The amendment would gut Section 601 of the legislation, which provides small banks with an expanded ability to raise capital and increase lending to local communities.
Section 601 has received broad bipartisan support in the Senate and in the House of Representatives. It raises the existing and outdated 500 “shareholders of record” threshold for Securities and Exchange Commission (SEC) registration to 2,000 “shareholders of record.” The 500 shareholder of record requirement has been in place since 1964, and is just being updated to reflect changes in the marketplace that have occurred over 48 years. The Reed amendment would revise the term “held of record” to include “beneficial owners,” which would have the effect of actually reducing the number of banks eligible for expanded capital raising, while also forcing many community banks that currently do not have to register under the securities laws to do so. This would further restrict capital acquisition by small banks at the local level, and harm lending and job creation. The Reed amendment would create new complexity and cost and is counter to the goal of the JOBS Act. Many community banks may in fact be put in a worse position by the Reed amendment than under current law.
Read the letter.