Community bankers are backing a bill introduced in the House of Representatives last week that would exempt privately held banks with less 2,000 shareholders from filing quarterly reports with the Securities and Exchange Commission.
Currently all banks with at least 500 shareholders must register with the SEC even if their stocks are not traded on a major exchange. Under legislation introduced last week by Rep. Jim Himes (D-Conn.) and Rep. Steve Womack (R-Ark.), the shareholder threshold that would require banks to register with the SEC would be raised to 2,000, while the threshold for de-registering would be increased from 300 shareholders to 1,200 shareholders. The bill is a companion to legislation introduced in the Senate by Sens. Kay Bailey Hutchison (R-Texas) and Mark Pryor (D-Ark) in March.
The thresholds have been in place since 1964 and community bankers have argued for several years that they should be raised to better reflect investor interest in local banks. They point out that, unlike with small companies in other industries, their financial information is already publicly available through call reports and that registering with the SEC is redundant and adds to their compliance costs.
The American Bankers Association said in a newsletter to members last week that it has raised the issue with policymakers — including President Obama and SEC Chairman Mary Schapiro — in recent meetings and letters.
"An increase in the outdated thresholds would provide immediate relief to community banks from the registration costs that they disproportionately bear, and also permit them to raise more capital to support their community lending needs," the ABA said in a newsletter to members last week.
