Vote Explanation for H.R. 1343 — Encouraging Employee Ownership Act of 2017
I voted in favor of H.R. 1343, the Encouraging Employee Ownership Act of 2017, which passed the House of Representatives with strong bipartisan support.
This legislation amends the Securities and Exchange Commission (SEC) Rule 701, which requires private companies to provide certain disclosures if the company issues more than $5 million of stock offerings to its employees in any consecutive 12-month period. Rule 701 was originally adopted in 1988, and H.R. 1343 raises the $5 million threshold to $10 million to account for inflation over those decades, and indexes the threshold for inflation every five subsequent years.
Creating pathways for working Americans to own capital in the U.S. economy is good for their ability to create savings. That is exactly what H.R. 1343 seeks to accomplish by assisting privately-held companies in providing their employees with the option of purchasing securities to increase employee ownership.
The outdated threshold set by Rule 701 prevents employees from having greater shares in their own company, which can lead to high turnover. At a time when the rate of business formation in this country is at its lowest point in decades, H.R. 1343 provides startups and new businesses with the necessary compensatory incentives they need to attract and retain workers.
H.R. 1343 is not an attempt to undermine investor protections, but rather it updates a 17-year old rule that will make stock ownership available to more companies and their employees. As Congress continues to find ways to encourage entrepreneurship and support economic growth, this bipartisan legislation is a step in the right direction.