Today, Rep. Ed Royce (R-CA), a senior member of the House Financial Services Committee, introduced H.R. 3655, the Small Business Access to Capital Act. Royce’s legislation helps increase job growth and eases the regulatory burden facing small businesses by permanently exempting companies with a market capitalization of less than $1 billion from Sarbanes-Oxley, Section 404(b).

"With unemployment still well over 8 percent and the economy sputtering, we need a fresh look at an old problem. Regulatory compliance has inundated many American businesses and has discouraged capital from our markets. Providing some relief to smaller institutions from Section 404 of Sarbanes-Oxley will make it easier for businesses to access our capital markets which will help bring more jobs to our country.

The SEC originally estimated that compliance costs for Section 404 would cost less than $100,000 per year. The SEC’s 2009 study found businesses are spending $2.3 million annually just to adhere to Section 404(b). Additionally, it found that "Section 404 compliance places a disproportionally larger burden on smaller companies" versus larger companies.

Currently, exemptions apply to companies with a market capitalization of $75 million or less. Rep. Royce’s legislation matches the recommended level put forward by President Obama’s Jobs Council, which highlighted the "unintended consequences" of Sarbanes-Oxley regulations in its recent report.

"It has become clear over the last decade that the costs of Section 404 far outweigh the benefits. If the U.S. is to remain competitive in the coming years, Congress must provide some relief to those smaller institutions that bear the heaviest burden. This bill would go a long way in that regard."

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