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Comment Letter

CAQ, CII, and CFA Institute Submit Joint Letter on the Financial CHOICE Act

Monday, May 1, 2017

In this May 2017 letter to the Chairman and Ranking Member of the House Financial Services Committee, the CAQ, the Council of Institutional Investors, and CFA Institute express their shared opposition to any legislation that would erode Section 404(b) of the Sarbanes-Oxley Act of 2002 or revise the definition of accelerated filer as defined in SEC Exchange Act Rule 12b-2. Companies that meet the current definition benefit from enhanced market confidence, the letter says, because their financial information is communicated to investors on a timely basis, which, research shows, can lead to a lower cost of capital.

The letter cites academic research that indicates that any increase in the public float threshold would not spur capital formation and could have the unintended consequence of eroding investor confidence and the quality of public company financial reporting. The letter also discusses two CAQ surveys—of financial advisors and chief financial officers—demonstrating that Section 404(b) is beneficial to our markets and investors.