On October 23, The House of Representatives passed Bill H.R. 2868, which allows the American Stock Exchange (Amex) to move forward with plans to create a second tier market for smaller companies that have less restrictive listing standards. The plan will hopefully improve the global competitiveness of U.S. financial markets.
H.R. 2868 was introduced by New York Representatives Vito Fossella and Gregory Meeks. Both men claim that the bill is intended to slow down the flow of U.S. initial public offerings from U.S. exchanges to foreign exchanges.
The proposed Small Cap Competitive Listing Act would take away the “inadvertent” legal impediment brought about by the 1996 National Securities Markets Improvement Act (NSMIA) and allow for developmental listing tiers on the three major U.S. stock exchanges.
Amex first submitted a proposed rulemaking to the SEC three years ago. At the time, state securities regulators disapproved of the plan because of the SEC’s strict interpretation of the 1933 Securities Act exemption under NSMIA. The exemption was an informal agreement that preempted state regulators from regulating any company regulated by the SEC and was listed on the New York Stock Exchange, Amex, or NASDAQ Stock Market.
H.R. 2868 modifies the exception so that both the SEC and state regulators could regulate securities in a second tier. Amex Senior Vice President for Government Affairs Mark Seetin says the legislation would improve investor protection by increasing regulation over these companies. It would also create an even playing field for domestic exchanges and increase their competitiveness in a global marketplace.
The securities litigation law firm of Shepherd Smith and Edwards represents investors throughout the U.S. who have lost money because of the inappropriate actions of investment advisers and investment firms. We also represent investors from outside the U.S. that wish to file claims against investment firms based in this country.
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Related Web Resources:
H.R. 2868, Congressional Budget Office (PDF)