Merion, on behalf of the SBIA, Urges House Subcommittee to Reduce Regulatory Burdens on Small Business Investors

WASHINGTON, D.C. (April 29, 2015) – The Small Business Investor Alliance (SBIA), the leading association of lower middle market private equity funds and investors, carried a message from its members to Capitol Hill today. SBIA Executive Committee Member Gayle Hughes, Partner at Merion Investment Partners, requested the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises to provide relief from redundant regulatory and compliance costs.

Ms. Hughes testified on behalf of the SBIA membership that America’s small business investors need relief from unintentional duplicative regulations. In her testimony, Ms. Hughes endorsed the Small Business Investment Company (SBIC) Advisers Relief Act; bipartisan legislation introduced in the House on January 21 as H.R.432, and one of the key provisions of the SBIA’s Capital Formation Agenda. This bill would correct language in Dodd-Frank to remove duplicative compliance burdens while maintaining investor protections.

Dodd-Frank was written with the clear intent to avoid double regulation of SBICs. However, the way it has been applied has caused unintended double regulation. This bill would remove regulated SBIC capital from the calculation used to trigger Registered Investment Adviser requirements, remove double regulation by both state and federal regulators, and remove the accidental regulatory burdens imposed by having two types of exempt funds – Venture and SBIC. This bill is a bipartisan technical correction that

maintains investor protections while reducing regulatory burdens on small business investors.

Ms. Hughes explained that Merion’s strategy is “to invest in small entrepreneurial businesses and provides them with the financial wherewithal and management expertise to realize their growth objectives.” Merion pursued two SBIC licenses in 2003 and 2010, with plans to seek a third later in 2015. “We have a strong record of success in this regard over our years of investing and, unfortunately, the cost and time associated with duplicative regulatory burdens would materially reduce the time we could be spending with small businesses focused on their growth and development.”

Ms. Hughes has over 30 years of experience in the financial industry with more than half of her career spent focused on providing entrepreneurial firms with growth capital via leveraged cash flow and mezzanine funding. She is Partner at Merion Investment Partners, “a family of mezzanine capital funds licensed by the Small Business Administration as an SBIC.” Ms. Hughes is a founder of Merion, which comprised the founder and former management of a mezzanine lending unit within Mellon Bank.

Ms. Hughes was one of five panelists testifying on “Legislative Proposals to Enhance Capital Formation and Reduce Regulatory Burdens” before the House Financial Services Subcommittee. The other panelists included representatives for the Coalition for Derivatives End-Users and the Biotechnology Industry Organization, a Professor of Law from George Washington University, and the U.S. Chamber of Commerce.