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Remarks at Meeting of SEC Small Business Capital Formation Advisory Committee

Jan. 29, 2021

Thank you Carla [Garrett] and members of the Committee for putting together an agenda that touches on a variety of important subjects. It is encouraging to see the Committee back to work in 2021. Now let us hope that we will be able to meet in person sometime later this year. Of course, that will depend on vaccination efforts against COVID-19, which continues to have a devastating impact on small businesses across America. The recently published Annual Report[1] from our Office of the Advocate for Small Business Capital Formation provides a sobering snapshot of the harmful effects of COVID-19 in the first three quarters of 2020: a 27% decrease in the number of small businesses, drastic reductions in revenue of up to 70% in certain industries over the same time period, and a reduction in headcount for nearly half of all small businesses. Facilitating access to capital for small businesses must remain a priority for the Commission in the coming months, and this Committee can play an important role in identifying pragmatic solutions and spotlighting specific issues that specific entrepreneurs are facing. I look forward to your continued engagement on these issues.

I also look forward to today’s other agenda items. When considering whether to go public, companies weigh the costs they anticipate facing as public companies against the benefits of being public. Among the anticipated costs are the costs associated with making required disclosures, which include disclosures of material information. To what extent do companies consider the potential for future disclosure requirements that are not tethered to our principle of materiality, but instead reflect the interests of an ever increasing group of “stakeholders”? One benefit companies hope for in going public is a liquid market for their stock, but this benefit remains out of reach for many small public companies. Are there any particular market structure changes that would facilitate better liquidity for companies with thinly traded securities? Additional questions for this discussion relate to smaller public companies’ experiences with transfer agents. What are the primary concerns that smaller companies have when working with a transfer agent, and what can we do as we modernize our transfer agent rules to address small public companies concerns?

The last item on today’s agenda is a discussion of the Commission’s proposed rules to modernize the framework that allows employees and other workers to receive equity compensation from their company.[2] I was happy to support these proposals and look forward to your feedback on the proper scope of the rules. As proposed in the gig workers release, only platform workers that provide services would be eligible to receive equity compensation under the proposal; workers that sell goods through a company’s marketplace platform would not be eligible. Is there any reason to limit participation to one type of gig economy worker? Along these lines, two of my fellow Commissioners questioned why gig workers should be singled out for a pilot program when other types of alternative work arrangements have existed for decades.[3] Should we expand the pilot to include additional types of workers? The proposal would limit a gig workers’ equity compensation to no more than 15% of the value of compensation received during a twelve-month period and no more than $75,000 of such compensation received during a thirty-six-month period. Are these caps unduly complex or even unnecessary?

Thank you to the Committee and panelists for taking the time to be with us today, and thank you to Martha Miller and her team for their hard work in publishing their Annual Report and their hard work throughout the year. I look forward to today’s discussions.

[1]Annual Report for Fiscal Year 2020, Office of the Advocate for Small Business Capital Formation, U.S. Securities and Exchange Commission, p. 17-19, available at

[2]Specifically, in November 2020 the Commission voted to propose rules that, on a trial basis, would allow public and private companies to offer equity compensation to their gig workers. See The Commission also voted to propose amendments to modernize the relevant exemption and registration statement for compensatory offerings. See

[3]See Commissioner Allison Herren Lee & Commissioner Caroline A. Crenshaw, Joint Statement on the Proposal to Facilitate Non-Cash Compensation for Certain Gig Workers, available at

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