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The House Financial Services Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets will hold a hearing today at noon ET titled, “Capital Markets and Emergency Lending in the COVID-19 Era." Securities and Exchange Commission Chairman Jay Clayton will testify before the subcommittee. Click here to view the prepared materials, access the live webcast of the hearing and review the legislative proposals to be discussed at the hearing.

Bankrupt Hertz Global Holdings Inc. yesterday suspended its plan to sell up to $500 million in new shares after the U.S. Securities and Exchange Commission (SEC) raised objections to the sale, Reuters reported. The move comes after SEC Chairman Jay Clayton told CNBC television that the agency has some issues with Hertz's share sale plan, without elaborating on what the problems were. "After discussions with the (SEC) staff, sales under the...program were promptly suspended pending further understanding of the nature and timing of the staff’s review," Hertz said in a filing. Last week, Hertz won bankruptcy court approval to sell up to $1 billion in stock. It announced on Monday plans to sell up to $500 million in new shares, as it takes advantage of a strong rally in its stock since filing for bankruptcy last month. Hertz has warned that its shares would be eventually “worthless”, but the stock sale could benefit creditors seeking to recover more of their claims during the bankruptcy process.

The novel coronavirus outbreak and economic fallout is proving to be a bonanza for whistleblower lawyers as the U.S. securities regulator cracks down on a range of related misconduct from companies touting sham cures to misuse of federal aid, Reuters reported. The Securities and Exchange Commission (SEC) fielded about 4,000 complaints from mid-March to mid-May, a 35 percent increase on the year-ago period, Steven Peikin, the agency’s co-head of enforcement, said this month as cases of COVID-19, the respiratory illness caused by the coronavirus, shot up. Two factors appear to be driving the current surge in tips, according to lawyers: the sheer scale of the crisis has sparked a wave of misconduct across all areas of the SEC’s remit, and mass unemployment has unleashed whistleblowers who may otherwise have feared retaliation by their employers.

Mutual funds facing stress from the market turmoil caused by coronavirus will be able to tap their parent asset-management companies and other affiliates for funding under relief announced this week by the Securities and Exchange Commission, the Wall Street Journal reported. The move gives the $19 trillion mutual-fund industry another tool to deal with large swings in redemptions, including borrowing money from the firm that manages the portfolio, according to an SEC order made public on Monday. The SEC’s order, which it said would provide the flexibility until at least June 30, shows how Wall Street’s regulator is rushing to aid firms threatened by the coronavirus shock. While the SEC’s role in a crisis is narrower than the Federal Reserve’s, it plays a key role in gauging market conditions and adjusting rules for brokers, investment advisers, and exchanges. As investors step up the pace of withdrawals, mutual funds could be forced to unload assets at a loss to meet redemptions. Investors pulled $40 billion from taxable bond funds last week alone, and net outflows have totaled $55 billion in the past month, according to Morningstar Direct. By law, investors in open-end mutual funds have a right to receive the closing share price on the day they ask to sell their shares. But a wave of selling can make it difficult for fund managers to raise cash quickly enough to meet those demands.

U.S. markets should stay open despite intense volatility, the head of the U.S. securities regulator said yesterday, quashing industry speculation that the government might shut down the country’s exchanges to stop a plunge in stock prices, Reuters reported. “Markets should continue to function through times like this,” Securities and Exchange Commission Chair Jay Clayton said, adding that the SEC was closely monitoring markets and was working with exchanges and market infrastructure providers to ensure they could continue to function. U.S. stocks plunged yesterday morning on mounting fears the coronavirus pandemic will cause a global recession, again triggering a circuit breaker which temporarily suspends trading. The S&P 500 index .SPX has lost nearly $6 trillion since its record closing high in mid-February. The turmoil prompted the U.S. Federal Reserve on Sunday to take aggressive action to buttress the economy and financial system, slashing interest rates to near zero, pledging hundreds of billions of dollars in asset purchases and backstopping foreign authorities with the offer of cheap dollar financing.

Companies affected by the spread of the novel coronavirus yesterday won a regulatory reprieve from the Securities and Exchange Commission, the Washington Post reported. The SEC said it temporarily will lift some requirements that publicly traded companies periodically alert shareholders to their financial health and quickly disclose significant corporate changes that could affect the stock price. Companies that can show they need extra time will be granted a reprieve for documents that should have been filed from March 1 to April 30, the SEC said. “The health and safety of all participants in our markets is of paramount importance,” SEC Chair Jay Clayton said. Timely public disclosures are “a cornerstone of well-functioning markets,” he said, but “we recognize that this situation may prevent certain issuers from compiling these reports within required time frames.” Companies increasingly are canceling conferences, limiting employee travel and weighing work-from-home arrangements to curb the outbreak. “Disruptions to transportation, and limited access to facilities, support staff, and professional advisors as a result of COVID-19, could hamper the efforts of public companies and other persons with filing obligations to meet their filing deadlines,” the SEC said in its order.

Startups and small companies would be allowed to raise more money from investors when they opt for light-touch fundraising methods under a plan made public Wednesday by the Securities and Exchange Commission, the Wall Street Journal reported. The proposal seeks to further ease rules for measures such as crowdfunding, which was supposed to make it cheaper and easier to raise limited pools of capital online. The plan, passed on a 3-1 vote, shows how Trump-appointed regulators are still trying to make those measures more useful to small firms that lack access to alternatives such as venture capital. Under the plan, which is open for public comment for 60 days, firms could use crowdfunding to raise as much as $5 million, up from about $1 million under current rules. Congress set the $1 million cap in a 2012 law, and the SEC is proposing to use its broad authority to waive that restriction and increase the limit. Business groups have lamented for years that crowdfunding hasn’t been widely used because the rules set a relatively low fundraising cap. At the same time, the rules require many companies using crowdfunding to provide investors with audited financial statements, which increases the cost of selling stock or debt. There were 519 completed crowdfunding deals from 2016 to 2018, with a median amount raised of $107,367, SEC staff said in a report last year. The median investor contribution per deal was just $260, the report found. (Subscription required.)