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January 31, 2013

100 banks end reporting to SEC under new law

About 100 small banks have stopped reporting financial details about their operations to the Securities and Excahnge Commission since April, when a law was enacted that aimed to lower the regulatory burdens for small companies.

For nearly five decades, securities law allowed banks with fewer than 300 shareholders to “deregister” — meaning they could stop reporting to the SEC their revenue, expenses, executive compensation and trends affecting their businesses, among other things.

Now, banks with fewer than 1,200 shareholders can deregister under a provision of the Jumpstart Our Business Startups, or JOBS, Act. Since the threshold rose in April, 101 banks have rushed to take advantage of it — more than the total number of deregistrations for the previous 21 quarters combined, according to an analysis by SNL Financial. Eighteen of the banks are based in Virginia, the highest number of any state.

Most of the firms are small community banks with less than $500 million in assets. The banks say that reporting to the SEC is a time-consuming and expensive process that eats into thin profit margins without any meaningful benefit to the public. The industry remains heavily regulated even without SEC oversight, bankers say.”

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Read full Washington Post article here

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