would be applied to reverse mergers and the like. i guess i would say we should be very careful about what the emerging growth company exemptions are being used for. we saw when investors very sundayly realize this person they acted on this starting in late 2010 shares of 93% of this company felt by an average of 50%, any of them that wanted to raise capital after that point became very difficult to do that.

the only reason that happens is if people believe they can't trust any of the numbers coming out of china. you're investing in a small company right now. the first risk factor you consider is whether or not it's fraud. i would say that we should be very careful about how we, we don't want to move in that direction is all i'm saying. >> you brought up the merit regulation which is my understanding is under federal securities law there's not merit regulation, is that correct? >> that's correct. it's matter of degree when you require, there are instances where disclosure can view into merit regulation.

requiring specific disclosure about specific topics that requiring companies to comply with substantive standards that are not about disclosing all of their material information. >> my understanding, again, it might be outdated is the scc cannot refuse because they object to a business model or anything else. they can just require now to doll out detail. that's not merit regulation. do you consider us having merit regulation for federal securities law?

>> i don't think. it's very important. having seen a lot of other countries, particularly in asia they give investors much less information and rely on has the company earned a profit for the last three years, and if not you can't go public. it closes out a lot of good companies and doesn't improve prices because people don't have enough information to judge. i think a strength of the u.s. is we do have disclosure and not merit. >> because of that there is a strong emphasis on very thorough disclosure and as mr. trotter points out it leads prospectus. the information is just gratuitous or ignored.

if i was presented 200 pages, i would quickly, evelyn bowood wod be proud of me. when you have these road shows and their very, very useful, i presume. is that accurate? >> i think so. i tell my students that you get more information when company is an ipo than at any other time. there's so much in the prospectus. when we do case studies the we go through the risk factors and they'll have stories and extra detail. you find out how the company does business, how the model works from that detail disclosure. you don't have to read all of it and look through for what you need and hopefully it's there. >> your comment. >> we would read it cover to cover prior to meeting with the

company so as be able to use the meeting time most effectively. there's a tremendous amount of information available. it brings about the question about the jobs act is investors have less time to study the prospectus given they can be filed confidentially. >> how will that impact you as an investor that wants to invest and also is helping to find the right price because you have all these details. what effect will that have on you? >> i would say mostly institutional investors read the prospectus when it's in its final form. however, from time to time, the initial filing differs quite widely from the final filing thanks to commentary from the

scc. investors learn a great deal in wa watching the changes. iltd argue that that knowledge, watching that process was very valuable to institutional and retail investors. >> it strikes me too, again, we have a system which is based on transparency, disclosure. basic economic theory which drives competitive markets and we have said this is all going to be confidential until very late in the process, et cetera. i don't see how that accomplishes the significantly in informing investors. >> i would agree with you and i would further comment that by allowing them to keep those

facts hidden until later in the process while con currently encouraging research provisions that allow research during that period, we're actually asking investors to make their decisions based on upon as oppose to the facts they could have had. we have flipped the ranarrangem that should be in place. >> i know you have a position on this. >> i guess i would say this process is based on a scc historical practice. that's the genesis of the idea. in the case of emerging growth companies under the jobs act, they are required to provide the original submission plus all amendments that resulted from the scc process. approximately, a month before the ipo will price. all the information this buyer is referring to is publicly available in sequence and

investors will have a month to pour over that information. >> let me ask you another question. there's the presumption that the jobs act has proponents would argue that it reduces course. estimates are 30 to 50% of the course. i think that's what you are suggesting. where are these coming from? there's not requirement to do these elaborate road shows. is it because information, where are is savings coming from? >> responded to the specific proposals and estimates how much cost savings they would recognize.

the four companies of this size, tb president's job council recommendsed a permanent exemption. second from the benefits available from the scale disclosure system that the scc has adopted for smaller reporting companies and so in the case of, you asked about merit regulation versus disclosure. if you think about some of the disclosures that are required of large enterprises and applying those disclosure requirements to much smaller enterprises. i think it's worth noting all of the companies that are captured within the definition of emergent growth company represent 3% of total market capitalization. there's a concern expressed by my fellow witnesses here that the definition is too brood. i think you have to take into account that that definition

captures 3% of the market capitalization of the united states. that's not a very large number. >> this depends on what you're measuring and comparing to. my sense is sg having limits of up to a billion dollars in revenue captures a lot of companies in the united states, not just in capitalization but just sheer numbers in companies and probably every potential ipo company. >> i'm not familiar with the 3% number. it could be right in in terms of the ipo task force, they said it was 14% of companies. in terms of ipos it's about 90%. >> essentially, the world when talking about ipos it's about 90% of them.

if this goes to, it was pointed out, one is internal control and two it's sort of disclosure requirements that would could argue are more appropriate to large corporations. it still goes the issue of disclosure. that's where the savings are going to be. does that, for the investing public holds the initial investors, does that make sense? >> the investment banking fees are substantial for ipos. it would be nice if we could find ways to reduce that. in terms of the compliance cost, a company that's doing a billion dollars in sales is market cap is 700 million, which is the upper limit here can really afford to comply.

>> again, having been participated with both the chairman in legislation, which was a direct response to abuses and lack of controls and those things that had shareholders dearly when the companies cratered because they were not doing things the shareholders were doing. i've had the rare opportunity to be able to engage with a splendid panel of experts. we have learned a great deal. let me just simply ask, i think it's appropriate if any concluding comments about the issue, advice to us going forward. >> i think, and i tell my students that one of the great strengths of the u.s. economy

really is the fact that we focused on giving investors the information they need and letting them decide for themselves. i hope the u.s. will focus on giving people as much information as possible and then having take responsible for their decisions. >> i would agree with the companies along the way. i would say the promise spurs many individuals all over the country issue certainly in silicone valley to try new ideas that turn into the large companies that never exists and suddenly employ thousands and thousands of people. the markets are important and mostly not broken. they suffer through swings through risks in the marketplace. i think there are a few changes

that could improve the process. i strongly recommend many aspects of the jobs act be re-considered. >> this is the potential for not just misallocation, but for fraud. does that concern you? >> yes. some fraud, but we haven't talked another time about crowd funding, which is very interesting, but also enables significant transfer of funds between informed investors and uninformed without regulations around it.

we will probably see much more activity on the secondary markets. there are no requirements for information. it's going on too long? yes. >> there's a furd complication which complicates our life in many different dimensions. that is with an internet based economy, these companies can be virtual and located far beyond the reach of anyone which further makes it potential source of get rich schemes. i have this terrible feeling that the first thing would be congress just recently authorized this tremendous advantage to take advantage of it. that concerns me. >> years ago there was a cartoon

in the new yorker and the caption was on the internet, no one knows you're a dog. >> yes or very short. any way. mr. trotter. >> the ipo task force came to its work with the view that the ipo process is critical to capital formation and early stage investing. that's all connected to innovation and job creation ultimately by the part of the private sector that creates jobs. that's our focus. you can't remove risk from the system because if you do, you remove the opportunity to make a profit. the solution is to not look for ways to reduce risk but to make the system fair, and that's

disclosure. is it the type of information that the various largest companies in the united states have to provide or is it the more scaled disclosure that focuses on what is material to an investor in an early stage company. if you fail to recognize that and apply disclosure rules, then you do have a system that veers into merit regulation of the smaller companies. >> generally speaking, it's not a good company for investors to get involved in companies too early. after a brief period of flipping stocks that occurs at the beginning of an ipo process. ipos tend to under perform. the concern is that we don't ipos to be a process where

companies are coming public with the intention of getting shares to favor clients of the underwriters so they can flip the stocks over to unwitting inverss who don't understand which companies are poor quality, and which ones aren't. i would say at a minimum it's important that we have inequitiable distribution. i agree that these prospectuses are very detailed. there's a lot of good information presented there. it's very difficult to go through them and find out, pick through it and figure out what stuff is really important. the facebook example, really you had to read between the lines to figure that out. i think at a minimum it would make sense for investors to have the same kind of access that clients of the underwriters have.

one final thing with regards to fraud. a lot of security felons have raised concern about the jobs act. i would say we need to think carefully about that. i was various recommendations with regard to crown founding. i can talk about them or just submit it to you later. >> thank you very much. i thank all of you for your testimony. it's been very thoughtful and helpful. my colleagues may have their own written statements, which they will be allowed to submit. they can do so before next wednesday, june 27th. all your testimony will be made part of the record.

inform the chairman and the other members of the committee of this hearing. with that, let me thank you for testimony and adjourn the hearing.

a hearing on efforts by the environmental protection agency to halt a west virginia coal mining project. this is a little more than an

hour and a half. the committee will come to order. under committee rule 3e is two members. the sub committee on nrj and mineral resources is meeting today to hear testimony on obama administration's actions against the spruce coal mine. cancelled permits, lawsuits and lost jobs. under committee rule 4-f opening statements are limited to the chairman and ranking member of the sub committee. hearing no objection, so ordered. i also unanimous consent to have david mckinley of west virginia's first district to

participate in today's hearing. hearing no objection, so ordered. i now recognize myself for five minutes. we will hear an update on the spruce coal mine in logan county west virginia. this is one of the most disappointing legacies of federal bureaucracy in history. the obama administration agency can attempt to single handedly decide to pull permits which destroys jobs and cripples our economy and try to do this without consequence. at the heart of this issue the the lack of confidence in permitting by the federal government. if without cause an agency can veto issued permits then how can any company, contractor or concessionair have confidence to invest in america when their

permit is not worth the paper its written on. fortunately u.s. district judge amy jackson found the e.p.a.'s action were a power grab not justified by the statute. the obama administration is committed to a war on coal and is appealing this clear decision. this appeal will consume tax dollars and time in our courts, and for what? to destroy good important jobs for americans. that's the goal of this administration's appeal. they want to destroy jobs and expand the power of the e.p.a. to have new power to revoke comments. this sub committee hears discussions about certainty. should the administration win this case and grant epa the

power to revoke permits, it would destroy all certainty in permitting for projects across the united states. this would be terribly destructive for the american committee. this permit isn't the only one the epa has withdrawn that has cost jobs and destroyed the livelihood of americans. supplied power to the hundreds of thousands of homes. the obama administration's war on coal can be felt. east, west, apallachia and

farmington, new mexico. americans should be concerned with this trend to pull permits, destroy jobs and hurt the economy. today we will hear from folks that are interested in talking about other topics than the reckless disregard for the law as demonstrated by the epa in this instance. they crew said against domestic jobs and domestic energy. i will now recognize the ranking member from new jersey, representative holt for five minutes for his opening statement. >> thank you. mountain top removable mining can be one of the most

destructive practices on earth. appalachian stream has been filled with debris from mountain top removal mining. mountain top removal mining has deforced to a size of delaware. the proposed spruce number one mine in west virginia could cover seven times. it would be one of the largest individuals. the epa represent some of the

last remaining resources. the epa has concluded this mine will quote transform these head water streams from high quality habitat into sources of pollutants. since the bush administration approved it in 2007, which may have been unwise then, additional nch additional information has become available which reflect a growing consensus of ahead water streams and a growing concern. we increasingly understand the affects the impact that this sort of mining has on our environment and on the health of local communities. this morning scientific understanding of the impacts of this mine and others like it, i beg your pardon, this mounting

uning of the impacts led the epa to withdraw the personalities for filling the streams under the clean water act. the coal company, a subsidiary of arch coal challenged the epa decision. epa has ae peeled this decision and agreed to an expedited schedule to resolve the appeal and remove any uncertainty that, for example, the chair reversed. the majority may claim that the epa's effort to protect the environment and communities from mountain top removal mining are somehow evidence of a larger attack on the coal industry.