EX-IM NAMES DROPLET MEASUREMENT TECHNOLOGIES AS SMALL BUSINESS EXPORTER OF THE YEAR

FROM:  U.S. EXPORT-IMPORT BANK
Export-Import Bank Names Droplet Measurement Technologies as Small Business Exporter of the Year
 Boulder, CO Company Employs a Team of 45 and Exports to Over 47 Countries

Washington, D.C. – Today, the Export-Import Bank of the United States (Ex-Im Bank), announced that Droplet Measurement Technologies (DMT), a Boulder, Colorado small business that manufactures cutting-edge cloud and aerosol measurement devices to customers around the globe, has been named its Small Business Exporter of the Year. An award will be presented to the company at the Bank's Annual Conference in Washington, D.C. on April 23rd.

“Equipping small businesses like Droplet Measurement Technologies to grow and successfully compete on the global stage is at the core of the Bank’s mission of reducing risk and unleashing opportunity,” said Ex-Im Bank Chairman and President Fred P. Hochberg. “When innovative American small businesses like DMT have a level playing field, they can enter new markets, sell their made-in-America goods and create jobs here at home.”

“Being named Small Business Exporter of the Year is an honor in that our small technical instruments company makes the tools scientists and researchers use to study the environment,” said Droplet Measurement Technologies CEO Robert McAllister. “This award is recognition of the global nature of the science we support. It supports our mission of providing scientists worldwide with the quality instruments they need to do the research we all rely on.”

Founded in 1987 by Dr. Darrel Baumgardner and Mr. Bill Dawson, DMT works with scientists and researchers around the world to expand research and development into new products that allow countries to measure the atmospheric changes taking place related to global warming, atmospheric ozone, and other areas of particle research. DMT produces the cloud probes that are utilized for climate and weather research, aircraft icing studies, and other atmospheric research.

As a leader in scientific cloud and aerosol measurements for more than 27 years, DMT began using Ex-Im’s insurance policy over four years ago to safeguard its international accounts receivable. The company’s export sales have risen 17.5 percent and their workforce has grown by 20 percent as a result. With 60 to 70 percent of their annual sales now exports, DMT relies heavily on the insurance provided by Ex-Im.

Ex-Im Bank's 2015 Annual Conference will feature remarks and panel discussions with some of the world’s leading voices in business and trade, including IMF Managing Director Christine Lagarde; National Security Advisor Susan Rice; US Secretary of Commerce Penny Pritzker; Doug Oberhelman, chairman and CEO of Caterpillar Inc.; W. James McNerney, Jr., chairman and CEO of The Boeing Company; Steven Rattner, chairman of Willett Advisors LLC; Joe Kaeser, president and CEO of Siemens AG; Stephen S. Poloz, governor of the Bank of Canada; Jacqueline Hinman, chairman and CEO of CH2M Hill; Ambassador of the United Arab Emirates to the United States, Yousef Al Otaiba; and Dr. Mo Ibrahim, founder and chairman of the Mo Ibrahim Foundation.

EXPORT-IMPORT BANK REPORTS PROVIDING MORE THAN $5 BILLION FINANCING FOR SMALL BUSINESS EXPORTS

FROM:  U.S. EXPORT-IMPORT BANK 
Ex-Im Bank Finishes Fiscal Year Strong, Providing over $5 Billion to Finance U.S. Small Business Exports and Supporting over 160,000 American Jobs

Washington, D.C. – The Export-Import Bank today unveiled its total authorizations and the value of the U.S. exports it supported in Fiscal Year 2014, including its strong support for small businesses, which accounted for nearly 90 percent of the Bank’s customers. Last year, Ex-Im Bank’s financing again supported American jobs and boosted U.S. exports by filling private sector financing gaps and leveling the playing field for U.S. businesses as they compete overseas.

“Ex-Im is proud to serve as a backstop, filling in gaps in the private sector and ensuring that the American export economy remains vibrant in a world of market ebbs and flows,” said Chairman Fred P. Hochberg. “This year’s numbers are reflective of a strong economic recovery and of Ex-Im Bank’s continued record of supporting quality American jobs while generating a surplus for the American taxpayer.”

Key FY 2014 Highlights:

In FY 2014, Ex-Im Bank authorized approximately $20.5 billion to support 164,000 U.S. jobs.

Of the 3,746 transactions Ex-Im Bank approved in FY 2014, 3,347, or almost 90 percent, supported American small businesses.

Of the total dollar amount authorized by Ex-Im Bank in FY 2014, small business authorizations accounted for 24.7 percent, or more than $5 billion.

The total value of exports supported by Ex-Im Bank amounted to almost $27.5 billion, $10.7 billion (39 percent) of which accounted for small business export value.

Ex-Im Bank authorized $2 billion, a record-high dollar value, for sub-Saharan African transactions.

Approximately $675 million in deficit-reducing receipts was transferred to the U.S. Treasury's General Fund.

PRESIDENT OBAMA'S WEEKLY ADDRESS ON APRIL 4, 2014

FROM:  THE WHITE HOUSE 

Weekly Address: Congress Needs to Act on Minimum Wage

WASHINGTON, DC – In this week’s address, the President highlighted small business owners across the country acting to raise wages for their workers, and called on Congress to give America a raise so more hard-working Americans have the opportunity to get ahead.

The audio of the address and video of the address will be available online atwww.whitehouse.gov at 6:00 a.m. ET, Saturday, April 26, 2014. 

Remarks of President Barack Obama
Weekly Address
The White House
April 26, 2014

Hi, everybody.  In my State of the Union Address, I talked about pizza.  More specifically, I talked about a pizza chain in Minneapolis – Punch Pizza – whose owner, John Soranno, made the business decision to give his employees a raise to ten bucks an hour.

A couple weeks ago, I got a letter from a small business owner who watched that night.  Yasmin Ibrahim is an immigrant who owns her own restaurant – Desi Shack – and plans to open another this summer. 

Here’s what she wrote.  “I was moved by John Soranno’s story.  It got me thinking about my … full-time employees and their ability to survive on $8 an hour in New York City.”  So a few weeks ago, Yasmin put in place a plan to lift wages for her employees at both her restaurants to at least $10 an hour by the end of this year. 

But here’s the thing – Yasmin isn’t just raising her employees’ wages because it’s the right thing to do.  She’s doing it for the same reason John Soranno did. It makes good business sense. 

Yasmin wrote, “It will allow us to attract and retain better talent – improving customer experience, reducing employee churn and training costs.  We believe doing so makes good business sense while at the same time having a positive impact on the community.”

Yasmin's right.  That’s why, two months ago, I issued an Executive Order requiring workers on new federal contracts to be paid a fair wage of at least ten dollars and ten cents an hour.

But in order to make a difference for every American, Congress needs to do something.  And America knows it.  Right now, there’s a bill that would boost America’s minimum wage to ten dollars and ten cents an hour.  That would lift wages for nearly 28 million Americans across the country.  28 million.  And we’re not just talking about young people on their first job.  The average minimum wage worker is 35 years old.  They work hard, often in physically demanding jobs. 

And while not all of us always see eye to eye politically, one thing we overwhelmingly agree on is that nobody who works full-time should ever have to live in poverty.  That’s why nearly three in four Americans support raising the minimum wage.  The problem is, Republicans in Congress don’t support raising the minimum wage.  Some even want to get rid of it entirely.  In Oklahoma, for example, the Republican governor just signed a law prohibiting cities from establishing their own minimum wage. 

That’s why this fight is so important.  That’s why people like John and Yasmin are giving their workers a raise.  That’s why several states, counties, and cities are going around Congress to raise their workers’ wages.  That’s why I’ll keep up this fight.  Because we know that our economy works best when it works for all of us – not just a fortunate few.  We believe we do better when everyone who works hard has a chance to get ahead.  That’s what opportunity is all about.

And if you agree with us, we could use your help.  Republicans have voted more than 50 times to undermine or repeal health care for millions of Americans.  They should vote at least once to raise the minimum wage for millions of working families.  If a Republican in Congress represents you, tell him or her it’s time to give the politics a rest for a while and do something to help working Americans.  It’s time for “ten-ten.”  It’s time to give America a raise. 

Thanks, and have a great weekend.

SEC COMMISSIONER AGUILAR'S REMARKS ON INTERNET AND THE ACCESS TO CAPITAL

FROM:  SECURITIES AND EXCHANGE COMMISSION
Harnessing the Internet to Promote Access to Capital for Small Businesses, While Protecting the Interests of Investors
 Commissioner Luis A. Aguilar
Washington, D.C.

Oct. 23, 2013

Today, the Commission is proposing new rules to implement Title III of the JOBS Act, which exempts qualifying crowdfunding transactions from the registration and prospectus delivery requirements of the Securities Act.[1]  The new Regulation Crowdfunding is expected to be used primarily by small companies.  As is well known, although personal savings is the largest source of capital for most start-ups, external financing is very important to many small and medium-sized businesses.[2]  Unfortunately, as is also well known, many small businesses have difficulty finding external capital.[3]  It is worth noting that the need for outside investment is even greater among minority entrepreneurs, who tend to have lower personal wealth than their non-minority counterparts.[4]  

Supporters of crowdfunding believe that it may offer a potential solution to the small business funding problem.[5]  Observers point to the success of existing crowdfunding services around the world, which raised almost $2.7 billion in 2012, an increase of more than 80% from the prior year.[6]

However, even the strongest supporters of crowdfunding acknowledge that it carries substantial risks.[7]  Small business investing is inherently risky and, the fact is, the majority of new business establishments fail.[8]  Research indicates that, in the U.S., about 70% of initial venture-capital investments lose money.[9]  Moreover, small business investments tend to be highly illiquid, as most securities offerings may be too small for an active secondary trading market to develop.[10]  As a result, crowdfunding investors must be prepared to hold and bear the risk of their investments indefinitely.

In addition to these risks, commenters, including state securities regulators, have noted that small business investments may pose relatively high risks of fraud, and may afford the potential for self-dealing or overreaching by controlling shareholders.[11]

As contemplated by the JOBS Act and our proposed rules, the hope is that such risks will be minimized by the disclosures that will be required under Regulation Crowdfunding, and by the individual and aggregate investment limits to be imposed in such offerings.  It is also hoped that the risks will be further offset by the gatekeeping role of the crowdfunding intermediary—a registered broker-dealer or registered funding portal—which sits between the investor and the issuer.  Under the proposed rules, the crowdfunding intermediary is required to keep an eye out for fraud and to have a reasonable basis for believing that the issuer has complied with the requirements of the exemption.[12]  The crowdfunding intermediary will also provide a forum for information sharing, with communications by an issuer or paid promoter clearly identified as such.  However, it is acknowledged that, while those and other proposed conditions may possibly reduce harm, they can never eliminate the risks.[13]  

Many believe that, if structured appropriately, crowdfunding can bring great benefits to our economy.  However, for crowdfunding to have a positive impact on the small business funding problem, it must work for both issuers and investors.  In particular, it is vitally important that investors have confidence in the crowdfunding process—or they will stay away.  The need for both investor protection and investor confidence is why Section 302(c) of the JOBS Act specifically directs the Commission to issue such rules “as the Commission determines may be necessary or appropriate for the protection of investors” to carry out the statutory exemption.[14]  As we enter the public comment process for this rulemaking, it will be important to hear from investor advocates if the proposed rules have enough safeguards built-in to protect investors from fraud and self-dealing and to provide them with confidence that they are being dealt with fairly and honestly.

The use of crowdfunding to reach potentially vulnerable segments of society is a particular concern.  Many of the SEC’s enforcement cases arise from “affinity frauds” that exploit the trust and friendship that often exists among members of any ethnic, religious, or other community.[15]  Given the possibility that crowdfunding may facilitate affinity fraud by making it easier to identify and target vulnerable groups, I would urge the Commission’s enforcement staff and state securities regulators to take a proactive approach to monitor the crowdfunding space for potential problems.  In that regard, I am pleased to note that the North American Securities Administrators Association announced the formation of a task force on Internet fraud investigations shortly after the enactment of the JOBS Act.[16]

Clearly, all investments bear some degree of risk.  However, to the extent that crowdfunding increases the risks of fraud, illiquidity, and self-dealing to relatively unsophisticated investors, it will be incumbent upon the Commission and state securities regulators to take appropriate measures.  Problems that arise from the actions of crowdfunding issuers or portals could generally affect investor confidence in the capital markets and have an adverse effect on capital formation.

It is therefore essential that the Commission work to establish this new financing technique in a responsible manner.  Because of the importance of small business funding, I support the issuance of this proposal.  However, I recognize that crowdfunding may entail substantial risks.  I look forward to public comments, particularly from investors and investor advocates, as to how the rules can be improved.  I also note that Title III of the JOBS Act expressly requires that, in carrying out the rulemaking required to implement the crowdfunding exemption, the Commission shall consult with the state securities commissions.[17]  To that end, I look forward to hearing from state regulators.

I thank the staff for their hard work on this proposal.


[1] Crowdfunding can be defined as using the Internet to raise small investments from a large number of investors.  See, C. Steven Bradford, Crowdfunding and the Federal Securities Laws, 2012 Colum. Bus. L. Rev. 1, 10.  Title III of the JOBS Act amended the Securities Act of 1933 (the “Securities Act”) to add Section 4(a)(6) and Section 4A to the Securities Act.  Together, these new sections establish the foundation for a regulatory structure for the offering and sale of securities through crowdfunding.  See, Jumpstart Our Business Startups Act, Pub. L. No. 112-106, 126 Stat. 306 (2012) (the “JOBS Act”).   The rules proposed today would both govern the offer and sale of securities in transactions that qualify for the crowdfunding exemption and create a framework for the regulation of crowdfunding platforms.

[2] Ewing Marion Kauffman Foundation, 2013 State of Entrepreneurship Address (February 5, 2013), p.2, http://www.kauffman.org/uploadedFiles/DownLoadableResources/SOE Report_2013pdf.pdf .  Many entrepreneurs max out their credit cards, or take loans or investments from friends and family; others rely on trade credit and other forms of vendor financing, or seek commercial bank loans and lines of credit.  See, Alicia M. Robb and David Robinson, The Capital Structure Decisions of New Firms, Ewing Marion Kauffman Foundation (November 2008), http://www.kauffman.org/uploadedfiles/Capital_Structure_Decisions_New_Firms.pdf .  

[3] A 2012 study by the National Small Business Association found that 43% of small business owners surveyed could not get the financing they needed.  National Small Business Association, Small Business Access to Capital Survey (July 11, 2012), p. 4, http://www.nsba.biz/wp-content/uploads/2012/07/Access-to-Capital-Survey.pdf .

[4] U.S. Department of Commerce, Minority Business Development Agency, Disparities in Capital Access between Minority and Non-Minority-Owned Businesses: The Troubling Reality of Capital Limitations Faced by MBEs (January 2010), pp. 6-8, et seq., http://www.mbda.gov/sites/default/files/DisparitiesinCapitalAccessReport.pdf.  Women and persons of color also face additional obstacles raising outside capital for their small businesses.  See, Board of Governors of the Federal Reserve System, Report to the Congress on the Availability of Credit to Small Businesses (September 2012), pp. 42-45, http://www.federalreserve.gov/publications/other-reports/files/sbfreport2012.pdf; supra note 23, pp. 19-22.

[5] See, e.g. Bradford, p. 5.

[6] Today, crowdfunding platforms in the U.S. generally operate on a “pre-sale” or “donation-and-reward” model, in which participants contribute to a project they wish to support in exchange for a copy of the finished work or some other token of thanks.  See, Kent Bernhard Jr., Crowdfunding’s tally: $2.6 B in 2012 and growing, Upstart Business Journal (April 8, 2013), http://upstart.bizjournals.com/money/loot/2013/04/08/crowdfundings-tally-26-b-in-2012.html .

[7] See, e.g. Bradford, pp. 9, 99.

[8] See, Bureau of Labor Statistics, Business Employment Dynamics, Entrepreneurship and the U.S. Economy, http://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm.

[9] Telephone Interview by Marc Leaf, Counsel to Commissioner Luis A. Aguilar, with Shikhar Ghosh, Senior Lecturer, Mel Tukman Faculty Fellow, Harvard Business School (October 22, 2013).  See, Deborah Gage, The Venture Capital Secret: 3 Out of 4 Start-Ups Fail, The Wall Street Journal (September 20, 2012), http://online.wsj.com/news/articles/SB10000872396390443720204578004980476429190 (citing research by Shikhar Ghosh).

[10] See, e.g. Bradford, pp. 9, 99; see, also, Dina ElBoghdady, “‘Crowdfunding’ trend poised to make mark on U.S. investing landscape,” The Washington Post (April 29, 2013), available at  http://articles.washingtonpost.com/2013-04-29/business/38902177_1_crowdfunding-small-businesses-investors (citing NASAA president Heath Abshure).

[11] See, e.g. Bradford, pp. 9, 99.  See, also, letter from Andrea L. Seidt, Commissioner, Ohio Division of Securities (January 9, 2013), available at http://www.sec.gov/comments/jobs-title-iii/jobstitleiii-199.pdf (crowdfunding provides investors with “almost no bargaining power and little information”).

[12] See, Crowdfunding, Release No. 33-XXXX (October 23, 2013) (the “Proposing Release”).  The crowdfunding intermediary is required, at a minimum, to conduct a background and securities enforcement regulatory history check on each issuer and its officers, directors and 20% beneficial owners, and must deny access to its platform if (i) the intermediary believes that the issuer or the offering presents the potential for fraud or otherwise raises concerns regarding investor protection, or (ii) the intermediary believes that it is unable to effectively assess the risk of such fraud.  If, after it has granted access to an issuer, an intermediary becomes aware of information that causes it to believe that the issuer or offering presents the potential for fraud, or otherwise raises concerns regarding investor protection, the intermediary must promptly remove the offering from its platform, cancel the offering, and return (or direct the return of) any funds that have been committed by investors in the offering.

[13] Bradford, pp. 9, 99.

[14] JOBS Act § 302(c).

[15] See, e.g., “Investor Bulletin: Affinity Fraud,” SEC Office of Investor Education and Advocacy (September 2012), www.sec.gov/investor/alerts/affinityfraud.pdf.

[16] Press release, “NASAA Sees Sharp Spike in Crowdfunding Presence on the Internet” (December 5, 2012), http://www.nasaa.org/18951/nasaa-sees-sharp-spike-in-crowdfunding-presence-on-the-internet/

[17] JOBS Act § 302(c).