. I THINK ANYTIME YOU'RE
[01:30:17] TALKING ABOUT BROADENED ACCESS OR PROVIDING INFORMATION OR
[01:30:21] PROVIDING ACCESS TO ALL, I THINK THE FOUNDATION QUESTION SHOULD
[01:30:25] BE THAT WE SHOULD NOT PROVIDE
[01:30:27] ACCESS TO EVERYONE WITHOUT INVESTMENT PROTECTION,
[01:30:30] DISCLOSURE, AND TRANSPARENCY. I THINK THAT WHAT CONGRESS CAN DO IS THINK OF ANY TYPE OF
[01:30:34] LEGISLATION. BUT THE FIRST THING YOU SHOULD THINK ABOUT IS, WILL
[01:30:37] THIS LEGISLATION COST? IS IT
[01:30:39] SOMETHING THAT HAS A HAS A DETRIMENT TO, TO PEOPLE WHO
[01:30:43] ACTUALLY TRYING TO PROVIDE. SO I THINK THAT WHEN ANYTIME YOU'RE TRYING TO THINK OF ACCESS OF
[01:30:46] POLICIES, YOU ALSO, IN THE BACK OF YOUR MIND, THINK ABOUT INVESTMENT PROTECTION,
[01:30:50] TRANSPARENCY, AND THINGS OF THE SUCH.
[01:30:54] >> THANK YOU. >> THANK YOU, SENATOR ALSOBROOKS. THANKS TO ALL FOUR WITNESSES FOR BEING WITH US
[01:30:57] TODAY. WE REALLY APPRECIATE YOUR INSIGHT, YOUR