Subject: SEC Regulatory Initiatives Under the JOBS Act: Title I — Reopening American Capital Markets to Emerging Growth Companies
From: A. Whigham

February 4, 2013

I would like to please urge the SEC to not allow for a creation of a private exchange that would allow only accredited investors or institutional investors to invest in small or micro cap companies. Small capitalization companies generally tend to have stronger potential for earnings, revenue, and valuation growth during their early stages. By creating a private exchange it would take away opportunities for educated investors that may not be accredited investors to invest in companies that could offer large potential return on investments.

From the view of protecting investors, risk is involved when it comes to investing. An investor can experience a loss or gain on a large cap company just as easily as they could on a small cap company. So it would not protect investors to create a private exchange for accredited investors.

Our system is set up so that companies that would like to raise money from private investors already exist and that is through private placement investments. If companies need to raise more money they can go public. If private investors would like to have more liquidity available for their investment, then they are very influential in urging for the company to go public.

Although there is a high cost for a company to go public with a great deal of reporting requirements, the reason that our reporting requirements are very extensive for publicly traded companies is because of the excessive amount of fraud that took place during the early 2000s. Lowering the reporting standards for smaller capitalization companies would invite that type of fraud to return. If a company would like to go public then that company must comply with the standard of reporting that all publicly traded companies must comply with; and should trade as any other publicly traded company, trading on normal stock exchanges available to all investors.

Please consider these points and do not allow for a private exchange to be established for institutional and accredited investors. This would only continue to put the retail investor at a disadvantage. A retail investor with an MBA in Finance would not be able to invest in a company if they did not meet the requirements for being accredited investors even if they had a job paying $120,000 a year with $650,000 in assets. However a backup player on an NFL team making $750,000 a year with no college degree would be considered to be an accredited investor and eligible to make investments in companies they may very well unsuited to invest in.