* Traditional companies retain former congressman on issue
* Wawa, Wegmans pushing debate alongside hot tech firms
* SEC, Congress may loosen private firms' shareholder limits
By David Ingram and Alexandra Alper
WASHINGTON, Dec 29 (Reuters) - Two traditionalretailers and a manufacturer have joined the ranks of hot techcompanies like Facebook in the debate over a U.S. securitiesrule that can force privately held companies to disclosefinances they'd rather keep secret.
The three companies - Wawa Inc, Wegmans Food Markets Inc,and W.L. Gore & Associates, best known as the maker of GORE-TEXclothing - have formed a loose coalition and retained a formerU.S. congressman as their lobbyist.
They are lobbying for legislation that would increase thenumber of shareholders a company can have before it must makedetailed disclosures to the U.S. Securities and ExchangeCommission, and exempt employees from that cap.
The cap has stood at 500 for over four decades.
Unlike Facebook, which had to find a way around the rule toattract outside investors and still stay private, the oldercompanies say the limit threatens their ability to offerstock-based compensation plans to senior managers.
"As we grow, we don't have the ability to retain and attractthe number of people we'd like because of the restriction ofthis rule," said Paul Speranza, vice chairman and generalcounsel of Wegmans, a grocery chain based in Rochester, NewYork.
In an interview with Reuters, Speranza said Wegmans is"quite close" to the 500-shareholder limit.
Lobbying for the privately held companies is a team headedby Thomas Reynolds, who served in Congress for 10 years as aRepublican representing the Buffalo, New York, area.
Now a lobbyist with the firm Nixon Peabody, Reynolds haslobbied for Wegmans since May, according to a registration hefiled. This month, he filed paperwork for two other clients:Wawa, which sells gasoline and food at 600 stores along the EastCoast, and W.L. Gore.
The involvement of the companies, with decades of historyand established corporate cultures, may broaden a regulatorydebate that has focused on tech companies like Facebook andTwitter, which want access to more investor cash but are notquite ready for initial public offerings.
"Wawa is not a high-growth, go-go, potential IPO thatdoesn't want SEC disclosure," said John Coffee, a ColumbiaUniversity law professor.
Companies like Wawa "would get most of the protection theywant through a provision that excludes employees" from the totaltally of shareholders, Coffee said.
Still, Coffee voiced concern that the Senate bill, aswritten, would make investors vulnerable by exempting too manybig companies from disclosing important information.
The debate is playing out at the SEC, which appointed anadvisory committee to review possible changes to reportingrequirements to make it easier for small, fast-growing companiesto raise capital.
Congress is also considering loosening the rule.
A bill that passed a House committee in October would bumpthe shareholder limit up to 1,000, while a version in the Senatewould raise it to 2,000. Both bills would exempt shares receivedas part of an employee compensation plan.
Lawmakers have promoted the changes as a way to boostcapital raising and economic growth, but they are trying toensure that the reforms don't erode investor protections.
In testimony at a Senate hearing earlier this month, Wawa'sincoming chief executive and current chief financial officer,Christopher Gheysens, said the 500-shareholder limit will forcethe company to make a big decision in the not-so-distant future.
"We will be required to choose between becoming a publicreporting company and initiating a costly, time-consumingcorporate restructuring," Gheysens said.
Wawa would likely choose to restructure under a process suchas a reverse stock split, rather than make public reports thatmay come with heavy compliance costs, Gheysens said. (Editing by Steve Orlofsky)