BAC Bank of America Corporation

The Obama administration threatened to veto two bills that would scale back the Securities and Exchange Commission's oversight of fundraising by small companies and its regulation of private-equity managers.

The House is scheduled to vote Thursday or Friday on the legislation, which reflects Republicans' desire to further deregulate stock offerings by startups and small businesses.

The veto threat, issued Tuesday, shows the White House opposes further loosening regulation in this sector. It supported relaxing some fundraising rules when it backed the 2012 Jumpstart Our Business Startups Act.

One piece of the Republican legislation, authored by Rep. Tom Emmer (R., Minn.), would allow small companies to raise up to $500,000 without distributing financial statements and other information that typically accompanies a public stock offering. The exemption would be available for deals in which the buyers of shares and the company issuing them know one another, and when there are 35 or fewer purchasers of the shares.

The White House, in its veto threat, said the bill would allow companies to sell risky securities "without appropriate regulatory protections."

A related provision sponsored by Rep. Ann Wagner (R., Mo.) would remove some red tape for small companies, including those traded in over-the-counter markets where investors typically get less information about the businesses. Under the legislation, the businesses could sell stock to the public on an accelerated timetable with less oversight by regulators. The special status has in the past been restricted to companies that have issued common stock valued at $75 million or more, but the legislation would repeal that restriction.

A second bill, sponsored by Rep. Robert Hurt (R., Va.), would ease some rules for private-equity managers, which raise money from pension funds, insurance companies and wealthy individuals to purchase companies they hope to sell later for a higher price.

In particular, the bill would exempt private-equity firms from having to provide regulators with information about the debt levels of their portfolio companies and the countries where the investments were made. The legislation also would make it easier for private-equity firms to advertise their successful deals to the financial institutions and wealthy individuals who invest in their funds.

The American Investment Council, whose members include private-equity firms such as Apollo Global Management LLC and Blackstone Group LP, said it supports the bill.

Separately, the House voted 241-174 on Wednesday to approve a bill opposed by the White House that would bar the Justice Department from requiring defendants who settle cases to make donations to outside groups. Republicans have said such deals foster a government "slush fund."

The legislation was a response to multibillion-dollar settlements with Citigroup Inc., Bank of America Corp. and others to resolve claims that they misled investors about quality of mortgage-backed securities that lost much of their value by 2008. The Justice Department settlements allowed the banks to get credit toward the penalties by donating to housing groups and others approved by federal regulators.

Under its 2014 deal, for example, Bank of America was required to donate $50 million to community development funds certified by the Treasury Department, $30 million to state accounts that help low-income people with legal problems, and $20 million to housing counseling groups that are approved by the Department of Housing and Urban Development.

Write to Dave Michaels at dave.michaels@wsj.com

(END) Dow Jones Newswires

September 07, 2016 20:55 ET (00:55 GMT)

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