Original Broadcaster Captioning (Enhanced). Treat it as a searchable index of what was broadcast, not a quotation record.
00:00:00THEY OPPOSE THE REMOVALS THAT
00:00:03DETENTION MAKES POSSIBLE. THEN, WHEN THE SYSTEM SHOWS ANY
00:00:07PRESSURE, THEY POINT TO THAT PRESSURE AS PROOF THAT
00:00:11ENFORCEMENT ITSELF MUST END. THE
00:00:14SEQUENCE NEVER CHANGES. DEFUND,
00:00:16OBSTRUCT INVESTIGATE, ABOLISH
00:00:21THE GOAL, FOR MANY DEMOCRATS IS
00:00:23VERY CLEAR. IT'S NOT BETTER
00:00:25DETENTION FACILITIES. IT'S NO DETENTION AT ALL. THE BILL DOES
00:00:29NOT MAKE ONE DETENTION FACILITY
00:00:32SAFER. IT SHUTS DOWN A FACILITY
00:00:34AND PUSHES THE PROBLEM SOMEWHERE
00:00:37ELSE. MADAM PRESIDENT, A SERIOUS
00:00:40SENATE WOULD NOT WOULD LET THE
00:00:42CURRENT INVESTIGATION RUN ITS COURSE. CORRECT FAILURES AND
00:00:45STRENGTHEN THE SYSTEM. AN UNSERIOUS SENATE SHUTS DOWN THE
00:00:49BUILDING AND PRETENDS THE LAW NO
00:00:51LONGER NEEDS ENFORCEMENT. I
00:00:55OBJECT TO USING A PENDING INVESTIGATION AS A PLOY TO
00:00:59DISMANTLE LAW ENFORCEMENT. I
00:01:00OBJECT TO DEFUNDING ICE AND THEN
00:01:03BLAMING ICE FOR LACKING
00:01:06RESOURCES, FIX WHAT'S BROKEN, HOLD WRONGDOERS ACCOUNTABLE,
00:01:10PROTECT EVERY PERSON IN FEDERAL CUSTODY, OF COURSE. BUT WE MUST
00:01:13ENFORCE THE LAW. AND FOR THOSE REASONS, MR. PRESIDENT, I
00:01:16OBJECT. >> OBJECTION IS HEARD.
00:01:19>> MR. PRESIDENT. >> RECOGNIZE THE SENATOR FROM
00:01:23NEW JERSEY. >> I APPRECIATE THE GOOD FAITH. UH, WORDS OF MY COLLEAGUE, AND I
00:01:25WILL TAKE IT TO HEART THAT HE IS AGAINST UNNECESSARY DEATHS. THAT
00:01:29GEO GROUP SHOULD BE INVESTIGATED THOROUGHLY AND HELD ACCOUNTABLE. I DO WANT TO MAKE A COUPLE
00:01:33FOLLOW UP POINTS. FIRST OF ALL,
00:01:36I LIVE IN NEWARK, NEW JERSEY. I USED TO RUN THE POLICE
00:01:40DEPARTMENT AS ITS MAYOR. THERE'S NOBODY THAT FEELS MORE
00:01:43URGENCY FOR PUBLIC SAFETY IN MY
00:01:45CITY THAN I DO. AND I HIRED AS
00:01:49MANY LAW ENFORCEMENT OFFICERS, WORKED WELL WITH ICE. I WORKED
00:01:53WELL WITH, UH, FBI, DOJ, ALL THE
00:01:56FEDERAL LAW ENFORCEMENT
00:01:57OFFICERS. IN A COORDINATED
00:02:01EFFORT TO PROTECT MY COMMUNITY. THIS IDEA THAT DEMOCRATS WANT TO
00:02:03DEFUND ICE IS WRONG. I ACTUALLY
00:02:05BELIEVE WE NEED LAW ENFORCEMENT IN OUR COMMUNITIES TO KEEP US
00:02:09SAFE. I WANT TO MAKE SURE THAT
00:02:11WE DO IT IN A WAY THAT COMPORTS
00:02:14WITH OUR VALUES AND OUR DECENCY.
00:02:16LET'S BE CLEAR. THERE IS NO LAW
00:02:20ENFORCEMENT AGENCY IN AMERICA THAT HAS MORE MONEY THAN ICE HAS
00:02:23RIGHT NOW. THIS IDEA THAT DEMOCRATS HAVE DONE ANYTHING TO
00:02:27DEFUND IT. RIGHT NOW, ICE HAS
00:02:28MORE THAN THE FBI, MORE THAN THE
00:02:32ATF, MORE THAN THE COAST GUARD
00:02:37COMBINED. IT IS A WEALTH MOST
00:02:40WELL-FUNDED AGENCY. THERE IS.
00:02:43AND THE IDEA THAT THEY CANNOT
00:02:46PROVIDE FOR THE BASIC NEEDS OF
00:02:48PEOPLE THAT ARE IN THEIR
00:02:50FACILITIES IS A LIE. THIS IS NOT A MONEY PROBLEM. ICE HAS ALL THE MONEY THEY NEED, AND THEY'RE
00:02:54SHOWING AN INABILITY TO KEEP
00:02:57THEIR INMATES ALIVE. NOW, I LIKE
00:03:00MY COLLEAGUES METAPHOR THAT IF A
00:03:02BRIDGE IS CLOSED, IS BROKEN, YOU
00:03:05CLOSE THE BRIDGE. I KNOW THIS
00:03:06BECAUSE, AGAIN, I WAS A MAYOR.
00:03:10IF PEOPLE WERE FALLING THROUGH
00:03:10HOLES IN A BRIDGE, WE CLOSED THE
00:03:14BRIDGE. DO THE INSPECTIONS, BUT DON'T LEAVE PEOPLE IN A
00:03:17HELLSCAPE WHERE PEOPLE CONTINUE TO DIE IN THAT FACILITY, TO KEEP
00:03:20THAT OPEN IS IRRESPONSIBLE. ICE
00:03:23HAS ENOUGH MONEY TO TRANSFER PEOPLE THAT ARE A REAL THREAT TO
00:03:26OTHER FACILITIES. ICE HAS ENOUGH
00:03:30MONEY TO RUN AROUND MY STATE
00:03:33OVERSPEND FOR REAL ESTATE, AS THEY'VE DONE IN ONE OF MY
00:03:37TOWNS, THROWING CASH AROUND IN A WAY THAT SHOULD OFFEND
00:03:40REPUBLICANS IN ANY FISCAL, ANYBODY FISCALLY PRUDENT, BUT
00:03:43NOT HOLD THE PEOPLE ACCOUNTABLE.
00:03:47YES, IF SOMETHING IS BROKEN, YOU
00:03:48STOP USING IT. IF PEOPLE ARE
00:03:52DYING BECAUSE OF A DEFECT IN A
00:03:53CAR, YOU DON'T USE IT. IF
00:03:56PEOPLE ARE FALLING THROUGH HOLES IN A BRIDGE, YOU CLOSE IT. WE
00:04:00HAVE A RESPONSIBILITY FOR
00:04:02TAXPAYERS MONEY, AND WE HAVE SHOVELED THIS AGENCY MORE MONEY
00:04:05THAN ANY LAW ENFORCEMENT AGENCY THERE IS. AND THEN WE'RE NOT
00:04:09DOING WHAT'S NECESSARY TO HOLD THESE PEOPLE, LIKE THE GAO
00:04:13GROUP, ACCOUNTABLE. I WILL
00:04:19CONTINUE TO STAND FOR LAW ENFORCEMENT. ONE OF THE REASONS
00:04:22WHY I GOT ELECTED BY MY STATE,
00:04:25BECAUSE WE DROVE CRIME DOWN IN THE CITY OF NEWARK, AND
00:04:27EVERYBODY SAW IT. INVESTMENT
00:04:29CAME BACK, POPULATION CAME BACK.
00:04:32I BELIEVE IN COMMUNITY, IN CREATING SAFETY IN MY COMMUNITY.
00:04:36THIS IS NOT ABOUT THE
00:04:39ACCUSATIONS THAT SOMEHOW DEMOCRATS DON'T BELIEVE WE SHOULD HAVE STRONG LAW
00:04:42ENFORCEMENT. IF ANYBODY BELIEVES
00:04:44IN THAT, I KNOW MY RECORD HERE
00:04:48IN THE SENATE SPEAKS TO THAT. HOW CAN WE STAND HERE AND ALLOW
00:04:52A FACILITY IN WHICH MULTIPLE PEOPLE HAVE DIED IN THE MOST
00:04:56GRUESOME WAYS? HOW CAN WE ALLOW
00:04:57AN ORGANIZATION THAT IS SUPPOSED TO BE PROVIDING HEALTH CARE, BUT
00:05:01DENYING IT? HOW CAN WE ALLOW
00:05:04THIS IN ACCORDANCE WITH OUR OWN
00:05:08VALUES? ENOUGH IS ENOUGH. DELANEY HALL IS A NIGHTMARE. I DID NOT COME TO THE FLOOR TO
00:05:12TALK ABOUT CLOSING FACILITIES ALL OVER THE COUNTRY. I'M
00:05:16TALKING ABOUT ONE FACILITY WITH
00:05:17A RECORD FOR PEOPLE DYING
00:05:21UNNECESSARILY, WITH A RECORD OF PEOPLE BEING DENIED MEDICAL CARE, WITH A RECORD, PEOPLE
00:05:24BEING DENIED HEALTHY FOOD. ONE
00:05:26FACILITY THAT IS FAILING, AND TO KEEP IT OPEN FOR THIS BODY TO
00:05:30KEEP IT OPEN, WAITING FOR
00:05:31SOMETHING TO CHANGE WHILE MORE
00:05:34PEOPLE ARE SUFFERING AND MAY
00:05:35DIE, IS IRRESPONSIBLE BEYOND
00:05:38COMPARE I BELIEVE THERE'S COMMON
00:05:43GROUND ON BOTH SIDES OF THE AISLE WHERE WE CAN ACHIEVE THE
00:05:46HIGHEST LEVELS OF SAFETY AND
00:05:50ALSO ENSURE THAT WITHIN OUR
00:05:52INCARCERATED FACILITIES, PEOPLE
00:05:55ARE TREATED WITH DIGNITY. I HAVE
00:05:58WORKED ACROSS THE AISLE WITH
00:06:00SENATOR LINDSEY GRAHAM, WITH
00:06:03SENATOR CHUCK GRASSLEY, WITH SENATOR MIKE LEE, TO IMPROVE
00:06:07CONDITIONS IN THE BUREAU OF
00:06:08PRISONS. I HOPE WHEN IT COMES TO
00:06:11ICE FACILITIES IN THIS PRIVATE,
00:06:12FOR PROFIT COMPANY WHERE PEOPLE
00:06:15ARE DYING, THAT WE CAN FIND SOME
00:06:17COMMON GROUND TO STOP THIS NIGHTMARE FROM HAPPENING. THANK
00:06:21YOU, MR. PRESIDENT.
00:06:33>> AND WE'RE LIVE FROM THE US SENATE, WAITING FOR A SENATOR TO
00:06:37COME TO THE FLOOR TO SPEAK. LAWMAKERS TODAY SCHEDULED TO
00:06:39WORK ON 74 EXECUTIVE AND JUDICIAL NOMINATIONS. BUT WE'VE
00:06:42SEEN LITTLE DEBATE ON THOSE IN THE UPPER CHAMBER. MUCH OF THE SENATE'S WORK TAKING PLACE OFF
00:06:46THE FLOOR AS REPUBLICANS WRESTLE WITH HOW TO PROCEED WITH A
00:06:50NUMBER OF ISSUES, INCLUDING THE FARM BILL, WHICH HAS RUN INTO PROBLEMS GETTING OUT OF
00:06:54COMMITTEE. TODD BLANCHE IS
00:06:55ATTORNEY GENERAL. NOMINATION AND TEMPORARY GOVERNMENT FUNDING
00:06:59THROUGH DECEMBER 11th. WITH SUCH A SMALL MAJORITY, REPUBLICAN LEADERS CAN ONLY LOSE A COUPLE
00:07:03OF VOTES IF THEY HOPE TO PASS ANY LEGISLATION. ONE MAJOR
00:07:06FACTOR HAS BEEN ATTENDANCE, ESPECIALLY FROM FORMER MAJORITY
00:07:08LEADER AND SENIOR SENATOR FROM KENTUCKY, MITCH MCCONNELL. HE'S
00:07:12BEEN OUT FOR MEDICAL REASONS FOR ABOUT SEVEN WEEKS WHILE
00:07:15REHABBING. WELL, WE'VE GOTTEN AN UPDATE. THE SENATOR'S OFFICE
00:07:18RELEASED THIS STATEMENT EARLIER TODAY. I WAS DISCHARGED FROM THE
00:07:22REHABILITATION CENTER TO CONTINUE MY RECOVERY AT HOME.
00:07:25ELAINE AND I ARE GRATEFUL FOR THE MANY WELL-WISHES AND SUPPORT
00:07:29FROM FRIENDS, COLLEAGUES, AND KENTUCKIANS, AND FOR THE
00:07:32ATTENTIVE CARE I'VE RECEIVED FROM EXCELLENT DOCTORS, NURSES,
00:07:34THERAPISTS, AND HOSPITAL STAFF. ON THE ADVICE OF MY DOCTORS,
00:07:37I'LL MAINTAIN AN INTENSIVE REGIMEN OF PHYSICAL THERAPY FROM
00:07:41HOME DURING THE STATE WORK PERIOD, AND I'LL CONTINUE TO ENGAGE WITH MY STAFF AND
00:07:45COLLEAGUES ON IMPORTANT SENATE
00:07:49BUSINESS.
00:08:20>> WRIGHT. UTERUS. GOOD MORNING. I CALL THIS HEARING TO ORDER.
00:08:24TODAY, THE COMMITTEE MEETS TO DISCUSS HOW WE CAN MAKE IT
00:08:28EASIER FOR ENTREPRENEURS, SMALL BUSINESSES, GROWING COMPANIES, AND EVERYDAY INVESTORS TO BUILD
00:08:32OPPORTUNITY IN AMERICA THROUGH
00:08:34CAPITAL FORMATION. CAPITAL FORMATION MAY SOUND LIKE A WALL
00:08:37STREET TERM, BUT AT ITS CORE,
00:08:39THIS IS ABOUT MAIN STREET IN
00:08:41AMERICA. IT GIVES LOCAL BUSINESSES AND EVERYDAY
00:08:45INVESTORS THE TOOLS TO TURN GOOD IDEAS INTO JOBS, GROWTH, AND A
00:08:47STRONGER FUTURE FOR THEIR OWN COMMUNITIES. THE BEST IDEAS IN
00:08:50AMERICA DO NOT COME JUST FROM
00:08:52NEW YORK OR SAN FRANCISCO, OR A
00:08:56HANDFUL OF OTHER COMMUNITIES.
00:08:58THEY COME FROM PLACES IN SOUTH CAROLINA, LIKE IRMO,
00:09:02SIMPSONVILLE, AND COMMUNITIES
00:09:02ALL ACROSS AMERICA. BUT TOO
00:09:06OFTEN, ACCESS TO CAPITAL IS CONCENTRATED IN TOO FEW PLACES
00:09:09AND IN TOO FEW HANDS. THAT >> THAT MEANS AN ENTREPRENEUR IN
00:09:13SOUTH CAROLINA MAY HAVE A HARDER
00:09:16TIME ACCESSING CAPITAL THAN SOMEONE WITH THE SAME IDEA. IN
00:09:20SILICON VALLEY. THAT SHOULD NOT BE THE CASE. OPPORTUNITY SHOULD
00:09:23NOT BE DICTATED BY YOUR ZIP
00:09:24CODE, AND IT SHOULD NOT TAKE
00:09:29WEALTH TO CREATE WEALTH. MY PRIORITIES ARE SIMPLE TO EXPAND
00:09:32INVESTMENT OPPORTUNITIES FOR EVERYDAY AMERICANS AND INCREASE
00:09:36WEALTH OUTSIDE OF THE HANDS OF A
00:09:39CONCENTRATED FEW. TO DO THIS, WE
00:09:40NEED HELP. TO HELP COMPANIES GO
00:09:43PUBLIC AND STAY COMPANY AND STAY PUBLIC. AND WE NEED TO HELP
00:09:47SMALL AND MEDIUM SIZED BUSINESSES ACCESS THE CAPITAL.
00:09:50THEY NEED TO GROW HIGHER AND COMPETE. THAT'S GOOD NEWS IN SO
00:09:53MANY WAYS. AND IT IS NOT
00:09:55STARTING FROM SCRATCH. LAST
00:09:58CONGRESS, I INTRODUCED THE
00:10:00EMPOWERING MAIN STREET IN AMERICA ACT BECAUSE TOO MANY
00:10:04AMERICANS LACK ACCESS TO OUR
00:10:06CAPITAL MARKETS. MSA WOULD HAVE
00:10:09EXPANDED THE WAYS EVERYDAY AMERICANS CAN INVEST IN GROWING
00:10:11BUSINESSES. AND IT WOULD HAVE TAILORED REGULATIONS FOR
00:10:14COMPANIES AT EVERY STAGE OF
00:10:16GROWTH. FROM A STARTUP. AND
00:10:20BEYOND. SINCE THEN, MEMBERS ON BOTH SIDES OF THE AISLE HAVE
00:10:23ALSO PUT FORWARD COMMON SENSE
00:10:26PROPOSALS THAT CAN HELP MOVE US
00:10:27IN THE RIGHT DIRECTION. I'VE
00:10:31TEAMED UP WITH SENATOR WARNER ON
00:10:34LEGISLATION TO HELP EMERGING COMPANIES, GROWTH COMPANIES
00:10:37SCALE, AND ULTIMATELY ACCESS THE
00:10:40PUBLIC MARKET. SENATOR BRITT HAS INTRODUCED LEGISLATION
00:10:44COSPONSORED BY SENATOR WARNOCK, TO LEVEL THE PLAYING FIELD
00:10:46BETWEEN 400 AND 3 B'S AND 401(K)
00:10:48PLANS, GIVING 15 MILLION
00:10:52NONPROFIT EMPLOYEES FROM HOSPITAL WORKERS TO TEACHERS
00:10:56ACCESS TO THE SAME LOWER COST
00:11:00INVESTMENT OPTIONS AS EVERYDAY 401(K) SAVERS. ALREADY, 13
00:11:04MEMBERS OF THIS COMMITTEE HAVE
00:11:06SIGNED ON AS CO-SPONSORS. SENATOR MCCORMICK AND SENATOR
00:11:10ALSOBROOKS HAVE INTRODUCED LEGISLATION TO ELIMINATE RED
00:11:14TAPE THAT INFLATES THE REPORTED
00:11:17COST OF BUSINESS DEVELOPMENT COMPANIES, MAKING IT MORE
00:11:19ATTRACTIVE FOR INVESTORS TO PUT CAPITAL INTO THE SMALL AND
00:11:22MIDDLE MARKET BUSINESSES THAT
00:11:26BDCS ARE BUILT TO SERVE. AND THERE ARE MORE IDEAS WE CAN
00:11:29BUILD ON. THAT IS WHY THIS
00:11:32COMMITTEE IS WORKING TO UPDATE THE CAPITAL FORMATION PACKAGE
00:11:35THAT I PUT TOGETHER. OUR CAPITAL
00:11:39MARKETS SHOULD HELP A COMPANY GROW FROM AN IDEA TO A SMALL
00:11:42BUSINESS, FROM A SMALL BUSINESS,
00:11:43TO A LARGER EMPLOYER, AND MAYBE ONE DAY TO THE NEXT, GREAT
00:11:47PUBLIC COMPANY. THAT IS THE POINT OF TODAY'S HEARING. WE
00:11:51WANT TO HEAR FROM OUR WITNESSES ABOUT WHAT IT IS, WHAT IS
00:11:55WORKING, WHAT IS NOT WORKING, AND WHERE CONGRESS SHOULD FOCUS
00:11:58OUR ATTENTION TO MAKE CAPITAL
00:12:01FORMATION EVEN EASIER. THIS COMMITTEE HAS SHOWN TIME AND
00:12:05TIME AGAIN THAT WE CAN WORK TOGETHER ON SERIOUS ISSUES THAT
00:12:08MATTER TO THE AMERICAN PEOPLE. HELPING A SMALL BUSINESS GROW IS
00:12:12NOT ABOUT POLITICS. GIVING
00:12:14FAMILIES A CHANCE TO INVEST IS
00:12:17NOT PARTIZAN. KEEPING AMERICA
00:12:19THE BEST PLACE IN THE WORLD TO
00:12:21BUILD THE FUTURE SHOULD NOT BE
00:12:25CONTROVERSIAL. CAPITAL FORMATION SHOULD UNITE US. SO TODAY,
00:12:26LET'S FOCUS ON PRACTICAL
00:12:30SOLUTIONS FOR EVERY COMMUNITY,
00:12:31NOT JUST A FEW ZIP CODES. I LOOK
00:12:34FORWARD TO HEARING OUR TESTIMONY FROM OUR WITNESSES. RANKING
00:12:38MEMBER, YOU ARE NOW RECOGNIZED. >> THANK YOU, MR. CHAIRMAN, AND
00:12:41THANK YOU FOR HOLDING THIS HEARING. I BELIEVE IN MARKETS,
00:12:44FAIR AND TRANSPARENT. MARKETS
00:12:47PROMOTE INNOVATION. THEY POWER ECONOMIC GROWTH. THEY GIVE
00:12:50EVERYONE A CHANCE TO THRIVE. THE
00:12:54CONFIDENCE THAT INVESTORS AT HOME AND AROUND THE WORLD PLACE
00:12:58IN THE INTEGRITY OF OUR MARKETS IS A CRITICAL PART OF WHY OUR
00:13:02NATION'S ECONOMY IS THE ENVY OF
00:13:05THE WORLD. BUT UNDER PRESIDENT
00:13:07TRUMP, THE CORRUPTION IS SO
00:13:10MASSIVE AND SO UNPRECEDENTED
00:13:13THAT IT IS FUNDAMENTALLY CHANGED OUR MARKETS, RIGGING THEM FOR
00:13:17THE WEALTHY AND THE WELL
00:13:19CONNECTED. THOSE WITH MONEY AND POWER GET SPECIAL TREATMENT,
00:13:23WHILE FAMILIES, SMALL BUSINESSES
00:13:27AND COMMUNITIES PAY THE PRICE. WE SHOULD BE WORKING TOGETHER TO
00:13:29MAKE OUR MARKET STRONGER AND TO ENSURE THAT THEY SERVE AMERICAN
00:13:33BUSINESSES AND AMERICAN FAMILIES. I KNOW THAT WE SHARE
00:13:37THAT GOAL. OUR NUMBER ONE JOB,
00:13:40NUMBER ONE, SHOULD BE TO PUT A
00:13:42STOP TO THIS CORRUPTION AND TO
00:13:47PROTECT INVESTORS, UNDERSTAND
00:13:48THE CORRUPTION IS EVERYWHERE.
00:13:53IT'S BEEN ABOUT 15 MONTHS SINCE PAUL ATKINS WAS SWORN IN TO LEAD
00:13:55THE TRUMP SEC. AT EVERY TURN. HE
00:13:59HAS LET SCAMMERS OFF THE HOOK
00:14:01AND ROLLED BACK THE RULES THAT PROTECT INVESTORS FROM GETTING
00:14:05CHEATED. CORRUPTION. CORRUPTION.
00:14:07CORRUPTION UNDER TRUMP AND CHAIR ATKINS, THERE IS NO COP ON THE
00:14:11BEAT TO PROTECT INVESTORS. THE
00:14:14SEC'S ENFORCEMENT ACTIVITY
00:14:17DROPPED BY 20% LAST YEAR. CHAIR
00:14:19ATKINS COULDN'T EVEN SAY UNDER
00:14:21OATH IN THIS ROOM THAT INSIDER
00:14:24TRADING IS BAD. FRAUDSTERS AND
00:14:28CHEATS. IT APPEARS THAT EVERYONE
00:14:29GETS A FREE PASS. CHAIR ATKINS
00:14:33IS ALSO MAKING MARKETS MORE SECRETIVE. HE'S SLASHING
00:14:37DISCLOSURE RULES SO THAT
00:14:38COMPANIES CAN HIDE JUST HOW
00:14:41RISKY THEY'VE BECOME. HE'S CUTTING OVERSIGHT AND
00:14:43ENFORCEMENT TOOLS THAT HELP FINANCIAL COPS ON THE BEAT GO
00:14:47AFTER INSIDER TRADING. AFTER
00:14:49MARKET MANIPULATION, AND OTHER
00:14:53CORPORATE CRIMES. HE'S MAKING
00:14:54IT EASIER FOR EXECUTIVES TO SILENCE SHAREHOLDERS AND TO
00:14:58STRIP THEM OF THEIR RIGHTS.
00:15:00HE'S EVEN MAKING IT HARDER FOR
00:15:02STATES TO PROTECT THEIR OWN
00:15:05CITIZENS FROM BEING DEFRAUDED
00:15:07ACROSS THE BOARD EVERY DAY,
00:15:10INVESTORS ARE LOSING. CHAIR
00:15:12ATKINS RIGS THE RULES. IT'S JUST ONE MORE EXAMPLE OF THE CORRUPTION THAT HANGS OVER THE
00:15:16ENTIRE TRUMP ADMINISTRATION.
00:15:19THIS CORRUPTION COSTS AMERICAN
00:15:23FAMILIES AND RETIREES. BUT WHO
00:15:25WINS? WELL, CORRUPTION IS REALLY
00:15:29PROFITABLE FOR SOME PEOPLE, COMPANIES, AND EXECUTIVES WHOSE
00:15:32BUSINESS MODELS ARE BUILT ON
00:15:35FRAUD WIN. WHILE HONEST
00:15:38BUSINESSES COMPETING ON THIS
00:15:39UNFAIR PLAYING FIELD LOSE.
00:15:42TRUMP'S BILLIONAIRE BUDDIES WIN, DONATING BIG TIME TO TRUMP COULD
00:15:46MEAN THE SEC CASE AGAINST YOU.
00:15:48JUST SUDDENLY DISAPPEARS.
00:15:51ANOTHER TRUMP FRIEND WHO WON BIG. ELON MUSK, WHO BRIEFLY
00:15:55BECAME THE WORLD'S FIRST
00:15:56TRILLIONAIRE, GOT HIS SPACEX IPO
00:16:00GREENLIT DESPISED DESPITE
00:16:05ANALYSTS CALLING THE NUMBERS NONSENSICAL. SPACEX GOT AN
00:16:08ADDITIONAL BOOST WHEN ELON MUSK
00:16:10REPORTEDLY PUSHED SOME INDEX PROVIDERS TO BEND THEIR RULES.
00:16:13SO TENS OF MILLIONS OF AMERICANS
00:16:16ARE FORCED TO HAVE SPACE IN
00:16:19THEIR RETIREMENT FUNDS, EVEN IF
00:16:21IT INJECTS SIGNIFICANT RISK. AND
00:16:25THEN PRESIDENT TRUMP HIMSELF IS
00:16:26THE ULTIMATE WINNER. HE MADE
00:16:29$1.4 BILLION OFF HIS MAJOR
00:16:32CRYPTO VENTURES JUST LAST YEAR.
00:16:34WHILE NEARLY A MILLION INVESTORS
00:16:37LOST OUT ON NEARLY $4 BILLION ON
00:16:42TRUMP MEME COINS ALONE. AND NOW, HIS SOCIAL MEDIA COMPANY HAS
00:16:45COME UP WITH A PLAN TO SELL WALL
00:16:50STREET FIRMS ACCESS TO HIS
00:16:52MARKET, MOVING POSTS ON TRUTH
00:16:55SOCIAL BEFORE EVERYONE ELSE GETS
00:16:57TO SEE THEM. AND WHO BENEFITS?
00:17:00WELL, ONLY PEOPLE WHO CAN PAY
00:17:02MORE THAN $1 MILLION A YEAR FOR
00:17:05THE INSIDE SCOOP ON WHAT TRUMP
00:17:07WILL BE DOING. THIS IS A BRAZEN
00:17:09SCHEME TO PROFIT OFF THE
00:17:11PRESIDENCY, AND IT MAY BE, AND
00:17:15SHOULD BE, FLATLY ILLEGAL. HOW
00:17:18CAN AMERICANS, OR THE WORLD, FOR THAT MATTER, TRUST THE HONESTY
00:17:22OF OUR MARKETS? AS TRUMP AND THE
00:17:26SEC BURN, OUR CREDIBILITY. STUDY
00:17:28AFTER STUDY SHOWS THAT CORRUPTION SIGNIFICANTLY REDUCES
00:17:31GROWTH AND INVESTMENT, EVEN IN
00:17:34AMERICA. THERE IS A COST TO THIS CORRUPTION, AND WE ALL HAVE A
00:17:38RESPONSIBILITY TO REIN IT IN. I
00:17:42HAVE NOT GIVEN UP ON THE ORIGINAL PROMISE OF OUR CAPITAL
00:17:45MARKETS. WE NEED TO ACT BEFORE
00:17:47OUR STANDING IN THE WORLD.
00:17:51CRATERS AND OUR PEOPLE PAY FOR THIS FOR GENERATIONS TO COME.
00:17:55THANK YOU, MR. CHAIRMAN. >> THANK YOU MA'AM. EACH WITNESS WILL BE GIVEN FIVE
00:17:58MINUTES FOR YOUR TESTIMONY, AND
00:18:01WE WILL TAKE YOUR WRITTEN TESTIMONY AND PUT IT IN THE
00:18:04RECORD. I NOW RECOGNIZE OUR
00:18:07FIRST WITNESS, MISS DALIA BLASS,
00:18:11SENIOR INVESTMENT MANAGEMENT PARTNER AT SULLIVAN AND CROMWELL. YOU MAY BEGIN YOUR
00:18:13TESTIMONY. THANK YOU. >> THANK YOU, MR. CHAIRMAN.
00:18:16CHAIRMAN SCOTT, RANKING MEMBER WARREN, AND DISTINGUISHED MEMBERS OF THIS COMMITTEE, THANK
00:18:20YOU VERY MUCH FOR THE OPPORTUNITY TO TESTIFY TODAY ON THIS IMPORTANT TOPIC. MY NAME IS
00:18:24DALIA BLASS, AND I'M THE SENIOR INVESTMENT MANAGEMENT PARTNER AT
00:18:27SULLIVAN AND CROMWELL. BEFORE RETURNING TO PRIVATE PRACTICE, I
00:18:30HAD THE HONOR OF SERVING AT THE SEC, CONCLUDING MY TENURE AS THE
00:18:33DIRECTOR OF THE DIVISION OF INVESTMENT MANAGEMENT. I'M
00:18:37TESTIFYING SOLELY IN MY PERSONAL CAPACITY AND NOT ON BEHALF OF
00:18:41SULLIVAN AND CROMWELL OR ANY OF ITS CLIENTS. I APPLAUD MEMBERS OF THIS COMMITTEE FOR ADVANCING
00:18:44KEY LEGISLATIVE PROPOSALS THAT EXPAND RETAIL ACCESS TO
00:18:48INVESTMENT OPPORTUNITIES, PROVIDING THEM WITH GREATER TOOLS TO SAVE FOR RETIREMENT AND
00:18:52OTHER FINANCIAL GOALS. MY WRITTEN TESTIMONY COVERS A BROAD
00:18:54SET OF TOPICS RELATED TO TODAY'S HEARING, AND I WOULD LIKE TO FOCUS MY REMARKS ON
00:18:58THREE MAIN POINTS. FIRST, RETAIL
00:19:02ACCESS IS ABOUT THOUGHTFULLY REINTRODUCING ACCESS TO PRIVATE
00:19:06MARKET INVESTMENTS FOR ALL,
00:19:07RATHER THAN A SUBSET OF RETAIL
00:19:10INVESTORS. COVERAGE OF RETAIL ACCESS AND THE USE OF
00:19:14DESCRIPTORS SUCH AS RETAIL IZATION, HAVE LEFT THE IMPRESSION THAT WE'RE BUILDING
00:19:18BRIDGES TO NEW, UNCHARTED TERRITORIES, AND THAT IS NOT THE
00:19:20CASE. THE HISTORICAL SHIFT FROM
00:19:22DEFINED BENEFIT TO DEFINED
00:19:25CONTRIBUTION PLANS HAS SIGNIFICANTLY CURTAILED RETAIL
00:19:28ACCESS TO PRIVATE MARKET INVESTMENTS. COMPOUNDING THIS IS
00:19:31THE DECISION BY MORE COMPANIES TO REMAIN PRIVATE LONGER. THE
00:19:35RESULT IS THAT RETAIL INVESTORS INCREASINGLY ARE MISSING OUT ON
00:19:37OPPORTUNITIES FOR EARLY
00:19:40COMPOUNDING RETURNS. SECOND, I BELIEVE CURRENT REGULATIONS
00:19:43UNDERMINE RETAIL INVESTOR ACCESS
00:19:44TO PRIVATE MARKETS. FOR EXAMPLE,
00:19:48RETIREMENT FOCUSED PRODUCTS THAT ARE UNNECESSARILY LIMITED, LIMITED TO DAILY LIQUID
00:19:52PRODUCTS, PERMITTING, PRODUCTS THAT ARE MORE TAILORED TO THE
00:19:55LIQUIDITY NEEDS OF PLANS WOULD
00:19:57PROVIDE ACCESS TO MORE DIVERSIFIED INVESTMENT
00:20:00OPPORTUNITIES, WHILE MAINTAINING IMPORTANT INVESTOR PROTECTIONS
00:20:04OUTSIDE THE RETIREMENT SPACE. THE SEC STAFF PRIOR PRACTICE OF
00:20:08LIMITING PRIVATE FUND
00:20:08INVESTMENTS IN PUBLICLY OFFERED
00:20:13CLOSED END FUNDS, COMBINED WITH ACTIVIST TARGET INVESTORS TARGETING THOSE FUNDS, HAS SIGNIFICANTLY LIMITED THE NUMBER
00:20:17OF LISTED FUNDS ON THE MARKET.
00:20:20THESE FUNDS CAN PROVIDE MEANINGFUL ACCESS TO PRIVATE INVESTMENTS UNDER IMPORTANT
00:20:24INVESTOR PROTECTIONS. THE RESULT HAS BEEN THE GROWTH IN TWO
00:20:27RELATED TRENDS. FIRST, INCREASING USE OF RETAIL FOCUSED
00:20:30VEHICLES THAT OPERATE OUTSIDE THE PROTECTIONS OF THE
00:20:33INVESTMENT COMPANY ACT. WHILE INNOVATIVE, THESE WILL ALWAYS
00:20:37HAVE LIMITATIONS BECAUSE THEY LACK THE PROTECTIONS OF THE ACT. SECOND IS THE INCREASING USE OF
00:20:41PERIODIC LIQUIDITY STRUCTURES,
00:20:43LOOSELY CALLED SEMI LIQUID. THESE FUNDS HAVE BEEN AROUND FOR
00:20:46DECADES, BUT HAVE SEEN A RESURGENCE IN THE ALTERNATIVE
00:20:50SPACE. I HAVE A FEW OBSERVATIONS
00:20:51ABOUT THEM. DESPITE ASSERTIONS BY THE PRESS, THEY DO NOT HAVE
00:20:55GATES THE REGULATIONS REQUIRE THEM TO PROVIDE PERIODIC
00:20:58LIQUIDITY SUBJECT TO A PRE DISCLOSED LIMIT. ALSO, THE USE
00:21:01OF THE TERM SEMI-LIQUID. WHILE
00:21:03PLAIN ENGLISH MAY CREATE A FALSE
00:21:05SENSE OF AN ABILITY TO RELIABLY
00:21:08ACCESS LIQUIDITY, AND THESE FUNDS OFFER PERIODIC LIQUIDITY
00:21:11UNDER RULES THAT ARE, FRANKLY, NOT FIT FOR PURPOSE. WITH
00:21:14RESPECT TO PUBLICLY OFFERED FUNDS, KEY PIECES OF LEGISLATION
00:21:18PROPOSED BY THIS COMMITTEE WOULD PROVIDE MUCH NEEDED REFORMS. FOR
00:21:22EXAMPLE, THEY WOULD PROTECT THE STATUTORY RIGHT OF CLOSED END FUNDS TO INVEST IN ALTERNATIVE
00:21:26ASSETS, AND THEY WOULD CORRECT
00:21:28THE AFPS TECHNICAL ERROR. THAT
00:21:30DOUBLE COUNTS BDC EXPENSES AND INVESTOR DISCLOSURES. BUT
00:21:33OPPORTUNITIES FURTHER EXIST TO ENHANCE RETAIL ACCESS. ONE IS
00:21:37FOR THE SEC TO TAKE ACTION TO PROTECT LISTED CLOSED END FUNDS FROM ACTIVIST INVESTOR
00:21:40CAMPAIGNS. ANOTHER IS REVISING THE REALLY HIGH QUORUM REQUIREMENT FOR SHAREHOLDER
00:21:45MEETINGS FOR FUNDS, WHICH EFFECTIVELY JUST ADD COST TO
00:21:48FUND INVESTORS. THIS BRINGS ME
00:21:50TO MY THIRD AND FINAL POINT.
00:21:52EMPOWERING RESPONSIBLE PRODUCT INNOVATION UNDER THE INVESTMENT
00:21:55COMPANY ACT, WHICH REQUIRES AN
00:21:58OVERHAUL OF THE SEC'S EXEMPTIVE PROCESS. NOVEL APPLICATIONS CAN
00:22:03TAKE ANYWHERE FROM 5 TO 10 YEARS FROM START TO FINISH, IMPOSING SIGNIFICANT COSTS, UNCERTAINTY,
00:22:06AND A MATERIAL BARRIER TO ENTRY
00:22:08AND INNOVATION. CONGRESS
00:22:11ADDRESSED A VERY SIMILAR ISSUE IN 2010, WHEN AMENDED SECTION 92
00:22:14OF THE EXCHANGE ACT FOR SELF-REGULATORY ORGANIZATION
00:22:17FILINGS. THAT PROCESS IS TRANSPARENT. IT PROMOTES CERTAINTY AND HOLDS BOTH
00:22:21REGULATORS AND MARKET PARTICIPANTS ACCOUNTABLE. CONGRESS CAN LOOK TO THAT
00:22:25PROCESS FOR A SIMILAR FRAMEWORK UNDER THE 1940 ACT, AND MY
00:22:29WRITTEN TESTIMONY EXPLAINS HOW THAT CAN WORK. THANK YOU AGAIN
00:22:31FOR THE OPPORTUNITY TO SHARE MY VIEWS WITH YOU, AND I VERY MUCH
00:22:34LOOK 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
00:22:41SIFMA. 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
00:22:49TESTIFY TODAY. MY NAME IS KEN BENSON. I'M THE PRESIDENT AND CEO OF THE SECURITIES INDUSTRY
00:22:52AND FINANCIAL MARKETS
00:22:54ASSOCIATION. SEPA HAS LONG SUPPORTED LEGISLATIVE AND
00:22:57REGULATORY EFFORTS TO ENCOURAGE COMPANIES TO GO PUBLIC BY
00:22:59ENSURING THE COSTS AND REQUIREMENTS ASSOCIATED ARE
00:23:02APPROPRIATELY TAILORED, ALLOWING ISSUANCE TO FLOURISH WITHOUT INTRODUCING UNNECESSARY RISK TO
00:23:06INVESTORS OR THE BROADER MARKET. THE JOBS ACT, PASSED BY THE
00:23:10CONGRESS IN 2012 WITH OUR SUPPORT, IS A PRIME EXAMPLE OF
00:23:12HOW LEGISLATION CAN HELP COMPANIES ACCESS PUBLIC MARKETS
00:23:16AND SECURE FUNDING FOR GROWTH. WE BELIEVE THIS BENEFITS NOT
00:23:18ONLY ISSUERS, BUT ALSO INVESTORS BY PROVIDING GREATER
00:23:22OPPORTUNITIES TO PARTICIPATE IN LONG TERM WEALTH CREATION,
00:23:25SUPPORTING STRONGER PUBLIC MARKETS DOES NOT MEAN DIMINISHING THE ROLE OF PRIVATE
00:23:27MARKETS. BOTH PLAY AN IMPORTANT
00:23:30AND COMPLEMENTARY ROLES IN CAPITAL FORMATION. WHILE PRIVATE
00:23:33MARKETS PROVIDE VALUABLE FINANCING OPTIONS, POLICYMAKERS
00:23:36SHOULD SEEK TO REVERSE THE LONG DECLINE IN PUBLIC COMPANY
00:23:40LISTINGS LIKE IPOS. BY CONDUCTING AN INITIAL PUBLIC OFFERING, A COMPANY GAINS ACCESS
00:23:44TO A BROADER POOL OF CAPITAL THAT CAN BE USED TO FUND GROWTH
00:23:48INITIATIVES, INVEST IN INNOVATION, PURSUE ACQUISITIONS,
00:23:51AND STRENGTHEN ITS OVERALL FINANCIAL POSITION. LIQUIDITY,
00:23:54AND PUBLIC PRICE FORMATION. FURTHER, DISTINGUISHED PUBLIC
00:23:56MARKETS. SHARES CAN BE. GENERALLY. SHARES CAN GENERALLY
00:24:00BE BOUGHT AND SOLD WITH RELATIVE EASE IN SECONDARY MARKETS AT
00:24:02TRANSPARENT PRICES, GIVING
00:24:05INVESTORS THE FLEXIBILITY TO REALLOCATE CAPITAL AS THEIR
00:24:07FINANCIAL NEEDS OR MARKET CONDITIONS CHANGE. IN ADDITION,
00:24:10PUBLIC COMPANIES ENJOY BROADER ACCESS TO CAPITAL MARKETS FOR
00:24:14FOLLOW ON EQUITY OFFERINGS AND DEBT ISSUANCE. WHILE MARKET.
00:24:18WHILE THE MARKET VALUE OF U.S. LISTED EQUITIES HAS INCREASED
00:24:21MORE THAN FIVEFOLD OVER THE PAST QUARTER CENTURY, THE NUMBER OF PUBLICLY LISTED COMPANIES HAS
00:24:25MOVED IN THE OPPOSITE DIRECTION. THE U.S. PUBLIC COMPANY UNIVERSE
00:24:29IS CONTRACTED FROM APPROXIMATELY
00:24:317200 FIRMS TO 5500 FIRMS OVER
00:24:33THE SAME PERIOD, A DECLINE OF
00:24:35NEARLY 25%. WHEREAS U.S. AVERAGE
00:24:38459 IPOS ANNUALLY. DURING THE 1990s, THE AVERAGE SINCE 2020
00:24:42HAS FALLEN TO JUST 196. EVEN SO,
00:24:46THERE IS AMPLE EVIDENCE THAT THE JOBS ACT HAS EXPANDED ACCESS TO PUBLIC CAPITAL MARKETS FOR
00:24:50SMALLER COMPANIES, FACILITATING
00:24:52CAPITAL FORMATION THROUGH A MORE EFFICIENT AND LESS BURDENSOME
00:24:55IPO PROCESS. THE JOBS ACT HAS EXPANDED ACCESS TO PUBLIC
00:24:58MARKETS FOR. SINCE ITS
00:25:01ENACTMENT, EMERGING GROWTH
00:25:03COMPANIES HAVE RAISED NEARLY
00:25:07$440 BILLION ACROSS 2100 OFFERINGS. NOTWITHSTANDING THE
00:25:09SUCCESS OF THE JOBS ACT, WE BELIEVE POLICYMAKERS SHOULD
00:25:12CONTINUE TO EVALUATE WHETHER
00:25:14EXISTING REGULATIONS APPROPRIATELY BALANCE INVESTOR PROTECTION WITH THE COSTS AND
00:25:18COMPLEXITIES ASSOCIATED WITH BECOMING AND REMAINING A PUBLIC
00:25:21COMPANY. SIFMA SUPPORTS THE
00:25:24RECENT LEGISLATIVE AND REGULATORY STEPS, INCLUDING THE
00:25:26HOUSE'S PASSAGE OF THE INVEST ACT AND SEVERAL MEASURES INTRODUCED BY MEMBERS OF THIS
00:25:30COMMITTEE. WE ALSO SUPPORT THE
00:25:33SEC'S PROPOSED REFORMS TO
00:25:36EXPAND SHELF REGISTRATION, ELIGIBILITY AND EMERGING GROWTH COMPANY STATUS, AS WELL AS SEC
00:25:40AND FINRA EFFORTS TO EXPAND
00:25:43RESEARCH COVERAGE. CONGRESS SHOULD ALSO CONSIDER POLICIES
00:25:47THAT BROADEN INVESTMENT OPPORTUNITIES FOR RETAIL INVESTORS. TARGETED REFORMS IN
00:25:50THESE AREAS CAN STRENGTHEN THE COMPETITIVENESS OF U.S. CAPITAL
00:25:53MARKETS, WHILE PRESERVING ROBUST INVESTOR PROTECTIONS. I THANK
00:25:57THE COMMITTEE FOR HOLDING THIS HEARING AND THE WORK BY THE
00:26:01MEMBERS TO ADVANCE IMPORTANT LEGISLATION. SIFMA STANDS READY TO WORK WITH THIS COMMITTEE,
00:26:04CONGRESS AND THE SEC AND OTHER POLICYMAKERS TO ADVANCE THOUGHTFUL REFORMS.
00:26:09>> THANK YOU. WE'LL NOW
00:26:10RECOGNIZE MR. MIKE FLOOD, SENIOR
00:26:14VICE PRESIDENT OF THE CENTER FOR CAPITAL MARKETS COMPETITIVENESS
00:26:16AT THE U.S. CHAMBER OF COMMERCE. YOU'RE NOW RECOGNIZED FOR UP TO
00:26:20FIVE MINUTES.
00:26:35>> CHAIRMAN SCOTT, RANKING MEMBER WARREN, AND MEMBERS OF
00:26:39THE COMMITTEE, THANK YOU FOR THE OPPORTUNITY TO TESTIFY AND THE NEED TO EMPOWER MAIN STREET BY
00:26:42ENHANCING AND GROWING OUR CAPITAL MARKETS. THE CHAMBER OF
00:26:45COMMERCE, THE WORLD'S LARGEST BUSINESS ORGANIZATION,
00:26:48REPRESENTS BUSINESSES OF ALL SIZES. THE SUBSTANTIAL MAJORITY
00:26:51OF WHICH ARE SMALL BUSINESSES.
00:26:53WE THANK CHAIR SCOTT FOR LEADING THE CHARGE ON CAPITAL FORMATION
00:26:56WITH THE EMPOWERING MAIN STREET AMERICA ACT AND THE BROAD
00:27:00BIPARTISAN EFFORT BY SENATORS OF THIS COMMITTEE ON CAPITAL REFORM, CAPITAL FORMATION
00:27:04LEGISLATION, MAIN STREET AMERICA
00:27:08DEPENDS UPON VIBRANT AND ACCESSIBLE CAPITAL MARKETS FOR
00:27:11ECONOMIC GROWTH, INNOVATION, JOB
00:27:13CREATION, RETIREMENT, SECURITY, AND AMERICA'S ABILITY TO LEAD IN
00:27:17THE GLOBAL ECONOMY. WHEN BUSINESSES CAN ACCESS CAPITAL
00:27:21EFFICIENTLY, THEY HIRE MORE WORKERS, INVEST IN NEW TECHNOLOGIES, AND BUILD THE
00:27:24PRODUCTS AND SERVICES THAT DRIVE
00:27:27THE AMERICAN ECONOMY. WHEN
00:27:29INVESTORS, INCLUDING EVERYDAY AMERICANS, CAN PARTICIPATE IN
00:27:32THAT GROWTH, WEALTH IS BUILT
00:27:34BROADLY, NOT JUST AT THE TOP.
00:27:37THE WEALTH CHANGES LIVES AND ENABLES PARENTS TO SEND THEIR
00:27:41KIDS TO COLLEGE, FAMILIES TO BUY HOMES, AND ENTREPRENEURS TO
00:27:45START NEW BUSINESSES. CHAMBERS IS HERE TODAY BECAUSE WE BELIEVE
00:27:47CONGRESS HAS A CRITICAL AND TIME SENSITIVE OPPORTUNITY TO ENACT
00:27:51MEANINGFUL CAPITAL FORMATION POLICY THAT REFLECTS THE NEEDS
00:27:54OF TODAY'S SMALL BUSINESSES,
00:27:57INVESTORS, AND THE OVERALL
00:27:59ECONOMY. STRONG CAPITAL MARKETS ARE ESSENTIAL TO AMERICAN
00:28:03LEADERSHIP. THE UNITED STATES IS THE DEEPEST, MOST LIQUID, AND MOST INNOVATIVE CAPITAL MARKETS
00:28:07IN THE WORLD, REPRESENTING
00:28:10APPROXIMATELY 45% OF GLOBAL
00:28:11PUBLIC EQUITY AND FIXED INCOME
00:28:14CAPITALIZATION, AND NEARLY 75% OF ALL U.S. CORPORATE FINANCE
00:28:16COMES FROM U.S. CAPITAL MARKETS.
00:28:19HOWEVER, THE CAPITAL MARKETS MUST BE ENHANCED IN ORDER TO
00:28:22COMPETE. THE NUMBER OF U.S.
00:28:24PUBLIC COMPANIES HAS FALLEN BY
00:28:27NEARLY 40% SINCE THE 1990s, FROM
00:28:29OVER 7800 COMPANIES IN 1997 TO
00:28:314700 TODAY. LET'S PUT THAT IN
00:28:33PERSPECTIVE. THERE AREN'T ENOUGH
00:28:37PUBLIC COMPANIES TO FULLY COMPRISE THE WILSHIRE 5000. THE
00:28:39DECLINE IS NOT A MARKET ANOMALY.
00:28:42IT IS EVIDENCE THAT THE CURRENT FRAMEWORK IS NOT WORKING, THAT
00:28:45THE COSTS AND COMPLEXITY OF ACCESS PUBLIC OF ACCESSING
00:28:48PUBLIC MARKETS HAS OUTPACED THE BENEFITS FOR FAR TOO MANY
00:28:51COMPANIES. AND JUST AS IMPORTANTLY, FOREIGN CAPITAL
00:28:55MARKETS ARE OFFERING EFFECTIVE SOLUTIONS. IF THE TREND
00:28:57CONTINUES, YOUR CONSTITUENTS WILL LOSE OUT ON ACCESS TO
00:29:01POTENTIAL JOBS THROUGH PUBLIC COMPANIES, AND ALSO OPTIONS TO
00:29:04SAVE FOR THEIR FUTURES. ANOTHER
00:29:08ANSWER IS EXPANDING SMALL BUSINESS ACCESS TO CAPITAL. I'D LIKE TO SAY THE CHAMBER
00:29:11REPRESENTS NEARLY 3 MILLION BUSINESSES. WHILE MANY ARE
00:29:14RECOGNIZED IN THE FORTUNE 500,
00:29:17THE OTHER 2,999,500 ARE SMALL
00:29:21AND MEDIUM SIZED ENTERPRISES.
00:29:26SMALL BUSINESSES COMPRISE 99.9% OF ALL COMPANIES IN THE UNITED STATES, 47% OF THE WORKFORCE,
00:29:30AND HAVE COMPRISED 62% OF NET
00:29:34JOB CREATION SINCE 1995. FROM START UP TO IPO, AND EVERY STEP
00:29:37IN BETWEEN, THE REGULATORY
00:29:39FRAMEWORK SHOULD FACILITATE, NOT OBSTRUCT, ACCESS TO CAPITAL,
00:29:43SMART REFORMS LIKE HALOS, AND RAISING THE INVESTMENT ADVISER
00:29:47THRESHOLD. FOR EXAMPLE, FOR INFLATION, CAN EXPAND THE
00:29:49NETWORKS THAT ARE CRUCIAL TO
00:29:51ENTREPRENEURSHIP. AND FINALLY, ANOTHER SOLUTION IS TO
00:29:55STRENGTHEN AND CREATE MORE PUBLIC COMPANIES, INVESTOR
00:29:59PROTECTION AND CAPITAL FORMATION ARE COMPLEMENTARY GOALS. THE
00:30:01REFORMS PROPOSED BY THIS
00:30:04COMMITTEE, SUCH AS ELEVATE, AND ALLOWING COMPANIES TO SUBMIT
00:30:06DRAFT IPO DOCUMENTS TO THE SEC,
00:30:09ACHIEVE BOTH. AND FINALLY, WE
00:30:13SHOULD EXPAND INVESTMENT OPPORTUNITIES FOR AMERICAN INVESTORS, WORKERS, AND
00:30:17RETIREES. CAPITAL FORMATION IS MORE THAN JUST HELPING COMPANIES
00:30:21RAISE MONEY. IT IS ABOUT PROVIDING AMERICAN. EVERY
00:30:24AMERICAN THE OPPORTUNITY TO INVEST IN THE GROWTH OF BOTH
00:30:28U.S. PUBLIC AND PRIVATE MARKETS.
00:30:29FOR TOO LONG, THE MOST DYNAMIC INVESTMENT OPPORTUNITIES HAVE
00:30:33BEEN AVAILABLE ONLY TO THOSE WHO
00:30:37WHO ALREADY HAVE WEALTH. SMART LEGISLATION CAN TARGET THIS
00:30:41FUNDAMENTAL SOCIETAL INEQUALITY WHILE MAINTAINING STRONG
00:30:43INVESTOR PROTECTIONS. SO,
00:30:45SENATOR WARREN, WE AGREE THAT MONEY AND POWER AND SPECIAL
00:30:48SHOULD NOT EQUATE TO SPECIAL
00:30:51TREATMENT. AND THAT'S WHY WE WANT TO PROVIDE RESPONSIBLE ACCESS TO RETAIL INVESTORS, TO
00:30:54THE PRIVATE MARKET. WE, THEREFORE, ASK THE COMMITTEE TO
00:30:58CONTINUE ITS BIPARTISAN MOMENTUM
00:31:02TO PASS LEGISLATION THAT WILL HELP MILLIONS FIND AN AFFORDABLE HOME. IT WAS NOT EASY, BUT YOU
00:31:06PREVAILED, AS YOU ALWAYS DO. BIPARTISAN SUPPORT FOR CAPITAL
00:31:08FORMATION LEGISLATION IS JUST AS
00:31:11AS OVERWHELMING, INCLUDING WITH THE ADMINISTRATION. THE SENATE
00:31:15WORK PRODUCT HAS MUCH IN COMMON WITH THE HOUSE PASSED INVEST
00:31:18ACT, WHICH PASSED WITH A WHOPPING 302 VOTES. THERE'S
00:31:22ABSOLUTELY NO REASON WHY CONGRESS CAN'T COME TOGETHER
00:31:24AGAIN TO PASS BIPARTISAN LEGISLATION THIS YEAR TO PROVIDE
00:31:28MAIN STREET BUSINESSES BETTER OPPORTUNITIES TO GROW AND THRIVE, INCREASE PUBLIC COMPANY
00:31:32JOBS IN AMERICA, AND ALLOW EVERY
00:31:34NEW INVESTOR, NOT BECAUSE OF THEIR INCOME OR WEALTH, BUT
00:31:37PRECISELY BECAUSE OF THEIR APTITUDE, A BETTER OPPORTUNITY
00:31:40TO SAVE FOR THEIR FUTURES. IF WE ACCOMPLISH THIS TOGETHER, YOUR
00:31:44CONSTITUENTS WILL BE MUCH CLOSER TO LIVING THE AMERICAN DREAM.
00:31:47THANK YOU, AND I LOOK FORWARD TO YOUR QUESTIONS.
00:31:50>> THANK YOU. FINALLY, WE WILL HEAR FROM MR. CANTRELL. DUMARCE,
00:31:54SENIOR RESEARCH FOR FINANCIAL REGULATION AND POLICY AT THE
00:31:57JOINT CENTER FOR POLITICAL AND ECONOMIC STUDIES. YOU ARE NOW
00:32:01RECOGNIZED FOR UP TO FIVE
00:32:02MINUTES.
00:32:06>> CHAIRMAN SCOTT, RANKING MEMBER WARREN, AND MEMBERS OF THE COMMITTEE, THANK YOU FOR THE
00:32:10OPPORTUNITY TO TESTIFY. MY NAME IS KENTRELL DUMAS. I'M A SENIOR
00:32:14RESEARCHER AT THE JOINT CENTER FOR POLITICAL AND ECONOMIC
00:32:16STUDIES, FOUNDED IN 1970, THE
00:32:18JOINT CENTER IS A NONPROFIT,
00:32:22NONPARTISAN ORGANIZATION KNOWN AS AMERICA'S BLACK THINK TANK. WE DEVELOP EVIDENCE BASED
00:32:25POLICIES TO IMPROVE THE ECONOMIC AND CIVIC WELL-BEING OF BLACK
00:32:28AMERICANS. MY WORK FOCUSES ON RETIREMENT SECURITY, FINANCIAL
00:32:32REGULATION, AND THE POLICIES THAT AFFECT HOW BLACK FAMILIES
00:32:35BUILD WEALTH. I HAVE MORE THAN A DECADE OF PUBLIC SERVICE
00:32:39EXPERIENCE, INCLUDING WORK AT THE COMMODITY FUTURES TRADING COMMISSION AND SERVICE AT THE
00:32:41FEDERAL DEPOSIT INSURANCE
00:32:44CORPORATION DURING THE 2008 FINANCIAL CRISIS. I'VE ALSO WORKED IN PRIVATE PRACTICE AS AN
00:32:48ATTORNEY, ADVISING CLIENTS ON FINANCIAL TRANSACTIONS,
00:32:52EXPANDING ACCESS TO CAPITAL IS
00:32:53IMPORTANT. SMALL BUSINESSES NEED AFFORDABLE FINANCING TO START,
00:32:57GROW, AND HIRE. AT THE SAME TIME, WORKERS AND FAMILIES
00:33:00SUPPLY CAPITAL THROUGH SAVINGS AND RETIREMENT ACCOUNTS. MAIN
00:33:04STREET IS ON BOTH SIDES OF OUR
00:33:05CAPITAL MARKETS, PAST DEREGULATORY EFFORTS MAY HAVE
00:33:09MADE IT EASIER FOR SOME FIRMS AND INVESTMENT FUNDS TO RAISE CAPITAL, BUT THE AMOUNT RAISED
00:33:13TELL US LITTLE ABOUT WHETHER CAPITAL REACHED BLACK OWNED BUSINESSES AND UNDERSERVED
00:33:17ENTREPRENEURS ARE. WHETHER LOW
00:33:19WEALTH FAMILIES GAIN MEANINGFUL OPPORTUNITIES TO BUILD WEALTH.
00:33:23BLACK ENTREPRENEURS CONTINUE TO FACE A SIGNIFICANT SCALING GAP.
00:33:26THEY OWN 40% OF BUSINESSES
00:33:27WITHOUT PAY EMPLOYEES, BUT ONLY
00:33:313% WITH PAID EMPLOYEES. AND THE FEDERAL RESERVE'S LATEST
00:33:34SURVEY, ONLY 35% OF BLACK OWNED
00:33:38BUSINESSES THAT APPLIED FOR FINANCING RECEIVED ALL THE FINANCING THEY SOUGHT, COMPARED
00:33:40WITH 56% OF WHITE OWNED FIRMS. THESE DISPARITIES SHOW WHY
00:33:44CAPITAL MARKETS POLICIES SHOULD BE JUDGED NOT ONLY BY HOW MUCH
00:33:47CAPITAL HELPS BUSINESSES RAISE,
00:33:49BUT ALSO WHO RECEIVES IT, WHAT TERMS AND WHAT ARE THE WORKERS
00:33:52AND FAMILIES WHO ARE PROTECTED,
00:33:55CAPITAL FORMATION AND INVESTOR
00:33:57PROTECTION ARE NOT COMPETING OBJECTIVES. RELIABLE
00:34:01INFORMATION, FAIR MARKETS, PROTECTION AGAINST FRAUD AND
00:34:04ABUSE. BUILD CONFIDENCE THAT MAKES CAPITAL FORMATION
00:34:08POSSIBLE. THESE PROTECTIONS ARE
00:34:09ESPECIALLY IMPORTANT TO BLACK HOUSEHOLDS, AND 2022 MEDIAN
00:34:12BLACK FAMILY WEALTH WAS
00:34:16APPROXIMATELY $44,900, COMPARED
00:34:18WITH APPROXIMATELY $285,000 FOR WHITE FAMILIES WITH LESS WEALTH
00:34:21TO FALL BACK ON, BLACK
00:34:24HOUSEHOLDS HAVE LESS CAPACITY TO ABSORB INVESTMENT LOSSES,
00:34:26EXCESSIVE FEES, AND FINANCIAL MISCONDUCT. FINANCIAL POLICIES
00:34:30SHOULD THEREFORE HELP LOW WEALTH HOUSEHOLDS BUILD ASSETS WHILE
00:34:33PROTECTING THE ASSETS THEY ARE WORKING TO ACCUMULATE. WHEN
00:34:37INFORMATION BECOMES LESS AVAILABLE, INVESTMENTS BECOME
00:34:38HARDER TO EVALUATE OR ENFORCEMENT WEAKENS. FAMILY
00:34:42RELEASE FINANCIAL CUSHION HAVE THE MOST TO LOSE. WITH THAT IN
00:34:46MIND, I WANT TO HIGHLIGHT THREE PRINCIPLES THAT SHOULD GUIDE
00:34:49CAPITAL MARKETS POLICY. FIRST,
00:34:50DISCLOSURES SHOULD REDUCE
00:34:53INFORMATION GAPS. LARGE INSTITUTIONAL INVESTORS MAY HAVE ACCESS TO COMPANY MANAGEMENT.
00:34:57PROFESSIONAL ANALYSTS, AND PRIVATE DATA SERVICES. ORDINARY
00:35:01INVESTORS RELY MORE HEAVILY ON PUBLIC DISCLOSURES, MOVING FROM
00:35:05QUARTERLY TO SEMIANNUAL REPORTING COULD HAVE THEM MAKING DECISIONS WITH LESS CURRENT
00:35:08INFORMATION. THE ANSWER SHOULD BE CLEAR. MORE INFORMATION.
00:35:12ANSWER SHOULD BE CLEAR INFORMATION, NOT LESS. SECOND,
00:35:16WE SHOULD BE CAUTIOUS ABOUT
00:35:18PLACING PRIVATE MARKET INVESTMENTS IN DIGITAL ASSETS AND WORKERS RETIREMENT ACCOUNTS,
00:35:22PRIVATE EQUITY AND PRIVATE CREDIT MAY INVOLVE LIMITED
00:35:25DISCLOSURE, SUBJECTIVE VALUATIONS, LAYERED FEES, CONFLICTS OF INTEREST, AND
00:35:28LIMITS ON WHEN INVESTORS CAN
00:35:30ACCESS THEIR MONEY. DIGITAL ASSETS RAISES A DIFFERENT
00:35:34CONCERN. EVEN IF CONGRESS ESTABLISHED CLEAR RULES FOR
00:35:37DIGITAL ASSET MARKETS, THERE IS LITTLE EVIDENCE THAT CRYPTO IS A
00:35:41RELIABLE WEALTH BUILDING MECHANISM FOR ORDINARY FAMILIES. REGULATORY CLARITY SHOULD NOT BE
00:35:45CONFUSED WITH EVIDENCE THAT
00:35:46CRYPTO BELONGS IN WORKERS RETIREMENT ACCOUNTS. EXPANDING
00:35:50ACCESS TO RISK IS NOT THE SAME AS EXPANDING ACCESS TO WEALTH.
00:35:54THIRD, CONSISTENT ENFORCEMENT STRENGTHENS CONFIDENCE IN OUR
00:35:58MARKETS. RULES MATTER ONLY WHEN THEY ARE ENFORCED, AND INVESTORS
00:36:02MUST BELIEVE THEY APPLY TO EVERY PARTICIPANT. WITHOUT THAT CONFIDENCE, CAPITAL FORMATION
00:36:05SUFFERS. BUT PROTECTING
00:36:09INVESTORS IS ONLY PART OF THE ANSWER. EMPOWER MAIN STREET ALSO MEANS DIRECTING CAPITAL TO BUSINESSES THAT HAVE
00:36:13HISTORICALLY FACED BARRIERS. CONGRESS SHOULD STRENGTHEN
00:36:17MINORITY DEPOSITORY INSTITUTIONS, COMMUNITY DEVELOPMENT, FINANCIAL
00:36:20INSTITUTIONS, AND FEDERAL SMALL
00:36:21BUSINESS PROGRAMS SO THAT BLACK
00:36:25OWNED BUSINESSES AND OTHER UNDERSERVED BUSINESSES CAN OBTAIN THE CAPITAL THEY NEED TO GROW. OUR GOAL SHOULD BE TO ENSURE THAT CAPITAL REACHES
00:36:29BUSINESSES THAT NEED IT, AND THAT WORKERS AND FAMILIES CAN
00:36:32BUILD AND PRESERVE WEALTH. THAT
00:36:34REQUIRES TRANSPARENT MARKETS, STRONG INVESTOR PROTECTION, CONSISTENT ENFORCEMENT, AND
00:36:38CLEAR 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
00:36:46ANSWER. EACH SENATOR GETS UP TO FIVE MINUTES TO ASK AND GET THE
00:36:49ANSWERS FROM YOU ALL. AND WE ARE
00:36:52PRETTY CONSISTENT ON KEEPING 5 MINUTES TO 5 MINUTES. SENATOR
00:36:56ROUNDS, YOU'RE RECOGNIZED FOR YOUR FIRST FIVE MINUTES. >> THANK YOU, MR. CHAIRMAN. FIRST OF ALL, THANK YOU TO ALL
00:37:00OF YOU FOR BEING HERE TODAY. AND I THINK THIS IS A REALLY
00:37:03IMPORTANT OPPORTUNITY FOR US TO
00:37:04REALLY KIND OF RETHINK A LITTLE
00:37:08BIT ABOUT WHETHER OR NOT THE EXISTING REGULATIONS ARE APPROPRIATE FOR TODAY, AND WHAT
00:37:11IMPROVEMENTS WE CAN MAKE. I, I'VE APPRECIATED THE FACT THAT
00:37:15THE HOUSE OF REPRESENTATIVES HAS
00:37:16PASSED OUT A PRODUCT ON A
00:37:19BIPARTISAN BASIS THAT I BELIEVE WILL HELP TO ALLOW MORE
00:37:23INDIVIDUALS TO INVEST IN EQUITY
00:37:25TO, TO ACTUALLY INVEST IN BUSINESSES THAT ARE NOT THEIRS,
00:37:29PER SE. AND AT THE SAME TIME,
00:37:32FOR BUSINESSES TO BE ABLE TO ACCUMULATE, UM, RESOURCES THAT
00:37:34THEY CAN USE TO BUILD THOSE
00:37:38BUSINESSES. WHAT I DON'T WANT TO DO IS TO RESTRICT ANYONE FROM
00:37:41BEING ABLE TO INVEST IN IT. IF THEY HAVE THE RESOURCES, THE
00:37:45SAVINGS THAT THEY PUT TOGETHER
00:37:46TO DO SO. UM, MR. BENSON, JUST
00:37:49TO BEGIN WITH, YOU, THE IT,
00:37:51THERE IS NO QUESTION BUT THAT AS
00:37:55TIMES CHANGE, AS DIFFERENT
00:37:56TECHNOLOGIES COME FORWARD AND, AND AS WE LEARN ABOUT WHAT
00:37:59REGULATIONS WORK CORRECTLY AND WHICH ONES NEED TO BE TWEAKED,
00:38:03THERE'S NO QUESTION, BUT THAT THERE HAS TO BE A REVIEW OF
00:38:07REGULATIONS ON A REGULAR BASIS. I BELIEVE IN YOUR OPENING
00:38:11STATEMENTS, YOU'VE INDICATED THAT THE JOBS ACT IS PROBABLY ONE OF THE LAST TIMES THAT WE'VE
00:38:14ACTUALLY LOOKED AT THIS WITH REGARD TO CAPITAL FORMATION. THAT WAS IN 2012. SO HERE WE
00:38:18ARE, 16 YEARS OR 14, 14 YEARS
00:38:25LATER, WE'RE NOW LOOKING AT IT AGAIN. AND ON A BIPARTISAN
00:38:28BASIS. CAN YOU TALK A LITTLE BIT ABOUT THE REASON WHY THOSE
00:38:32REGULATIONS THAT WERE THERE AT THAT TIME VERSUS WHAT THEY ARE
00:38:36NOW, WHY THERE WOULD BE A REASON
00:38:37WHY WE SHOULD TAKE A LOOK AT AT
00:38:41THOSE REGULATIONS. >> UH, THANK YOU, SENATOR, AND
00:38:43THAT'S A GREAT QUESTION. THE SECURITIES INDUSTRY IS ONE OF THE MOST REGULATED INDUSTRIES IN
00:38:47THE IN THE AMERICAN ECONOMY. UH,
00:38:50AND WE OPERATE UNDER A RULE BOOK
00:38:53THAT WAS REALLY SET IN PLACE 80 YEARS AGO, RIGHT? COMING OUT OF THE GREAT DEPRESSION. AND OVER
00:38:57THE YEARS, CONGRESS HAS MADE
00:38:59CHANGES TO THAT THROUGH MULTIPLE
00:39:01STATUTES, APPROPRIATELY SO. BUT
00:39:05I DO THINK THAT IT'S IMPORTANT FOR CONGRESS TO GO BACK ON A PERIODIC BASIS, NOT JUST TO LOOK
00:39:08AT THE RULE BOOK THAT THE REGULATORS PUT IN PLACE, BUT TO LOOK AT THE OWN THEIR OWN LAWS
00:39:12THAT THEY PUT IN PLACE. BECAUSE
00:39:16MARKETS CHANGE, PRODUCTS CHANGE, TECHNOLOGY COMES INTO PLACE. YOU KNOW, SOME OF THE THINGS WE'RE
00:39:19DEALING WITH TODAY, UH, IN TERMS
00:39:20OF THE CAPITAL FORMATION, EDGAR,
00:39:24FILINGS AT THE SEC, THOSE WERE ORIGINALLY DONE WITH PAPER. NOW
00:39:27THEY'RE DONE ELECTRONICALLY. AND, YOU KNOW, UM, HOW WE
00:39:30DELIVER CONFIRMS AND PROXIES TO,
00:39:33TO CLIENTS IS CHANGED AND WHERE WE'RE GOING MORE AND MORE TO
00:39:37E-DELIVERY AND MANY IN THIS, ON THIS COMMITTEE ARE PROPOSING GOING TO E-DELIVERY, THE SEC, ET
00:39:41CETERA.. SO I DO THINK IT'S APPROPRIATE FOR CONGRESS TO GO
00:39:44BACK AND LOOK. THEY DO THE BEST JOB THEY CAN AT THE TIME, BUT
00:39:47THEY HAVE TO GO BACK AND SEE, DID IT WORK? AND WHAT'S CHANGED
00:39:51IN THE MARKET? >> AND THE VAST MAJORITY OF THAT COULD BE DONE ON A BIPARTISAN
00:39:54BASIS, I SUSPECT. >> ABSOLUTELY. >> MR. FLOOD, UH, I APPRECIATED
00:39:58YOUR COMMENTS. I THINK IT'S IMPORTANT THAT WE TALK ABOUT
00:40:01BOTH THE INDIVIDUALS WHO ARE, ARE TRYING TO INVEST THAT WANT
00:40:04TO FIND SOMETHING OTHER THAN SIMPLY INVESTING IN A SAVINGS
00:40:07ACCOUNT. AND THEY LOOK AT WHERE
00:40:10REAL WEALTH IS DEVELOPED. AND PART OF IT IS YOU START OUT WITH SAVINGS. AND ONCE YOU HAVE SOME
00:40:13SAVINGS, WHERE, WHERE YOUR, BECAUSE OF THE WORK YOU'RE DOING
00:40:17AS A FAMILY, AS AN INDIVIDUAL, UH, AT THE END OF THE MONTH,
00:40:21YOU'VE GOT MORE IN YOUR, IN YOUR ACCOUNT THAN WHAT YOU HAD
00:40:25TO BEGIN WITH. AND YOU'VE PAID YOUR BILLS. AND AT SOME POINT
00:40:26YOU WANT TO TAKE THAT AS WEALTH,
00:40:29AS, AS, AS AN OPPORTUNITY TO GROW YOUR OWN WEALTH. AND YOU
00:40:32WANT TO PUT IT SOMEPLACE WHERE IT COULD PERHAPS GAIN INTEREST,
00:40:35OR IN SOME CASES, EQUITY. THE
00:40:39MARKETS TODAY ALLOW FOR TWO DIFFERENT TYPES. ONE IS FOR INDIVIDUALS TO INVEST IN
00:40:43PRIVATELY OWNED BUSINESSES. UH, IT MIGHT BE THEIR OWN BUSINESS,
00:40:46OR IT MIGHT BE WITH A SMALL GROUP. AND THOSE SEEM TO HAVE A
00:40:50REAL OPPORTUNITY FOR DEVELOPMENT. THE OTHER IS IN
00:40:52THE, THE, THE MARKETS THEMSELVES, THE PUBLIC MARKETS.
00:40:55BUT THERE'S A BIG COST INVOLVED IN THAT BECAUSE WE'RE TRYING TO
00:40:57MAKE THEM AS SAFE AS POSSIBLE FOR AVERAGE INVESTORS. CAN YOU
00:41:01TALK A LITTLE BIT ABOUT WHAT THE REAL OPPORTUNITIES ARE FOR
00:41:04SOMEONE TO INVEST, PERHAPS A LITTLE BIT EASIER IN SOME OF
00:41:08THOSE, THOSE IPO OR PRE IPO
00:41:11PROGRAMS VERSUS IN THE MARKETS
00:41:13THAT WE SUPPOSEDLY PUT OUT FOR
00:41:16THE GENERAL PUBLIC, BUT THAT ARE REGULATED TO THE POINT WHERE
00:41:18THERE'S ADDED COSTS AND PERHAPS A LITTLE BIT LOWER RATE OF RETURN ON INVESTMENTS IN THEM.
00:41:22AND THE REASON WHY WE WANT TO
00:41:25PERHAPS PROVIDE MORE OPPORTUNITY
00:41:26FOR SMALL INVESTORS TO LOOK AT BOTH THOSE THAT ARE PRIVATE TYPE
00:41:30COMPANIES 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.
00:41:44UM, BUT WHEN I THINK ABOUT THAT, I THINK THERE ARE A FEW
00:41:48OPPORTUNITIES. ONE IS ON THE INVESTMENT SIDE, BUT YOU TALKED ABOUT TWO TECHNICAL FIXES THAT I
00:41:52THINK BRING THINGS INTO TODAY'S
00:41:55WORLD. ONE IS, UM, WHEN YOU. >> THINK I'M GOING TO RUN OUT
00:41:59OF TIME, SO YOU MIGHT WANT TO MAKE IT QUICK.
00:42:01>> CLOSED END FUNDS, ALLOWING
00:42:03ACCESS. UM, BY CHANGING THE
00:42:05EXEMPTION. AND THEN TWO, UM,
00:42:09MAKING SURE THAT WHEN WE TALK
00:42:12ABOUT, UM, WELL, SOME CALL IT DOUBLE COUNTING FEES, BUT WITH A
00:42:16F A, MAKING SURE THAT WE RATIONALIZE THE DISCLOSURE. BECAUSE RIGHT NOW THE DISCLOSURE
00:42:19IS 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
00:42:26MAKING CAPITAL MARKETS STRONGER.
00:42:28LET'S START WITH SOME RECENT
00:42:30MARKET NEWS. ON SATURDAY,
00:42:34PRESIDENT TRUMP'S SOCIAL MEDIA COMPANY BEGAN OFFERING FASTER
00:42:37ACCESS TO HIS SOCIAL MEDIA POSTS
00:42:41TO INVESTORS WHO PAY UP TO
00:42:43$100,000 A MONTH. THAT'S OVER $1
00:42:47MILLION A YEAR PER INVESTOR. SO
00:42:48LET ME ASK ALL OF OUR WITNESSES
00:42:51HERE. RAISE YOUR HAND IF YOU
00:42:53BELIEVE THAT PRESIDENT TRUMP
00:42:56SELLING INFORMATION ABOUT OUR
00:42:59ECONOMY AND FOREIGN POLICY TO
00:43:00WALL STREET BEFORE EVERYONE ELSE
00:43:03GETS ACCESS TO THAT INFORMATION,
00:43:04IS GOOD FOR THE INTEGRITY OF OUR
00:43:08CAPITAL MARKETS. WELL, THERE WE GO. I SEE NO HANDS. SO MAYBE IF
00:43:12THE REPUBLICANS ON THIS COMMITTEE WANT TO STRENGTHEN THE
00:43:14CAPITAL MARKETS, WE CAN START BY
00:43:17OUTLAWING WHAT PRESIDENT TRUMP
00:43:19IS DOING. UM, WE ALL KNOW THAT THIS IS WRONG. LET'S LOOK AT
00:43:23ANOTHER SCAM. TRUMP'S PRIVATE EQUITY BUDDIES HAVE A PROBLEM.
00:43:27BIG INVESTORS ARE STARTING TO HEAD FOR THE EXITS. TRUMP'S
00:43:31CRYPTO BUDDIES ALSO HAVE A
00:43:34PROBLEM WITH BILLIONS IN LOSSES
00:43:35FOR INVESTORS. SO LAST AUGUST,
00:43:40PRESIDENT TRUMP THREW THEM A LIFELINE. HE DIRECTED FEDERAL
00:43:43AGENCIES TO MAKE IT EASIER FOR PRIVATE EQUITY, PRIVATE CREDIT,
00:43:47CRYPTO, AND OTHER RISKY ASSETS
00:43:48TO BE SHOVELED INTO RETIREMENT
00:43:52ACCOUNTS. THE IDEA IS TO GIVE
00:43:56ALL OF THOSE SKETCHY DEALERS
00:43:58ACCESS TO FAMILIES. 401 K'S.
00:44:00NOW, MR. DUMAS, YOU'RE AN
00:44:03EXPERT ON FINANCIAL REGULATION
00:44:05AND ITS IMPACT ON WORKING
00:44:09FAMILIES AND BLACK COMMUNITIES IS PUSHING THESE RISKY ASSETS
00:44:10LIKE CRYPTO AND PRIVATE EQUITY,
00:44:13INTO RETIREMENT ACCOUNTS, LIKELY
00:44:16TO HELP FAMILIES. >> SO THE QUESTION, SENATOR, NOT
00:44:20LIKELY. PUSHING PRIVATE EQUITY INTO RETIREMENT ACCOUNTS CREATES
00:44:23A CERTAIN RISK. PRIVATE EQUITY
00:44:26HAS, UM, LESS IS IT'S RISKY BECAUSE LESS TRANSPARENT
00:44:30NONDISCLOSURE. AND THERE AREN'T ANY CUSTOMER PROTECTION. DIGITAL
00:44:33ASSETS ALSO IS A VOLATILE ASSET AS WELL. UH, THERE IS EVIDENCE
00:44:37OUT THERE CURRENTLY THAT SAYS THAT CRYPTOCURRENCY PROVIDES ANY
00:44:40TYPE OF WEALTH BUILDING, UM, GROWTH FOR, ESPECIALLY FOR
00:44:44FAMILIES, FOR ORDINARY FAMILIES. UM, SO I THINK THAT OBVIOUSLY,
00:44:48UH, IT CAN, THESE VOLATILE
00:44:52ASSETS CAN DEFINITELY PROVIDE A LESS WEALTH OPPORTUNITY FOR FAMILIES. >> ALL RIGHT. THANK YOU. YOU
00:44:56KNOW, LET'S LOOK AT ANOTHER
00:44:59TRUMP ADMINISTRATION POLICY. WHEN YOU INVEST IN A PUBLIC
00:45:02COMPANY, YOU KNOW, LIKE PEPSI OR APPLE, THOSE COMPANIES ARE
00:45:05REQUIRED TO FILE BASIC FINANCIAL
00:45:08AND BUSINESS INFORMATION WITH THE SEC FOUR TIMES A YEAR. IN
00:45:11MAY, THE SEC PROPOSED REDUCING
00:45:14THOSE DISCLOSURES TO TWO TIMES A
00:45:17YEAR. DAYS LATER, THE SEC
00:45:18PROPOSED RULES THAT EXEMPT 80%
00:45:22OF PUBLIC COMPANIES FROM DISCLOSURES AND ACCOUNTABILITY
00:45:24ON WHAT EXECUTIVES GET PAID. THE
00:45:28SEC EVEN EXEMPTED MOST COMPANIES
00:45:30FROM THE REQUIREMENT THAT THEIR
00:45:32AUDITOR MUST SWEAR THAT THE
00:45:35COMPANY HAS SYSTEMS IN PLACE TO PRODUCE ACCURATE FINANCIAL
00:45:39INFORMATION. SO MR. DUMAS IS
00:45:42GETTING LESS INFORMATION, LESS OFTEN, ABOUT A COMPANY'S
00:45:45OPERATIONS, HELPFUL FOR WORKING
00:45:47PEOPLE, FOR MOM AND POP
00:45:49INVESTORS, OR FOR BLACK COMMUNITIES.
00:45:53>> NO, SENATOR, IT'S NOT HELPFUL AT ALL. DISCLOSURE AND
00:45:56TRANSPARENCY IS VITAL FOR
00:45:59CONFIDENCE IN INVESTMENT. UM, LESS INFORMATION LEADS ORDINARY
00:46:03INVESTORS IN THE DARK. WHAT WE NEED IS BETTER INFORMATION IN
00:46:06ORDER FOR IN ORDER FOR INVESTORS
00:46:10TO, UM, HAVE THE SAME AMOUNT OF
00:46:13INFORMATION AS SOPHISTICATED INVESTORS HAVE, WITHOUT THAT, THERE WOULD BE INFORMATION GAP
00:46:17BETWEEN THE SOPHISTICATED INVESTORS AND ORDINARY INVESTORS. >> SO THANK YOU, MR. DUMAS. LET
00:46:20ME DO ONE MORE. IN ADDITION TO
00:46:22WEAKENING THE RULES, TRUMP'S SEC
00:46:26IS SIMPLY TAKING THE COP OFF THE BEAT. LAST YEAR, ENFORCEMENT
00:46:29ACTIVITY DROPPED BY OVER 20% TO
00:46:35ITS LOWEST LEVEL IN NEARLY 20 YEARS. MR. DUMAS, WHO BENEFITS
00:46:37WHEN 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
00:46:45ENFORCEMENT, UH, YOU HAVE A MORE
00:46:48OF AN OPPORTUNITY FOR SCAMMERS AND FOSTERS TO TAKE ADVANTAGE OF
00:46:52EVERYDAY AMERICANS, STRONG ENFORCEMENT PROVIDES CONFIDENCE IN THE MARKETPLACE SO PEOPLE CAN
00:46:55PUT MORE INTO THE CAPITAL MARKETS AS WELL. >> THANK YOU. YOU KNOW, EVERY
00:46:58ONE OF THESE STEPS IS DESIGNED TO HELP WALL STREET INSIDERS,
00:47:02BIG CORPORATIONS, AND PRESIDENT
00:47:05TRUMP HIMSELF, NOT AMERICAN
00:47:07FAMILIES. CONGRESS NEEDS TO CLEAN THIS UP. THANK YOU, MR.
00:47:10PRESIDENT. MR. CHAIRMAN, I YIELD BACK.
00:47:13>> THANK YOU, MADAM. OR
00:47:17CONDOLENCES. AT THIS POINT YEAH.
00:47:19UH, LET ME JUST THINK ABOUT WHAT
00:47:23MR. FLOOD SAID EARLIER. NOT WEALTH, BUT APTITUDE. I WANT TO
00:47:26ASK A QUESTION OF MR. BENSON. AS
00:47:27RELATES TO THE DEFINITION OF AN
00:47:31ACCREDITED, ACCREDITED INVESTOR. WHEN I LOOK AT IT, I GREW UP IN
00:47:33POVERTY IN A SINGLE PARENT HOUSEHOLD. I WILL SAY THAT
00:47:36WITHOUT ANY QUESTION, WEALTH CREATING WEALTH SEEMS TO BE
00:47:39SOMETHING THAT IS CONSISTENT BUT NOT NECESSARY. THERE ARE A LOT
00:47:42OF BRIGHT FOLKS WITH GREAT IDEAS
00:47:47WHO NEED EARLY ACCESS. AND WHEN
00:47:48YOU LOOK AT THE ACCREDITED
00:47:52INVESTOR DEFINITION, I THINK IT ACTUALLY SHOULD BE UPDATED. I
00:47:54THINK THIS IS A BIPARTISAN CONVERSATION THAT WE ARE NOW
00:47:57HAVING. BOTH REPUBLICANS AND
00:48:00DEMOCRATS SEEM TO UNDERSTAND AND APPRECIATE THE IMPORTANCE OF NOT
00:48:03JUST HAVING A WEALTH DEFINITION FOR WHETHER OR NOT YOU HAVE THE
00:48:06APTITUDE TO BE AN ACCREDITED INVESTOR. I'D LOVE TO GET YOUR
00:48:10THOUGHTS 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
00:48:15HAS GONE BACK AND FORTH AND LOOKED AT HOW THEY SHOULD DEFINE
00:48:19ACCREDITED INVESTOR, AND THEY'VE LOOKED AT IT IN TERMS OF A QUANTITATIVE TEST. BUT ALSO NOW
00:48:22THERE'S EFFORTS IN LEGISLATION, AS YOU REFERENCED, TO LOOK AT IT
00:48:24IN A QUALITATIVE. AND THERE ARE. AND I THINK IT IS APPROPRIATE.
00:48:28WE THINK IT'S APPROPRIATE TO LOOK AT IT IN TERMS OF OF OTHER
00:48:32TYPES OF, OF SOPHISTICATION AND ACCREDITATION THAT AN INVESTOR
00:48:36MAY HAVE. FOR INSTANCE, WHEN I WAS AN INVESTMENT BANKER, I WAS
00:48:38A SERIES SEVEN, SERIES 63, UH,
00:48:42REGISTRANT THAT REQUIRES YOU TO GO THROUGH MULTIPLE FINANCIAL TESTING AND THE LIKE. YOU CAN
00:48:45HAVE CFAS, ONE OF THE MOST
00:48:47INTENSE, UH, FINANCIAL TESTINGS
00:48:50THAT GO ON. YOU MAY NOT NECESSARILY HAVE MILLIONS OF DOLLARS, BUT YOU ARE A
00:48:54SOPHISTICATED PARTY AT THAT POINT IN TIME. SO WE DO THINK
00:48:58IT'S APPROPRIATE FOR CONGRESS TO TAKE A LOOK AT THAT AND MAKE ADJUSTMENTS BASED UPON THE
00:49:01INDIVIDUAL INVESTORS, ACCREDITED OTHER ACCREDITATIONS.
00:49:04>> YEAH. MR. FLOYD, ANY THOUGHTS
00:49:06ON THAT?
00:49:11>> THE PROPOSALS THAT THE DIOCESE PUT TOGETHER, IT ATTEMPTS TO ALLOW RETAIL
00:49:15INVESTORS TO ACCESS THE PRIVATE MARKETS IN THREE RESPONSIBLE
00:49:19WAYS. ONE, SHOW YOUR APTITUDE BY PASSING A TEST. CLEARLY, SOMEONE
00:49:22WHO'S GOING TO TAKE THE TIME TO DO THAT IS INTERESTED IN THE
00:49:24MARKET, IS GOING TO UNDERSTAND THE RISKS. TWO, IF YOU ALLOW FOR
00:49:28A THREE B ACCESS LIKE WE ALLOW IN FOR ONE K, LET'S NOT FORGET
00:49:32THAT THERE WILL BE A PLAN ADMINISTER. THEY WILL LOOK AT
00:49:36THE INVESTMENTS. THEY WILL LOOK
00:49:37AT THE RISKS AND THEY WILL
00:49:40CURATE THEM AND DISPLAY THOSE TO THE RETAIL INVESTOR. AND THEN
00:49:44THREE UM YOU, IF YOU CAN USE AN ADVISOR, YOU CAN GO THAT ROUTE
00:49:47TOO. SO IF YOU HAVE, YOU HAVE ALL THREE ROUTES AND ALL THREE
00:49:50COME WITH THE EXACT SAME PROTECTIONS THAT YOU WOULD HAVE IF YOU INVESTED IN THE STOCK
00:49:54MARKET. AND IF YOU THINK ABOUT IT, WE WILL ALLOW AN INDIVIDUAL
00:49:57TO INVEST IN PENNY STOCKS, OTC,
00:49:58AND EQUITIES. AND WE'RE
00:50:02ACTUALLY ENHANCING THE CONTROLS TO ALLOW PEOPLE TO INVEST IN THE
00:50:04PRIVATE MARKETS. SO I THINK
00:50:07PEOPLE UNDERSTAND THE RISKS. >> ABSOLUTELY. MISS BLAS, THE
00:50:10STRENGTH OF OUR ECONOMY DEPENDS ON GETTING CAPITAL TO THE INNOVATORS AND ENTREPRENEURS WHO
00:50:14ARE WILLING TO TAKE RISKS, BUILD NEW BUSINESSES, AND CREATE JOBS.
00:50:17BUT TALENT AND GOOD IDEAS ARE DISTRIBUTED ACROSS AMERICA, NOT
00:50:21JUST IN BIG CITIES. IN MANY COMMUNITIES, ENTREPRENEURS RELY
00:50:24ON SMALLER, SPECIALIZED INVESTORS TO GET THEIR FIRST
00:50:27REAL SHOT AT TURNING AN IDEA INTO A COMPANY. BUT THE RULES
00:50:31WERE WRITTEN FOR A DIFFERENT TIME. WHEN SMALL VENTURE CAPITAL
00:50:34FUNDS WERE EXPECTED TO STAY SMALL, AND WHEN CAPITAL WAS FAR
00:50:38MORE CONCENTRATED IN MAJOR
00:50:40CITIES. THAT'S WHY I'M PROUD TO WORK WITH SENATORS MORAN,
00:50:44WARNER, GALLIANO AND MANY OTHERS. ON THE EXPANDING
00:50:46AMERICAN ENTREPRENEURSHIP ACT.
00:50:48OUR BILL WOULD MODERNIZE THEIR.
00:50:51THESE OUTDATED RULES SO MORE MONEY CAN REACH ENTREPRENEURS
00:50:55AND SMALL BUSINESSES IN SOUTH CAROLINA. ACROSS THE COUNTRY.
00:50:58GIVEN HOW MUCH FUN SIZES AND
00:51:00PRIVATE INVESTING HAVE CHANGED, HOW WOULD MODERNIZING THESE
00:51:04OUTDATED RULES HELP MORE CAPITAL REACH ENTREPRENEURS,
00:51:08PARTICULARLY IN RURAL AND TRADITIONALLY UNDERSERVED
00:51:12REGIONS OF OUR COUNTRY? >> THANK YOU, MR. CHAIRMAN. SO VENTURE CAPITAL FUNDS PROVIDE
00:51:15CRITICAL FUNDING FOR STARTUPS, UNLOCKING THEIR INVESTMENT AND
00:51:19CAPITAL FLOW FOR THE SMALLER FUNDS WOULD ENABLE ENABLE THEM
00:51:22TO UNLOCK CRITICAL CAPITAL
00:51:25FUNDING FOR SMALLER ENTITIES, FOR MORE STARTUPS, AND IN TURN, FOR OUR COMMUNITIES. AND THESE
00:51:29STARTUPS, BY THE WAY, THEY ESSENTIALLY BECOME OUR SMALL
00:51:32BUSINESSES, WHICH BECOME THE BACKBONE OF THE AMERICAN ECONOMY. SO THE PROPOSALS THAT
00:51:36YOU HAVE THAT WOULD UNLOCK THE INVESTMENT AND CAPITAL FLOW, AS
00:51:39WELL AS DEAL WITH THE LIQUIDITY ISSUES THAT INVESTMENTS FOR SOME
00:51:42OF THESE FUNDS WOULD BE CRITICAL
00:51:45TO CAPITAL FORMATION. AND I WOULD ALSO NOTE, MR. CHAIRMAN, THAT WHEN YOU LOOK AT THAT AND
00:51:48YOU LOOK AT UPDATING THRESHOLDS
00:51:51FOR ALL SMALL ENTITIES, NOT JUST
00:51:53VC FUNDS, THAT IN TURN, WOULD REALLY UNLOCK INVESTMENTS AND
00:51:56CAPITAL FLOW FOR, FOR SMALLER COMMUNITIES. >> I THINK MISS BLANCHE MAKES A REALLY GOOD POINT THAT I HOPE
00:52:00THIS COMMITTEE, UH, HAS THE
00:52:01COURAGE TO TAKE ON, WHICH IS THE CONVERSATION AROUND INDEXING.
00:52:05UH, WE HAVE NOT GOTTEN THERE YET, BUT IT'S SUCH AN IMPORTANT PART OF THE CONVERSATION. I
00:52:09THINK MYSELF AND THE RANKING MEMBER WOULD BE ABLE TO LEAD THE CHARGE ON LOOKING AT WAYS TO
00:52:13INDEX EVERYTHING FROM BSA TO
00:52:16CAPITAL FORMATION. WE HAVE A LITANY OF LEGISLATION THAT WAS
00:52:18WRITTEN FOR A DIFFERENT TIME THAT REQUIRES, IN MY OPINION,
00:52:22FOR US TO TAKE A SERIOUS LOOK AT
00:52:26WAYS TO INDEX OUR THRESHOLDS
00:52:30>> YOU. THANK YOU, MR. CHAIRMAN, AND THANK YOU FOR HAVING A
00:52:34HEARING FOCUSING ON THESE
00:52:36ISSUES. IT'S IMPORTANT TO MAKE SURE THAT OUR CAPITAL MARKETS
00:52:39SERVE AMERICANS EFFECTIVELY, BOTH SAVERS LOOKING TO BUILD UP
00:52:43RETIREMENT AND COMPANIES LOOKING
00:52:44TO RAISE MONEY. I JUST WANT TO
00:52:48FLAG FOR OUR COLLEAGUES A BIPARTISAN BILL THAT'S BEEN
00:52:50INTRODUCED, AND I WOULD HOPE THAT WE COULD MOVE FORWARD AT
00:52:53SOME POINT, ENTITLED THE
00:52:56ENCOURAGING PUBLIC OFFERINGS ACT. I'VE INTRODUCED THAT WITH SENATOR BUDD, SENATOR WARNOCK,
00:52:59SENATOR TILLIS, AND SENATOR ALSOBROOKS, AND IT WOULD HELP
00:53:02MAKE IT EASIER FOR COMPANIES TO
00:53:05GO PUBLIC AND SUPPORT STRONG MARKETS. SO I HOPE WE CAN WORK
00:53:09ON THAT TOGETHER. UH, MR.
00:53:11BENSON, YOU WOULD AGREE THAT IN
00:53:14GENERAL, BUSINESSES THAT DO THE
00:53:17SAME KIND OF ACTIVITIES IN THE
00:53:19MARKET SHOULD BE SUBJECT TO THE
00:53:22SAME KIND OF REGULATIONS, RIGHT
00:53:24>> UH, YEAH. FIRST, I SHOULD SAY WE SUPPORT YOUR LEGISLATION. UM,
00:53:28BUT. YES, SIR, THANK YOU.
00:53:31>> I MEAN, WE WANT TO HAVE AN EVEN PLAYING FIELD. I WOULD
00:53:35ANYBODY DISAGREE WITH THAT. >> WE HAVE A RULE BOOK. THE RULE
00:53:37SHOULD APPLY. IT MAY BE, YOU
00:53:39KNOW, REGULATIONS OFTEN WRITTEN BASED UPON SIZE AND STUFF LIKE THAT. BUT THERE SHOULD BE A
00:53:43BASELINE RULE BOOK. YES, EXACTLY.
00:53:46>> AND THAT'S HOW YOU PREVENT LOOPHOLES. THAT'S HOW YOU
00:53:50CREATE AN EVEN PLAYING FIELD. UH, AS I'M SURE YOU'RE AWARE,
00:53:54SEC CHAIR ATKINS HAS SAID THAT
00:53:57HE'D LIKE TO PUT OUT WHAT HE
00:53:58CALLS AN INNOVATION EXEMPTION
00:54:02FROM THE SECURITY LAWS. WE DON'T KNOW ALL THE DETAILS YET, BECAUSE THE SEC HASN'T RELEASED
00:54:06THEM. BUT IT DOES SEEM THAT THIS
00:54:10EXEMPTION WOULD CARVE OUT CERTAIN CRYPTO BUSINESSES LIKE
00:54:13DEFI PLATFORMS, FROM THE RULES THAT APPLY TO EVERYBODY ELSE.
00:54:17UH, MR. BENSON, IN A COMMENT
00:54:21ABOUT THIS INNOVATION EXEMPTION TO THE D. TO THE SEC, YOU WROTE
00:54:24THAT MANY CRYPTO FIRMS, INCLUDING DEFI PLATFORMS,
00:54:28PERFORM THE SAME FUNCTIONS AS TRADITIONAL BROKERS AND
00:54:32EXCHANGES. THAT MEANS, AND I'M QUOTING THE CRYPTO
00:54:34INTERMEDIARIES SHOULD BE SUBJECT
00:54:37TO IDENTICAL, OR AT LEAST
00:54:39SUBSTANTIALLY SIMILAR RULES AND
00:54:41OVERSIGHT, END QUOTE. IN OTHER
00:54:43WORDS, IF THE FCC EXEMPTS CRYPTO
00:54:49AND DEFI PLATFORMS FROM SECURITY LAWS, WE'D GET AN UNEVEN
00:54:51PLAYING FIELD THAT UNDERMINES THE MARKETS, RIGHT?
00:54:55>> YES. THAT WAS IN ONE OF THE DOZEN LETTERS WE'VE WRITTEN ON
00:54:58THE ISSUE, THAT IF WE BELIEVE YOU CAN, IF YOU'RE ENGAGED IN
00:55:02THE SECURITIES BUSINESS, YOU'RE BEING COMPENSATED TO ENGAGE IN SIMILAR SECURITIES ACTIVITIES,
00:55:06WHETHER IT'S ORDER, ROUTING, CUSTODY, WHATEVER IT MAY BE. UH,
00:55:09THEN THE SAME RULE SHOULD APPLY.
00:55:13>> THAT SEEMS LIKE COMMON SENSE
00:55:13TO MAKE SURE WE PROTECT A LEVEL
00:55:17PLAYING FIELD. UM, THE CHALLENGE WE HAVE RIGHT HERE IS THE
00:55:21CLARITY ACT, WHICH IS PROPOSED LEGISLATION BEFORE THE SENATE
00:55:24HAS THE SAME PROBLEM. AND
00:55:29HERE'S HOW A WALL STREET JOURNAL EDITORIAL BOARD PUT IT
00:55:30ON TUESDAY. AND, UM, NO LEFT
00:55:35WING OUTLET, THE WALL STREET JOURNAL. AND I'M JUST PUTTING
00:55:38UP THE HEADLINE CLARITY FOR
00:55:40CRYPTO COMMA SORT OF. AND THEN
00:55:43THEY SAY THE SENATE BILL TO REGULATE THE DIGITAL CURRENCY
00:55:47NEEDS CHANGES TO REDUCE RISKS TO
00:55:50THE FINANCIAL SYSTEM. AND I
00:55:55THINK THIS IS A WARNING FOR ALL
00:55:56OF US THAT THAT BILL IS NOT
00:56:00READY FOR PRIME TIME. THEY SAY
00:56:03RIGHT NOW THAT IF YOU IF YOU READ IT, YOU'LL FIND THAT THE
00:56:07ARGUMENT IS THAT IT WILL MIGRATE
00:56:09TO SHADOW MARKETS. MORE INVESTMENTS WILL MIGRATE TO
00:56:12SHADOW MARKETS WITH FEW OR NO
00:56:17INVESTOR PROTECTIONS. UM, YOU, YOU WOULD AGREE THAT THAT WOULD
00:56:18BE A CONCERN, WOULD YOU NOT?
00:56:21>> UH, YES, SENATOR. SO IF I
00:56:23COULD SAY TWO THINGS. ONE IS WE
00:56:26HAVE LONG SAID, I'VE LONG SAID CONGRESS SHOULD ACT IN THIS
00:56:29SPACE. SO, SO GOOD FOR CONGRESS
00:56:31TO BE ACTING. UM, WE THINK SOME OF THE, WE THINK THE BILL THAT
00:56:35CAME OUT OF THE SENATE BANKING COMMITTEE HAD A NUMBER OF GOOD
00:56:38THINGS IN IT. UH, OR THEY WERE CLARIFICATIONS THAT NEEDED TO BE
00:56:41MADE, THINGS LIKE BANK PERMISSIBILITY, UH, PORTFOLIO,
00:56:45UH, PORTFOLIO HEDGE, UM,
00:56:50NETTING, UM, BUT, UH, AND TRYING
00:56:52TO ADDRESS SOME OF THE CONCERNS
00:56:54AROUND WHAT RULES APPLY TO DEFI WHEN YOU, WHEN YOU DETERMINE
00:56:58BETWEEN A PROGRAMMER, A COMPUTER PROGRAMMER VERSUS SOMEBODY WHO'S ACTUALLY IN THE BUSINESS.
00:57:02SO THAT'S GOOD. THE BILL GOT TO THE AG COMMITTEE. SOME OF THOSE THINGS DIDN'T CARRY OVER. AND
00:57:05SO WE DO HAVE CONCERNS WITH THE BILL AS WE UNDERSTAND IT TODAY,
00:57:08BUT WE HAVEN'T QUITE SEEN IT. SO WE DON'T REALLY KNOW. UH, BUT
00:57:11WE DO THINK THAT IT IS IMPORTANT FOR CONGRESS TO SET THE RULES.
00:57:15BUT WE AGREE. I AGREE WITH THE WALL STREET JOURNAL EDITORIAL
00:57:19FROM YESTERDAY. I THINK IT'S VERY WELL WRITTEN THAT WHERE THE
00:57:22YOU CAN APPLY THE EXISTING RULEBOOK FOR THE SECURITIES AND
00:57:26COMMODITIES MARKETS FOR, FOR ACTIVITIES THAT ARE BEING DONE
00:57:28IN THAT SPACE. HOWEVER, THEY'RE BEING DONE, WHETHER THEY'RE
00:57:32BEING DONE DIGITALLY, ON PAPER, WHATEVER IT SHOULD BE.
00:57:35>> I AGREE. IT SHOULD BE TECHNOLOGY NEUTRAL. AND THAT WAS
00:57:38THE POINT YOU WERE MAKING WITH RESPECT TO THE, QUOTE,
00:57:41INNOVATION EXCEPTION. AND I
00:57:44THINK THAT SAME PRINCIPLE APPLIES. AND THAT'S BEFORE EVEN GETTING TO THE CONFLICT OF
00:57:47INTEREST AND ETHICS ISSUES, WHICH IS ANOTHER HUGE LOOPHOLE.
00:57:49SO 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
00:58:00STREET JOURNAL OP ED, UH,
00:58:03FOCUSED MUCH OF ITS ATTENTION ON
00:58:06THE DEPOSIT FLIGHT RISK THAT IS
00:58:10EMBEDDED IN THE PSYCHE OF THE SOME OF THE COMMUNITY BANKS.
00:58:12AND, FRANKLY, SPOKEN MORE ABOUT BY THE LARGER BANKS. BUT
00:58:16ULTIMATELY, IF YOU LOOK AT THE DATA, ONCE AGAIN, REINFORCES THE
00:58:18FACT THAT DEPOSIT GROWTH IS
00:58:20OCCURRING AT ABOUT 3% YEAR OVER
00:58:24YEAR, EVEN AFTER THE PASSAGE OF THE GENIUS ACT, SENATOR BRITT.
00:58:27>> THANK YOU, MR. CHAIRMAN. APPRECIATE YOU HOLDING THIS
00:58:29HEARING. AND THANK YOU TO ALL THE WITNESSES FOR BEING HERE.
00:58:33UM, MR. DUMAS, I HEAR YOU GRADUATED FROM THE UNIVERSITY OF
00:58:37SOUTH ALABAMA. IT IS ON FIRE.
00:58:40UH, PRESIDENT BONNER IS DOING
00:58:41SUCH A GREAT JOB. SO GO, JAGS.
00:58:45WHEN WE TALK ABOUT CAPITAL FORMATION, WE ARE TALKING ABOUT
00:58:48PUTTING AMERICANS SAVINGS TO
00:58:50WORK AND HELPING BUSINESSES GROW
00:58:53AND HELPING FAMILIES BUILD A
00:58:55SECURE FUTURE. LOOK, TODAY, MANY
00:58:59TEACHERS, NURSES, HOSPITAL EMPLOYEES, NONPROFIT WORKERS ARE
00:59:03STILL BEING TREATED UNFAIRLY BECAUSE CONGRESS LEFT A
00:59:05TECHNICAL FIX UNFINISHED. THESE
00:59:08WORKERS OFTEN HAVE TO SAVE FOR RETIREMENT THROUGH 403(B) PLANS,
00:59:12WHICH WE'VE DISCUSSED TODAY, WHICH IS ESSENTIALLY THE
00:59:14NONPROFIT AND PUBLIC SCHOOL
00:59:16VERSION OF A 401(K). THESE
00:59:20WORKERS SAVE AND WORK HARD, BUT
00:59:22UNFORTUNATELY, UM, WE'VE LEFT
00:59:25SOME THINGS UNFIXED. CONGRESS
00:59:27INTENDED TO ALLOW 403(B) PLANS
00:59:29TO OFFER COLLECTIVE INVESTMENT
00:59:32TRUST, AND WE MADE THE NECESSARY
00:59:33TAX LAW CHANGE TO SECURE 2.0.
00:59:37BUT THE MATCHING CHANGE TO THE SECURITIES LAW WAS LEFT OUT.
00:59:41ULTIMATELY, IT'S TIME FOR US TO DO OUR JOB. AS A RESULT, IT'S
00:59:44STILL NOT WORKING. AND SO WHEN
00:59:46WE LOOK AT THIS, I THINK
00:59:50LOWERING FEES MEANS MORE OF
00:59:51WORKERS MONEY STAYING IN THEIR
00:59:55ACCOUNT AND GROWING OVER TIME. AND THESE SITS WHY SOME PEOPLE
00:59:58SAY COLLECTIVE INVESTMENT TRUST. WHAT IS THAT? THAT SOUNDS COMPLICATED. UM, THIS IS
01:00:01ACTUALLY A VERY SIMPLE FIX AND A VERY SIMPLE THING. WORKERS CAN
01:00:05POOL THEIR RETIREMENT SAVINGS SO THAT THEY CAN RECEIVE LOWER
01:00:09PRICES, MUCH LIKE BUYING IN BULK AT SAM'S OR COSTCO OR WHEREVER
01:00:13IT IS THAT YOU GO. SO I WANT TO
01:00:16SEE THIS FIX. MY GUESS IS, IS THAT EVERY SINGLE PERSON ON THIS
01:00:20DAIS USES A CIT, WHETHER THEY REALIZE IT OR NOT. AND MY WHOLE
01:00:23THING IS, IS IF IT'S AVAILABLE TO US, IT SHOULD BE AVAILABLE TO
01:00:26NURSES AND FIREFIGHTERS AND TEACHERS AND PUBLIC SERVANTS. SO
01:00:30IT'S TIME TO GET THIS FIXED. I'VE ASKED FOR IT TO BE
01:00:34INCLUDED IN THE N, D, A, A WHEN
01:00:40CLARITY COMES TO THE FLOOR.
01:01:03BENSON, I'LL START WITH YOU. MY BILL WOULD NOT
01:01:07REQUIRE ANY EMPLOYER TO OFFER A C, I T OR A
01:01:09IN ONE. IT WOULD JUST SIMPLY PROVIDE THE SAME CHOICE ALREADY
01:01:13AVAILABLE 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
01:01:20CORRECTED. CONGRESS HAS WORKED ON FOR THREE BEES FOR A LONG TIME. WHY THIS WASN'T DONE
01:01:23BEFORE, I DON'T KNOW. UM, BUT, BUT, UH, AND ULTIMATELY, IT'S UP
01:01:27TO THE, UP TO THE PLAN SPONSOR TO DETERMINE WHAT'S GOING TO BE
01:01:30IN THE PLAN. SO, AND THEY HAVE A FIDUCIARY RESPONSIBILITY TO THE,
01:01:33TO THE PARTICIPANTS. SO WE THINK THIS IS VERY GOOD LEGISLATION.
01:01:37WE HOPE THE CONGRESS WILL PASS IT.
01:01:38>> I APPRECIATE IT. THANK YOU SO
01:01:41MUCH. UM, MRS. BLASS, CONGRESS.
01:01:46REMOVED THE TAX LAW BARRIER TO CITIES AND SECURED 2.0, BUT LEFT
01:01:49THAT OUTDATED SECURITY LAW BARRIER IN PLACE THAT I JUST
01:01:52DISCUSSED. CAN YOU EXPLAIN WHY
01:01:54THE TAX FIX IS NOT SUFFICIENT? WE'VE GOTTEN SOME PUSHBACK ON
01:01:58THIS, AND MORE CONGRESSIONAL ACTION IS ACTUALLY NEEDED TO FINISH THE JOB AND ALLOW PEOPLE
01:02:02TO UTILIZE THIS IN THE WAY THAT IT WAS INTENDED.
01:02:05>> THANK YOU. SENATOR. CORRECT. THE SECURE, SECURE 2.0 FIX THE
01:02:09TAX BARRIER. BUT AS YOU NOTED,
01:02:10IT DID NOT FIX TWO SECURITIES
01:02:14LAW BARRIERS. SO RIGHT NOW, FOR
01:02:16CITIES, IF THEY WOULD LOSE THEIR
01:02:19EXEMPTION UNDER THE INVESTMENT COMPANY ACT AND BECOME UNREGISTERED INVESTMENT
01:02:22COMPANIES, AND THEY WOULD LOSE AN EXEMPTION UNDER THE
01:02:25SECURITIES ACT AND BE ENGAGED IN UNREGISTERED OFFERINGS. SO CONGRESS NEEDS TO FIX TWO
01:02:29STATUTORY SECTIONS UNDER BOTH OF
01:02:31THESE STATUTES TO ENABLE TO MAKE
01:02:35SURE THAT FOR ONE AND FOUR ONE K PLANS AND FOUR THREE B PLANS
01:02:37HAVE A LEVEL PLAYING FIELD,
01:02:40BECAUSE CITIES ARE MORE COST EFFECTIVE, IN SOME CASES,
01:02:43DIVERSIFY INVESTMENT OPTIONS, AND CAN IMPROVE PERFORMANCE. AND
01:02:45I WOULD JUST NOTE, AS YOU
01:02:49PROVIDE PARITY BETWEEN 401(K) AND 403(B), IT'S ALSO IMPORTANT TO PROVIDE PARITY BETWEEN
01:02:53DEFINED CONTRIBUTION PLANS AND DEFINED BENEFIT PLANS. DEFINED
01:02:55BENEFIT PLANS. TODAY, 70% OF
01:02:58THEM INVEST IN PRIVATE MARKETS. ONLY 4% DEFINED CONTRIBUTION
01:03:02PLANS HAVE THAT PRIVILEGE. IT ALSO NEEDS TO BE EQUALIZED. >> THANK YOU VERY MUCH. AND, MR.
01:03:06FLOOD, HOW WOULD YOU ALLOW HOW WOULD ALLOWING SCHOOLS,
01:03:09HOSPITALS AND CHARITIES TO OFFER
01:03:11THE SAME RETIREMENT OPTIONS AS PRIVATE COMPANIES, HELP THEM
01:03:14RECRUIT WORKERS, STRENGTHEN RETIREMENT SECURITY, AND PUT A
01:03:18MORE AMERICAN SAVINGS TO WORK IN OUR ECONOMY? >> IT'S AS SIMPLE AS SAYING, I
01:03:21GET TO OFFER WHAT EVERYBODY ELSE DOES, AND I'M GIVING YOU THE
01:03:24SAME RISK PROFILE TO LOOK AT.
01:03:25AND BY THE WAY, THE PERSON WHO
01:03:28IS CURATING THESE CHOICES FOR YOU HAS A FIDUCIARY
01:03:31RESPONSIBILITY. SO WE'RE NOT CHANGING THE PROCESS BY WHICH WE
01:03:35CHOOSE THE INVESTMENTS TO SHOW TO YOU. WE'RE JUST CHANGING THE AMOUNT OF INVESTMENTS YOU GET TO
01:03:39INVEST. >> WELL THANK YOU. I THINK CONGRESS NEEDS TO FINISH THE JOB. WE'VE ALREADY DECIDED ON
01:03:42THE POLICY. LET'S DO IT. >> THAT'S GREAT. SENATOR BLUNT
01:03:46ROCHESTER. >> THANK YOU, MR. CHAIRMAN AND RANKING MEMBER, WARREN, AND
01:03:50THANK YOU SO MUCH TO THE
01:03:51PANELISTS THAT ARE HERE. I APPRECIATE TODAY'S HEARING,
01:03:55BECAUSE CAPITAL MARKETS ARE ULTIMATELY ABOUT OPPORTUNITY.
01:03:59THEY'RE ABOUT HELPING
01:04:02BUSINESSES AND HELPING FAMILIES BUILD WEALTH AND STRENGTHENING
01:04:04OUR ECONOMY. WE TALK A LOT ABOUT
01:04:08MAIN STREET IN OUR COMMITTEE,
01:04:10AND MAKING SURE THAT OUR FOCUS
01:04:12IS HERE, NOT JUST WALL STREET.
01:04:14AND THIS IS IMPORTANT BECAUSE ENTREPRENEURS OR SMALL
01:04:18BUSINESSES ARE SEEKING INVESTMENT. AMERICANS WHO
01:04:22SAVINGS ARE MAKE THOSE INVESTMENTS POSSIBLE. AND SO,
01:04:26MR. DUMAS, AS CONGRESS LOOKS TO MODERNIZE OUR CAPITAL MARKETS,
01:04:29WHAT SHOULD WE BE DOING TO MAKE
01:04:31SURE EVERY DAY, INVESTORS
01:04:34BENEFIT ALONGSIDE BUSINESSES SEEKING INVESTMENT? AND HOW
01:04:37SHOULD WE MEASURE WHETHER WE'RE SUCCEEDING? >> THANKS FOR THE QUESTION,
01:04:41SENATOR. I'M ALL FOR ASSETS. I THINK THAT IN PROVIDING ACCESS
01:04:45TO EVERYDAY INVESTORS, I THINK, FIRST, WE SHOULD STOP, TAKE A STEP BACK AND MAKE SURE THAT
01:04:49THERE'S PROPER GUARDRAILS IN PLACE. INVESTMENT PROTECTION,
01:04:53TRANSPARENCY. PEOPLE ARE FAMILIAR WITH THE RISK PROFILE.
01:04:55I THINK THAT THAT'S IMPORTANT.
01:04:59ANY TIME WE TALK ABOUT PROVIDING ACCESS TO ANYONE. UH, SECOND, I
01:05:03THINK THAT A GOOD WAY TO MEASURE IS ALSO, UM, THERE SHOULD BE
01:05:06SOME TYPE OF DATA I MENTIONED IN MY WRITTEN STATEMENT WHERE
01:05:09THERE'S TRANSPARENCY THAT WE
01:05:11SEE WHETHER OR NOT RAISING
01:05:15CAPITAL GOES TO PARTICULAR BUSINESSES, SPECIFICALLY BLACK OWNED BUSINESSES OR, UM, OR
01:05:19UNDERSERVED BUSINESSES. I THINK THAT THE IDEA THAT RAISING
01:05:22CAPITAL WITHOUT ANY TYPE OF
01:05:24TRANSPARENCY CAN GIVE AN INDICATION THAT THERE'S INCLUSION. AND I WANT TO MAKE
01:05:28SURE THAT, YOU KNOW, WHEN CAPITAL IS RAISED, IT'S DISTRIBUTED TO THOSE WHO
01:05:32ACTUALLY NEED IT. >> THANK YOU. AND HELPING
01:05:35FAMILIES BUILD WEALTH INCREASINGLY MEANS UNDERSTANDING HOW TECHNOLOGY IS CHANGING, THE
01:05:39WAY FINANCIAL DECISIONS ARE
01:05:41MADE. WE'RE SEEING ARTIFICIAL
01:05:44INTELLIGENCE TRANSFORM HEALTH CARE, OUR WORKPLACE, AND NOW
01:05:47INVESTING. MILLIONS OF AMERICANS
01:05:50ARE ALREADY USING AI TO ANSWER
01:05:52FINANCIAL QUESTIONS. MR. DUMAS,
01:05:54AS THESE TOOLS BECOME MORE SOPHISTICATED, WHAT ROLE SHOULD
01:05:58CONGRESS PLAY IN MAKING SURE
01:06:00THEY HELP FAMILIES BUILD WEALTH
01:06:03WITHOUT EXPOSING THEM TO NEW RISKS? >> IT'S A GREAT QUESTION,
01:06:06SENATOR. I THINK AI HAS AN OPPORTUNITY TO TRANSFORM OUR
01:06:10ECONOMY. IT HAS AN OPPORTUNITY
01:06:12TO, UM, TO EXPAND OPPORTUNITY
01:06:15FOR EVERYONE. BUT AT THE SAME TIME, I THINK THAT, YOU KNOW, ESPECIALLY IN THE FINANCIAL
01:06:18MARKETS, WE SHOULD BE CAREFUL
01:06:20USING AI WITHOUT UNDERSTANDING
01:06:24THE BACKGROUND. AI HAS THE POTENTIAL TO HAVE CERTAIN
01:06:26BIASES, RIGHT? SO WE JUST NEED TO, FOR CONGRESS, NEED TO
01:06:29UNDERSTAND AI, PROVIDE CERTAIN GUARDRAILS, PROVIDE SOME TYPE OF
01:06:33PROTECTION, AND INFORM INVESTORS OR PEOPLE WHO LOOK TO AI FOR
01:06:37INVESTMENT ADVICE TO BE SOME TYPE OF DISCLOSURE, SOME TYPE OF INFORMATION TO LET THEM KNOW
01:06:41THAT AI COULD BE WRONG. >> I'M GOING TO OPEN THAT QUESTION UP TO THE REST OF THE
01:06:45PANEL. IF ANYONE ELSE HAS ANY
01:06:46OPINIONS ON HOW WE, AGAIN, CREATE THOSE SAFEGUARDS, WHAT WE
01:06:50CAN DO IN CONGRESS. MR. FLOOD. >> FROM THE CHAMBER'S
01:06:54PERSPECTIVE, AI IS A TOOL THAT'S BEING USED, AND WE'VE
01:06:58CALLED FOR PUBLICLY CONVERSATIONS, SOLVES A LOT OF
01:07:00PROBLEMS, BUT PUBLIC PRIVATE ROUNDTABLES WITH AGENCIES TO
01:07:05TALK ABOUT THE THE WAY AI IS BEING USED IN DIFFERENT INDUSTRIES.
01:07:08>> THANK YOU, MISS BLASS. OUR TODAY'S SECURITIES LAWS,
01:07:12FLEXIBLE ENOUGH TO ADAPT AS AI
01:07:14BEGINS PLAYING A LARGER ROLE IN
01:07:18INVESTMENT ADVICE. >> SO ONE OF THE THINGS ABOUT THE FEDERAL SECURITIES LAWS IS
01:07:21HOW ENDURING THEY HAVE BEEN, RIGHT? YOU LOOK AT A BODY OF LAW THAT WAS ADOPTED BACK IN THE 30s
01:07:25AND 40s, AND UNTIL TODAY, THEY ARE THE BACKBONE OF THE OF OUR
01:07:29CAPITAL MARKETS. SO IN SOME, IN
01:07:31MANY WAYS, YES. UM, BUT, YOU
01:07:33KNOW, WITH, WITH AI, UM, IT'S A TOOL, IT'S STILL A TOOL IN
01:07:37PROGRESS. IT'S GOING TO HAVE GREAT POTENTIAL, AS MR. DUMAS
01:07:40SAID. UM, AND AS, AS MR. FLOOD SAID, HAVING A PRIVATE PUBLIC
01:07:43ROUNDTABLES TO BETTER UNDERSTAND THE IMPACT AND ANY SHORTCOMINGS
01:07:47WOULD BE FANTASTIC FOR THE CAPITAL MARKETS. >> YES. MR..
01:07:51>> I JUST ADD, IT IS A GREAT
01:07:53TOOL. IT DOESN'T ABSOLVE YOU OF
01:07:56YOUR RESPONSIBILITIES UNDER THE
01:08:0040 ACT OR REG BY. IN THOSE INSTANCES OF GIVING FINANCIAL
01:08:03ADVICE. AND SO FIRMS UNDERSTAND
01:08:06THAT. AND THEY NEED TO TAKE THAT INTO ACCOUNT.
01:08:09>> I'M GLAD YOU SAID THAT. I ASKED THE QUESTION, BECAUSE I
01:08:12THINK ABOUT THE FACT THAT A LOT OF PEOPLE ARE GOING TO CHAT BOTS
01:08:16AND OTHER PLACES TO GET HEALTH
01:08:18CARE INFORMATION, AND YOU CAN'T
01:08:22DEPEND ON AI NECESSARILY FOR THAT. AND WE HAVE, YOU KNOW, PROTECTIONS. AND SO WE'RE
01:08:25LOOKING AT HOW DO WE PROTECT
01:08:27CONSUMERS AS WELL. UM, I,
01:08:30ANOTHER AREA THAT WE'VE DISCUSSED IS TOKENIZATION AND
01:08:33OTHER INNOVATIONS IN MARKET INFRASTRUCTURE. TECHNOLOGY WILL
01:08:36CONTINUE TO EVOLVE. BUT MR. BENSON, WHAT INVESTOR
01:08:40PROTECTIONS OR MARKET AND MARKET INTEGRITY PRINCIPLES SHOULD
01:08:43NEVER CHANGE, REGARDLESS OF HOW SECURITY IS ISSUED, TRADED, OR
01:08:46HELD. >> WELL, I WOULD TAKE ABOUT 10 SECONDS. >> TO ANSWER.
01:08:50>> THAT QUESTION. YOU CAN NOT.
01:08:51TOKENIZATION IS JUST IN MANY OF EQUITIES AND SECURITIES. IS JUST
01:08:55THE LATEST ITERATION GOING FROM PAPER TO BOOK, ENTRY TO
01:08:59DIGITIZATION 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
01:09:09ECONOMIC CENTER OF COMMUNITIES
01:09:12ACROSS MY STATE. EXCESSIVE FEDERAL RED TAPE FORCES, MANY
01:09:16MAIN STREET BUSINESSES TO COMPETE ON AN UNLEVEL PLAYING
01:09:18FIELD. THAT'S WHY I INTRODUCED THE ELEVATE ACT WITH SENATOR
01:09:22CORTEZ MASTO AND PARTNER WITH SENATOR GALLEGO TO INTRODUCE THE
01:09:25HALOS ACT. BOTH BILLS WILL MAKE IT EASIER FOR SMALL ENTERPRISES
01:09:28TO UNLOCK AVAILABLE CAPITAL AND
01:09:30DRIVE OUR LOCAL ECONOMIES FORWARD. AND AS HAS BEEN
01:09:33MENTIONED HERE TODAY, YOU KNOW, THE UNITED STATES HAS THE
01:09:36STRONGEST, MOST TRUSTED CAPITAL
01:09:38MARKETS IN THE WORLD, AND IT'S BECAUSE OF THE REGULATORY STRUCTURE THAT WE HAVE IN PLACE.
01:09:42OUR SYSTEM RELIES ON CLEAR
01:09:43RULES, RELIABLE DISCLOSURES, AND ENFORCEMENT THAT IS PREDICTABLE
01:09:47AND GROUNDED IN LAW, FAIR AND TRANSPARENT REGULATIONS ALLOW OUR COUNTRY TO HAVE THE MOST
01:09:51LIQUID, TRANSPARENT MARKETS IN THE WORLD, AND THOSE STANDARDS
01:09:55MATTER EVEN MORE IN A TIME OF STRATEGIC COMPETITION AGAINST
01:09:59COMMUNIST CHINA. COMMUNIST CHINA IS NOT JUST ANOTHER FOREIGN MARKET PARTICIPANT. COMMUNIST
01:10:03CHINA IS OUR GREATEST EXISTENTIAL THREAT. THEY ARE A
01:10:07STRATEGIC COMPETITOR WITH A STATE DIRECTED ECONOMY. ACCORDING TO THE US-CHINA
01:10:11ECONOMIC AND SECURITY REVIEW
01:10:14COMMISSION, ROUGHLY 286 CHINA BASED COMPANIES WERE LISTED ON
01:10:17U.S. EXCHANGES AS OF MARCH 2025.
01:10:19COMBINED TOGETHER, THAT REPRESENTS ABOUT $1.1 TRILLION
01:10:22IN MARKET CAPITALIZATION. THAT
01:10:25MEANS THAT A MEANINGFUL SHARE OF AMERICAN RETIREMENT ACCOUNTS,
01:10:28MUTUAL FUNDS, AND INDEX FUNDS ROUTINELY HAVE EXPOSURE AND HOLD
01:10:32THESE SECURITIES IN THEIR PORTFOLIOS. AMERICAN RETIREMENT
01:10:35SAVINGS ARE FLOWING INTO CHINA BACKED COMPANIES OPERATING
01:10:37OUTSIDE THE REACH OF U.S.
01:10:39REGULATORY OVERSIGHT AND PROTECTIONS. IT MEANS AMERICANS
01:10:42RETIREMENT DOLLARS AND OUR
01:10:45MARKETS ARE USED TO PROMOTE COMMUNIST CHINA'S BUSINESSES.
01:10:49THAT'S WHY I INTRODUCED THE NO.
01:10:51CHINA INTO IN INDEX FUNDS ACT LAST JUNE, BECAUSE THE RETIREMENT SAVINGS OF EVERYDAY
01:10:55AMERICANS SHOULD NEVER BE FUNNELED INTO COMPANIES
01:10:57CONTROLLED BY COMMUNIST CHINA BY DEFAULT. WITHOUT THOSE AMERICANS
01:11:01EVER HAVING MADE THAT CHOICE,
01:11:04151 OF THOSE 286 CHINA BASED
01:11:07ISSUERS REPRESENT ABOUT 90% OF THE TOTAL MARKET CAP USED, AND
01:11:10THEY USE VARIABLE INTEREST ENTITY WRIGHT. THERE ARE
01:11:14VARIABLE INTEREST ENTITY V
01:11:16ARRANGEMENTS. THEY USE THESE STRUCTURES BECAUSE CHINA LAW
01:11:20RESTRICTS FOREIGN OWNERSHIP IN KEY SECTORS, SO THEY CAN'T SELL
01:11:23EQUITY IN THE OPERATING COMPANY DIRECTLY TO U.S. INVESTORS.
01:11:27INSTEAD, INVESTORS BUY SHARES IN AN OFFSHORE HOLDING COMPANY THAT
01:11:30RELIES ON CONTRACTS, NOT
01:11:32OWNERSHIP. MR. BENSON, MR. FLOOD, MR. DUMAS, YES OR NO? DO
01:11:36YOU BELIEVE THAT THE AVERAGE AMERICAN RETAIL INVESTOR
01:11:40UNDERSTANDS 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
01:11:47PROBABLY A LOT OF INVESTORS DON'T UNDERSTAND HOW THE INDEX
01:11:50MODELS WORK AND WHAT'S INCLUDED
01:11:52IN THAT.
01:11:55>> MR. FLOOD. >> IMPORTANT THING IS TRANSPARENCY. >> AND DISCLOSURE. SO WE GOT TO
01:11:58MAKE SURE THAT THE APPROPRIATE DISCLOSURES ARE THERE FOR PEOPLE TO UNDERSTAND. >> I THINK THE AVERAGE INVESTOR
01:12:02KNOWS THAT WHEN THEY'RE INVESTING IN THESE INDEX FUNDS, THAT IT'S GOING OFF TO
01:12:05COMMUNIST CHINA, BECAUSE THAT'S PART OF THE INDEX, AND IT'S NOT
01:12:09EVEN 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
01:12:17HAVE YOU AN INVESTOR. AND IF MY
01:12:22FUNDS GOING CHINA WITHOUT PROPER DISCLOSURE OR INFORMATION, I WOULDN'T HAVE ANY IDEA.
01:12:25>> YEAH. THANK YOU. UH, MISS
01:12:27BLAS AND MR. BENSON, IN YOUR VIEW, OUR EXISTING DISCLOSURE
01:12:31REQUIREMENTS ADEQUATE, ADEQUATE TO CLEARLY EXPLAIN THOSE
01:12:33OWNERSHIP DIFFERENCES TO INVESTORS.
01:12:36>> SO THE DISCLOSURES THEMSELVES. YES, BUT THEY ARE DENSE. AND OUR INVESTORS GOING
01:12:40TO ACTUALLY LOOK FOR THEM. THE ANSWER IS NO. UM, WHEN YOU LOOK
01:12:44AT THE INDEX ERS AND THE RULES OF THE ROAD THERE AND HOW THEY
01:12:47INCLUDE THESE COMPANIES AND WHETHER THESE COMPANIES HAVE THE
01:12:50SAME OBLIGATIONS LIKE U.S. COMPANIES IN TERMS OF DISCLOSURES, THAT IS SOMETHING ACTUALLY THAT WAS LOOKED AT AND
01:12:54HAS BEEN CONTINUED TO LOOK AT. AND DEFINITELY THE POLICYMAKERS
01:12:57AND REGULATORS NEED TO CONTINUE LOOKING AT THAT TO SAFEGUARD
01:13:01AMERICAN INVESTMENTS AND RETIREMENT SAVINGS. >> I HAVE NOTHING I AGREE WITH YOU.
01:13:04>> AGREE WITH HER. OKAY, GREAT.
01:13:07UM, I HAVE CONCERNS ABOUT HOW THESE VIE STRUCTURES ALLOW CHINESE COMPANIES TO RAISE
01:13:10CAPITAL IN U.S. MARKETS WITHOUT BEING SUBJECT TO THE SAME
01:13:13ONGOING DISCLOSURE, GOVERNANCE, AND OVERSIGHT STANDARDS THAT AMERICAN COMPANIES FACE. UNDER
01:13:17THE CURRENT RULES, CHINESE COMPANIES USING VIE STRUCTURES
01:13:20CAN STILL QUALIFY AS FOREIGN
01:13:23PRIVATE ISSUERS. MR. BENSON, AMONG ALL FOREIGN PRIVATE
01:13:25ISSUERS, IS IT FAIR TO SAY VIE
01:13:28ISSUERS BASED IN COMMUNIST CHINA ARE THE ONES RAISING THE MOST
01:13:32SERIOUS OVERSIGHT AND ENFORCEMENT CONCERNS FOR AMERICAN INVESTORS? I. >> I DON'T KNOW THAT I CAN
01:13:36ANSWER THAT, BUT WHAT I CAN SAY IS, WHERE WE DO HAVE CONCERNS,
01:13:38AND I KNOW YOU BROUGHT THIS UP, IS ON LOW PRICED, UH, THE LOW
01:13:42PRICED SECURITIES AND THE IMPACT THAT IT'S HAD ON INVESTORS AND
01:13:44ISSUES AND WHERE THE LISTING STANDARDS HAVE NOT BEEN. YEAH. AND THE PUMP AND DUMP SCHEMES.
01:13:48AND WE THANK YOU FOR BRINGING
01:13:50THAT UP. WE HAVE RAISED THAT
01:13:53WITH THE EXCHANGES AND THE SEC REPEATEDLY. TO BE FAIR, NASDAQ
01:13:56RECENTLY CAME OUT WITH REVISIONS. AND AND THEY WE DON'T REPRESENT THEM THERE, YOU
01:13:59KNOW, BUT, UH, THEY CAME OUT WITH REVISED LISTING STANDARDS,
01:14:03WHICH WE THINK IS A STEP IN THE RIGHT DIRECTION TO ADDRESS THE
01:14:06LOW PRICE ISSUE. >> WELL, THIS IS AN ISSUE THAT'S IMPORTANT TO ME, AND
01:14:09I'VE RAISED IT WITH CHAIRMAN ATKINS. UH, IT'S CRUCIAL THAT WE GET THIS RIGHT, BECAUSE WE
01:14:13ARE PUTTING, I THINK, INVESTORS
01:14:16DOLLARS AT RISK WITHOUT THEIR UNDERSTANDING WHAT THAT RISK IS.
01:14:18AND WE'RE ALSO HELPING TO FUND
01:14:22COMPANIES IN OUR CHIEF ADVERSARY IN THE WORLD. AND, UH, THEY ARE
01:14:26NOT PLAYING BY THE SAME RULES WE ARE. >> THANK YOU. MR. CHAIRMAN.
01:14:29THANK YOU, KIM.
01:14:32>> THANK YOU, CHAIRMAN, FOR BRINGING THIS HEARING TOGETHER.
01:14:36IT'S VERY IMPORTANT, AND I THANK YOU ALL FOR JOINING UP
01:14:39HERE. UM, YOU KNOW, MR. FLOOD, I
01:14:41WANTED TO START WITH YOU. UH, WHAT I'VE BEEN TRYING TO WORK
01:14:44ON AND ACTUALLY WORKING WITH THE CHAMBER ON IN NEW JERSEY, FOR
01:14:48INSTANCE, IS ABOUT REALLY TRYING TO CREATE THIS NEW INNOVATION
01:14:51HUB, YOU KNOW, REALLY TRYING TO BOLSTER THE TYPE OF, UH, YOU
01:14:55KNOW, TECHNOLOGY DEVELOPMENT AND INNOVATION WE'RE TRYING TO DO IN OUR STATE. I'VE CALLED IT,
01:14:59YOU KNOW, CREATING THIS EINSTEIN CORRIDOR BETWEEN PHILADELPHIA
01:15:03AND NEW YORK. AND, YOU KNOW, AS WE'VE BEEN GOING THROUGH THIS
01:15:06PROCESS, I'VE BEEN, YOU KNOW, TRYING TO THINK THROUGH THINGS. AND, YOU KNOW, THE CHAIRMAN RAISED THIS EARLIER ABOUT, YOU
01:15:10KNOW, HOW WE SEE SO MUCH OF THE
01:15:12VENTURE CAPITAL FUNDS, FOR INSTANCE, CONCENTRATED IN
01:15:15SILICON VALLEY, NEW YORK AND BOSTON. AND I GUESS I JUST WANT
01:15:19TO PULL ON THIS A LITTLE BIT
01:15:21FURTHER FROM THE CHAMBER'S PERSPECTIVE, WHAT POLICIES DO
01:15:24YOU, UH, DO YOU THINK WOULD BE
01:15:25MOST HELPFUL IN, YOU KNOW,
01:15:29DIRECTING MORE PRIVATE CAPITAL TOWARDS EMERGING INNOVATION HUBS
01:15:32RATHER 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
01:15:40SAYING, I THINK WHEN IT COMES TO
01:15:42INNOVATION, WE HAVE TO REALIZE THAT YOU NEED A NETWORK IN
01:15:46ALMOST EVERY AREA. YOU NEED A PLACE WHERE YOU CAN PITCH DEALS,
01:15:48YOU NEED A PLACE WHERE YOU HAVE
01:15:51OTHERS WHO, WHO HAVE LIKE MINDS, LIKE A HEALTH CARE HUB, AND YOU
01:15:54NEED FUNDERS TO BE THERE TO TALK
01:15:56ABOUT IT. SO WHEN I LOOK AT THE
01:15:58PROPOSALS THAT HAVE BEEN PUT
01:16:01FORTH BY THIS, UH, BY THIS COMMITTEE, AS WELL AS IN THE
01:16:04INVEST ACT, I SEE A FEW THAT CAN BE VERY HELPFUL. AND A LOT OF
01:16:08THEM ARE VERY TECHNICAL, JUST COMMON SENSE FIXES. UM, AGAIN,
01:16:12I'LL GO BACK TO THE A F E. UM, IF WE CAN SOLVE THAT, I WOULD
01:16:16HONESTLY, SOME PEOPLE SAY WE'RE DOUBLE COUNTING. I ACTUALLY SAY
01:16:18IT'S A, IT'S, IT'S BECAUSE WE
01:16:20ARE DOUBLE COUNTING. THAT IS A
01:16:23MISREPRESENTED DISCLOSURE. SO IF WE TECHNICALLY FIX THAT, IT WILL
01:16:27ALLOW THESE FUNDS TO MAKE IT INTO INDICES AND MAKE MORE LIQUID INVESTORS, NOT ONLY FOR
01:16:31RETAIL INVESTORS, BUT FOR THOSE
01:16:33FUNDS THEMSELVES. UM, TWO, WE SHOULD LOOK AT SOME OF THE
01:16:36DEFINITIONS. AND YOU ALL HAVE TALKED ABOUT IT HERE, MAKING
01:16:40SURE THAT THE RULES FOR EMERGING GROWTH FUNDS, THE RULES FOR
01:16:44VENTURE CAPITAL FUNDS HAVE MET INFLATION. YOU KNOW, LET'S RAISE
01:16:47SOME OF THE THRESHOLDS SO THAT THE BUSINESSES THAT WERE AT $125
01:16:51MILLION CAN STILL INVEST AS THEY WERE TEN YEARS AGO. THEIR ASSETS
01:16:55HAVE GONE PAST THAT VALUE. SO WE'VE LOST THE ABILITY FOR
01:16:58PEOPLE TO INVEST SIMPLY BECAUSE INFLATION HAS TAKEN THE ASSET
01:17:02VALUES HIGHER. UM, AND THEN THREE, THERE'S SOME REALLY
01:17:06COMMON SENSE THINGS. UM, IF SOMEONE WANTS TO GO PUBLIC AS WE
01:17:10DEVELOP THESE INNOVATION HUBS
01:17:12AND CREATE A DEEPER MARKET FOR SMALLER VENTURE CAPITAL FUNDS
01:17:16WHO WANT TO GO TO THE LOCAL
01:17:18AREAS, UM, AS WE BRING COMPANIES
01:17:21TO COME PUBLIC, THERE ARE SIMPLE
01:17:23THINGS WE CAN DO TO, UM, LIKE
01:17:27MAKING SURE THAT THERE'S AN ALIGNMENT BETWEEN THE FINANCIAL
01:17:30STATEMENTS THEY NEED TO RELEASE AS THEY GO PUBLIC, MAKING SURE
01:17:33THAT WE ASK OURSELVES THE APPROPRIATE QUESTION, DO WE NEED
01:17:37AN AUDITED FINANCIAL STATEMENT? THEY'RE EXCEPTIONALLY
01:17:40IMPORTANT. BUT IF WE'RE TRYING TO DEEPEN THE AMOUNT OF COMPANIES WE HAVE, WHERE SHOULD
01:17:44WE DRAW THAT LINE ON AN AUDITED FINANCIAL STATEMENT? PRE IPO,
01:17:47THERE'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
01:17:55CONTINUE TALKING WITH YOU AND OTHERS ABOUT THAT AS WE TRY TO
01:17:57BUILD ON. I WANT TO KIND OF SCOPE OUT A LITTLE BIT EVEN
01:18:01FURTHER. I MEAN, WE'RE TALKING
01:18:02ABOUT HOW DO WE TRY TO GET THAT
01:18:05INVESTMENT, THAT WEALTH, DEVELOP MORE ACROSS THIS COUNTRY, BUT
01:18:08ALSO JUST TRYING TO THINK ABOUT IT IN TERMS OF AMERICAN
01:18:11FAMILIES. SO, YOU KNOW, WE SEE GREAT STRENGTH WHEN IT COMES TO
01:18:14OUR MARKETS. YET WE'RE SEEING STILL TOO MANY AMERICANS,
01:18:18PARTICULARLY THOSE IN RURAL AND UNDERSERVED COMMUNITIES, UH,
01:18:22DISCONNECTED FROM SOME OF THOSE OPPORTUNITIES. AND SO, MR.
01:18:25FLOOD, I GUESS WHEN I'M THINKING THROUGH ROUGHLY HALF OF
01:18:28AMERICANS STILL NOT PARTICIPATING IN THE STOCK
01:18:31MARKET FROM THE CHAMBER'S PERSPECTIVE, WHAT ARE THE
01:18:34BIGGEST BARRIERS KEEPING FAMILIES, PARTICULARLY IN RURAL
01:18:37AND UNDERSERVED COMMUNITIES, FROM BECOMING LONG TERM
01:18:41INVESTORS? AND WHAT POLICIES
01:18:42COULD SAFELY EXPAND THAT PARTICIPATION?
01:18:45>> THAT'S A VERY FAIR QUESTION. I THINK WE SHOULD ALL REMIND.
01:18:49REMEMBER THAT, UM, ACCESS TO, 401 PLANS IS ALMOST AT AN ALL
01:18:52TIME HIGH. SO THE ABILITY TO
01:18:56ACCESS SAVINGS PLANS IS
01:18:57RELATIVELY HIGH. THE ABILITY TO
01:19:02KNOW THAT YOU CAN IS NOT THAT HIGH OR HOW TO DO IT. AND OF COURSE, MAKING SURE WE HAVE THE
01:19:05MONEY TO INVEST IS, IS PROBLEM NUMBER ONE. BUT WHAT WE CAN TALK
01:19:07ABOUT IS CREATING THAT ACCESS. SO I THINK THERE'S THREE
01:19:10ASPECTS. ONE, FINANCIAL LITERACY IS EXCEPTIONALLY IMPORTANT. TWO,
01:19:15I THINK IT'S REALLY IMPORTANT TO
01:19:17SEE WHAT THE SEC SMALL BUSINESS ADVISORY COUNCIL IS DOING. IT IS
01:19:21PUTTING OUT A LOT OF INFORMATION ABOUT NOT ONLY HOW CAN WE HELP
01:19:24SMALL BUSINESSES AND STATE AND LOCAL AREAS, BUT HOW CAN WE HELP INVESTORS GET INVOLVED? THREE, I
01:19:28THINK YOU HAVE A BILL ON CROWDFUNDING. IT'S A IT'S A
01:19:31SMALL WAY TO INCREASE THE POOL, TO ALLOW PEOPLE TO, TO
01:19:33PARTICIPATE IN INVESTMENTS. UH,
01:19:36AND FOR, AS WE'VE ALL TALKED
01:19:38ABOUT TODAY, MAKING SURE THAT NO MATTER WHAT AMERICAN YOU ARE,
01:19:41YOU HAVE THE ABILITY TO INVEST IN THE PRIVATE MARKETS, THAT
01:19:45MONEY 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
01:20:01STIMULATING 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
01:20:07TURNED THIS INTO MUST WATCH TV ALREADY, BUT, UH, FOR THE
01:20:11AVERAGE AMERICAN THAT COULD BE WATCHING THIS, COULD YOU JUST EXPLAIN IN VERY SIMPLE TERMS,
01:20:15WHAT DOES THIS MEAN TO BE AN
01:20:19ACCREDITED INVESTOR? >> UM, BASICALLY, AN ACCREDITED
01:20:20INVESTOR IS A SOPHISTICATED INVESTOR THAT HAS THE
01:20:24OPPORTUNITY 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
01:20:34IS A SIMPLE WEALTH AND INCOME TEST. AND IS THAT, YOU KNOW, SO IF YOU THINK. >> ABOUT IT, WHAT IS WHAT IS THE
01:20:37WEALTH? 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
01:20:47OF ANY HOME EQUITY. >> YEAH.
01:20:48>> SO, SO $250,000 OF NET NET
01:20:52WORTH, $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
01:20:58GRAND A YEAR IS NOT SOPHISTICATED. >> SO I WOULD SAY THAT IF YOU
01:21:02COULD 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
01:21:09YOU'RE A POLICE OFFICER OR A NURSE WHO MAKES 50, 60, 75 GRAND
01:21:13A YEAR, THE GOVERNMENT OF THE UNITED STATES IS NOT CONSIDERED YOU SOPHISTICATED.
01:21:16>> CORRECT >> DO YOU GUYS AGREE WITH THAT?
01:21:19THAT THAT SOMEBODY WHO MAKES 75 GRAND A YEAR GOES TO WORK EVERY
01:21:22DAY, IS RAISING A FAMILY, IS STRUGGLING, HASN'T BUILT A NET
01:21:25WORTH UP LIKE THAT, LIKE A
01:21:28PEJORATIVE 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.
01:21:35SO IT SEEMS LIKE WE OUGHT TO CREATE A WAY TO ALLOW ANYBODY WHO'S WILLING TO PUT IN THE
01:21:39WORK TO LEARN THE RISKS THEY'RE TAKING ON. >> SO THAT SMART, SO, SO YOU
01:21:43MAKE 75 GRAND A YEAR AS A POLICE
01:21:46OFFICER OR A NURSE, EMT AUTO
01:21:49MECHANIC, SALES CONSULTANT
01:21:52YOU'RE NOT SMART OR SOPHISTICATED. IS THAT WHAT, MR. DUMAS? WOULD YOU AGREE WITH
01:21:56THAT? >> SO I THINK WE SHOULD TAKE A
01:21:59STEP BACK. UM, SO ACCORDING TO THE CURRENT DEFINITION, UH, IF
01:22:02YOU HAVE HOUSEHOLD WHO HAS OVER 200,050 THOUSAND, WHATEVER THE
01:22:06CASE MAY BE, RIGHT? THE LOSS IS NOT THE SAME. SO IF YOU'RE A POLICE OFFICER AND YOU WERE TO
01:22:09INVEST IN THESE ASSETS THAT ARE PROBABLY MORE RISKY THAN A
01:22:13TYPICAL ASSET, YOU WILL HAVE AN
01:22:14ORDINARY INVESTOR, YOU KNOW, LOSING $50,000 TO A
01:22:18SOPHISTICATED INVESTOR MAY BE COST OF DOING BUSINESS. >> NO, NO, THAT WASN'T THE
01:22:21QUESTION. I'M SAYING. DOES, IT
01:22:23DOES. 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
01:22:30IT THAT WAY? WHAT'S THE POINT OF THE DEFINITION? IS IT IS IT MEAN
01:22:34THAT THE THAT THE. SOME BUREAUCRAT IS SMARTER THAN YOU ARE. >> IT DOESN'T MEAN THAT, SIR,
01:22:38BUT I THINK ALSO YOU SHOULD THINK OF THE FACT THAT, YOU
01:22:40KNOW, THERE'S, THERE'S DEFINITELY RISK ASPECT TO. >> IT, BUT THEY'RE NOT ABLE TO
01:22:44UNDERSTAND THE RISK BECAUSE OF THEIR LEVEL OF INCOME. >> I DON'T KNOW. I CAN'T SPEAK
01:22:47ON WHAT LEVEL OF RISK. >> BUT THAT'S THE RULE. THAT'S
01:22:50THE LAW TODAY. CORRECT.
01:22:54>> ACCORDING TO. MR. >> BUT I JUST, I JUST THINK I JUST THINK THAT'S AN
01:22:58EXTRAORDINARILY, UM, PATERNALISTIC VIEW OF THE
01:23:00AMERICAN PEOPLE. AND I THINK THE AMERICAN PEOPLE NEED TO KNOW THAT THEY HAVE A GOVERNMENT THAT
01:23:04DOESN'T THINK THAT THEY'RE VERY SMART OR VERY SOPHISTICATED BASED ON HOW MUCH MONEY OR NET WORTH THEY HAVE. AND I THINK
01:23:08THAT'S, THAT'S ACTUALLY DECENTLY GROTESQUE. FROM MY
01:23:11PERSPECTIVE. I THINK THAT'S, UM, YOU KNOW, WE TALK A LOT ABOUT
01:23:15WANTING TO ADVOCATE FOR WORKING AMERICANS. I THINK WE SHOULD
01:23:17START BY NOT DEMEANING THEM. UH, MR. DUMAS, YOU TALKED ABOUT
01:23:21DIGITAL ASSETS. YOU CALL IT CRYPTO. I MEAN, I'M GOING TO I'M GOING TO ASSUME, YOU KNOW,
01:23:25THE DIFFERENCE BETWEEN ALL THESE DIGITAL ASSETS. WHAT PERCENTAGE
01:23:29OF BLACK AMERICANS HOLD DIGITAL ASSETS?
01:23:31>> UH, ACCORDING TO, UH, I THINK A RECENT STUDY IS A LOW
01:23:34PERCENTAGE. I THINK OVERALL, NOT JUST BLACK PEOPLE, I THINK.
01:23:37>> NO, NO, I'M JUST TALKING ABOUT BLACK AMERICANS. UH, WHAT
01:23:39WOULD YOU GUESS? >> I'D PROBABLY SAY 2%.
01:23:42>> 2%. AND HOW ABOUT HISPANIC AMERICANS? >> SO I DON'T KNOW THE
01:23:45STATISTICS. >> YES. NO. WHITE AMERICANS.
01:23:49>> WELL, OVERALL, ACCORDING TO FEDERAL STUDY, UH, FEDERAL RESERVE STUDY, 9% OF AMERICANS,
01:23:53ALL AMERICANS OWN.
01:23:54>> WOULD YOU BE WOULD YOU BE,
01:23:58UH, COMPLETELY AND UTTERLY FLUMMOXED TO KNOW THAT, UH, BLACK AMERICANS HOLD MORE
01:24:02DIGITAL ASSETS THAN ANY OTHER
01:24:04ETHNIC GROUP? AND IT'S 20%, 19%
01:24:08FOR HISPANICS, 18% FOR WHITES. AND WOULD YOU BE EQUALLY
01:24:11FLUMMOXED, UH, TO KNOW THAT 66% OF WHITES HOLD STOCKS, 39% OF
01:24:15BLACKS HOLD STOCKS, 28% OF
01:24:18HISPANICS HOLD STOCKS, MEANING THAT YOU THINK IT'S RISKIER FOR
01:24:23THE 6.6 MILLION BLACKS, BLACK AMERICANS THAT HOLD CRYPTO
01:24:26ASSETS THAT YOU DON'T THINK
01:24:28THEY SHOULD. AND WHO ARE YOU TO
01:24:31DECIDE 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%,
01:24:40YOU KNOW, I WOULD OBVIOUSLY SEE HOW THEY DETERMINED THAT
01:24:43DETERMINED, MAKE DETERMINATION. MY WHOLE POINT IS THAT, YOU
01:24:46KNOW, IT'S THE IDEA OF CRYPTO PROVIDING THIS ACCESS TO. ALL
01:24:49RIGHT. UH, IN A SENSE, WHERE YOU
01:24:52PRODUCE THIS TYPE OF PREDATORY INCLUSION TO WHERE SOME PEOPLE
01:24:56ARE THINKING THAT THEY CAN HIT IT BIG, RIGHT? >> WELL, BUT SO, SO 6.6 MILLION
01:24:59AMERICAN BLACK AMERICANS ARE NOT SOPHISTICATED OR INTELLIGENT
01:25:03ENOUGH 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
01:25:10WOULD SAY THAT, YOU KNOW, I THINK PEOPLE NEED TO APPRECIATE
01:25:14THE RISK, RIGHT? I DON'T KNOW IF THERE'S ENOUGH DISCLOSURE, ENOUGH INFORMATION FOR PEOPLE TO
01:25:17UNDERSTAND, 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
01:25:23DISAGREE WITH YOU. I WOULD ALSO LIKE, MR. CHAIRMAN, I WILL PRODUCE THE PEW RESEARCH STUDY
01:25:27TO BE IN THE RECORD SO THAT
01:25:29EVERYBODY CAN VIEW IT.
01:25:32>> WITHOUT OBJECTION. SENATOR
01:25:39ALSOBROOKS. >> THANK YOU SO MUCH, CHAIR SCOTT, AND RANKING MEMBER
01:25:43WARREN, FOR HOLDING THIS IMPORTANT HEARING. THANK YOU, AS
01:25:45WELL TO ALL OF OUR WITNESSES WHO ARE HERE TODAY. UH, MY FIRST
01:25:48PRIORITY IN OUR COMMITTEE IS PURSUING POLICIES THAT WILL
01:25:52CREATE REAL ECONOMIC OPPORTUNITY, ESPECIALLY FOR
01:25:56THOSE WHO HAVE NOT HISTORICALLY HAD THAT OPPORTUNITY. THIS MEANS
01:25:59ACCESS TO CAPITAL, CREDIT, AND
01:26:01MARKETS. AND IT ALSO MEANS
01:26:04ROBUST INVESTOR PROTECTIONS. MY
01:26:06FIRST QUESTION IS FOR MR. BENSON AND FOR MR. FLOOD. I JOIN MY
01:26:10COLLEAGUE, SENATOR MCCORMICK, IN
01:26:13INTRODUCING S 1808, WHICH IS THE ACCESS TO SMALL BUSINESS
01:26:17INVESTOR CAPITAL ACT, WHICH
01:26:18WOULD SUPPORT SMALL AND MEDIUM SIZED BUSINESSES BY MAKING IT,
01:26:22UM, BY MAKING IT EASIER FOR BUSINESS DEVELOPMENT COMPANIES
01:26:25TO ATTRACT AND DEPLOY CAPITAL.
01:26:28BDCS HAVE INVESTED, FOR EXAMPLE,
01:26:31OVER $3.3 BILLION IN MARYLAND BUSINESSES OVER THE YEARS. AND
01:26:34IF YOU JUST TAKE, FOR EXAMPLE, PLANET FITNESS, WHICH WAS FORMED
01:26:38BY REALLY INNOVATIVE COUPLE WHO MET AT TOWSON UNIVERSITY AND NOW
01:26:41OPERATE 30 PLANET FITNESS GYMS
01:26:45IN THE DMV AREA. WELL, IN AUGUST
01:26:48OF 2019, IT WAS A BDC THAT
01:26:50PROVIDED A $50 MILLION LOAN TO
01:26:53PLANET FITNESS TO FINANCE GROWTH
01:26:55AND HIRING. AND UNFORTUNATELY,
01:26:57THERE'S A 2006 SEC RULE THAT
01:27:00UNINTENTIONALLY LEADS TO DOUBLE COUNTING AND INFLATING OPERATING
01:27:04EXPENSES. AND THIS HAS MADE BDC
01:27:06LESS ATTRACTIVE TO INVESTORS. MARYLAND IS HOME TO MANY, MANY
01:27:10BDCS IN. THIS PROBLEM MEANS THAT LESS CAPITAL IS GOING TO
01:27:13MARYLAND BUSINESSES. UM, OUR BILL PRESENTS A VERY SIMPLE FIX.
01:27:17AND SO I'M AWARE OF RECENT REPORTING ABOUT RISKS IN THE
01:27:21PRIVATE CREDIT MARKETS AND FULLY SUPPORT ROBUST SUPERVISION,
01:27:24OVERSIGHT, AND TRANSPARENCY THERE. BUT THIS BILL, I BELIEVE,
01:27:27ADDRESSES A DIFFERENT AND UNINTENDED PROBLEM. SO MR. FLOOD
01:27:31AND MR. BENSON, IF YOU COULD JUST EACH DESCRIBE IN SIMPLE
01:27:35TERMS HOW THIS BILL WOULD RESULT IN MORE CAPITAL FLOWING TO SMALL
01:27:39AND MEDIUM SIZED BUSINESSES IN MARYLAND, AND WHY THIS SOURCE OF
01:27:43CAPITAL IS IMPORTANT.
01:27:46>> SURE. I'LL I'LL START WITH IT'S THIS IS A LOT OF PEOPLE
01:27:50CALL IT COMMON SENSE. SOME CALL
01:27:51IT, UH, DOUBLE COUNTING, BUT I
01:27:54CALL IT RIGHT NOW. WE HAVE A, A
01:27:57MISREPRESENTED DISCLOSURE TO
01:27:59INVESTORS BY REGULATION. AND IF
01:28:02WE FIX IT, TWO THINGS HAPPEN. WE ACTUALLY HAVE A DISCLOSURE THAT
01:28:05MEANS SOMETHING TO INVESTORS. TWO, WE LOWER THE ACTUAL, WE
01:28:08SHOW THE ACTUAL COSTS OF THE
01:28:11BDC, WHICH THEN ALLOWS THESE
01:28:13FUNDS TO BE INCLUDED IN INDICES,
01:28:16WHICH MAKES THEM MORE VALUABLE, MORE INVESTORS AND MORE MONEY TO
01:28:19PUT OUT IN THE ECONOMY
01:28:23>> I AGREE WITH WITH MR. FLOOD, AND I JUST ADD, BDCS HAVE PROVEN
01:28:25TO BE A REALLY TREMENDOUS SOURCE OF FUNDING FOR MEZZANINE
01:28:29FUNDING, IN PARTICULAR FOR SMALL
01:28:32AND EMERGING COMPANIES. UM, AND
01:28:35MARYLAND, I MIGHT ADD, IS ALSO BEEN HOME TO A NUMBER OF THE
01:28:38MORE PROMINENT BDC, UH,
01:28:40COMPANIES. SO, UH, I THINK THE,
01:28:43YOUR LEGISLATION MAKES A LOT OF SENSE IN CORRECTING THAT ERROR.
01:28:46>> THANK YOU. MR. DUMAS. UM,
01:28:50I'M ALL FOR CUTTING RED TAPE, AND I BELIEVE IT'S IMPORTANT
01:28:54THAT WE MAINTAIN REALLY IMPORTANT, ROBUST INVESTOR
01:28:57PROTECTIONS THAT HAVE MADE OUR FINANCIAL MARKETS THE ENVY OF THE WORLD. AND I'D LIKE TO
01:29:00THANK MY COLLEAGUE, SENATOR REID, FOR HIS LEADERSHIP IN
01:29:03INTRODUCING LEGISLATION TO CODIFY OUR INSIDER TRADING LAWS.
01:29:07AND SO I'M A PROUD CO-SPONSOR OF THIS BILL, AS ARE MANY OF MY
01:29:11COLLEAGUES. AND SO CAN YOU
01:29:14EXPLAIN WHY STRONGER GUARDRAILS, LIKE INSIDER TRADING, PROHIBITIONS AND MARKET
01:29:17TRANSPARENCY MEASURES, ARE
01:29:20ESSENTIAL FOR CAPITAL FORMATION TO HAPPEN?
01:29:22>> THANK YOU FOR THE QUESTION,
01:29:24SENATOR. YOU CANNOT HAVE CAPITAL FORMATION WITHOUT INVESTOR
01:29:28CONFIDENCE. SO IF YOU HAVE INSIDER TRADING, YOU HAVE
01:29:31ORDINARY INVESTORS WHO BELIEVE THAT, UM, THEY'RE NOT IN THE
01:29:34SAME LEVEL PLAYING FIELD AS A SOPHISTICATED INVESTOR. SO YOU
01:29:37HAVE TO HAVE INVESTOR CONFIDENCE IN ORDER TO BUILD CAPITAL
01:29:41FORMATION. >> THANK YOU. UM, ALSO, MR.
01:29:43DUMAS, AS I SAID IN MY OPENING REMARKS, I WANT MY CONSTITUENTS
01:29:46TO BE ABLE TO BUILD A GENERATIONAL WEALTH. AND I'VE
01:29:49OFTEN SAID THAT I'M NOT OFFENDED
01:29:52BY WEALTH. I JUST WANT MORE PEOPLE TO HAVE ACCESS TO WEALTH.
01:29:55AND SO THIS MEANS THAT WE MUST OPEN AND BE MORE THOUGHTFUL IN
01:29:59CONSIDERING MEASURES THAT BROADEN ACCESS TO INVESTING IN
01:30:02CERTAIN PRODUCTS. SO MAIN STREET
01:30:05INVESTORS ARE CAPITAL PROVIDERS
01:30:07THEMSELVES. AND IF CONGRESS CONSIDERS LEGISLATION THAT
01:30:10BROADENS ACCESS TO INVESTING, WHAT GUARDRAILS DO YOU BELIEVE
01:30:14THAT CONGRESS SHOULD INCLUDE >> THANKS FOR YOUR QUESTION, SENATOR. I THINK ANYTIME YOU'RE
01:30:17TALKING ABOUT BROADENED ACCESS OR PROVIDING INFORMATION OR
01:30:21PROVIDING ACCESS TO ALL, I THINK THE FOUNDATION QUESTION SHOULD
01:30:25BE THAT WE SHOULD NOT PROVIDE
01:30:27ACCESS TO EVERYONE WITHOUT INVESTMENT PROTECTION,
01:30:30DISCLOSURE, AND TRANSPARENCY. I THINK THAT WHAT CONGRESS CAN DO IS THINK OF ANY TYPE OF
01:30:34LEGISLATION. BUT THE FIRST THING YOU SHOULD THINK ABOUT IS, WILL
01:30:37THIS LEGISLATION COST? IS IT
01:30:39SOMETHING THAT HAS A HAS A DETRIMENT TO, TO PEOPLE WHO
01:30:43ACTUALLY TRYING TO PROVIDE. SO I THINK THAT WHEN ANYTIME YOU'RE TRYING TO THINK OF ACCESS OF
01:30:46POLICIES, YOU ALSO, IN THE BACK OF YOUR MIND, THINK ABOUT INVESTMENT PROTECTION,
01:30:50TRANSPARENCY, AND THINGS OF THE SUCH.
01:30:54>> THANK YOU. >> THANK YOU, SENATOR ALSOBROOKS. THANKS TO ALL FOUR WITNESSES FOR BEING WITH US
01:30:57TODAY. WE REALLY APPRECIATE YOUR INSIGHT, YOUR