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U.S. Securities and Exchange Commission

Speech by SEC Chairman:
Remarks to the SEC Government-Business Forum on Small Business Capital Formation


Chairman Mary L. Schapiro

U.S. Securities and Exchange Commission

Washington, D.C.
November 18, 2010

Thank you very much, Meredith.

And thank you to everyone for participating in this year's SEC Forum on Small Business Capital Formation. I know you have had a productive morning, and I look forward to hearing about the constructive discussions you'll be engaging in this afternoon.

As the daughter of a small businessperson, I am familiar with the unique challenges small businesses face. And, at the SEC, we appreciate how much small business is a driving force in our economy. Reliable data suggests that small businesses have created 60-to-80 percent of net new American jobs over the last ten years.

And it's not just the number of jobs created that are important; it's the kind of jobs. At a time when improving our global trade position is a top priority, small businesses produce almost a third of America's exports. And, at a time when expanding those exports — while increasing domestic market share — often means producing at technology's cutting edge, small business employees earn patents at 13 times the rate of those in larger firms.

Making sure small businesses can attract the investments they need to grow and thrive is vital to America's economic recovery.

And so, it is only natural that we would want you to be a part of the ongoing dialog about how best to harmonize our obligation to protect investors, the markets and our economy from another financial crisis, with our important responsibility to facilitate access that growing companies have to America's investment capital.

While, we won't make any final decisions here today, this event is important to the decisions that the Commission, as we move forward to implement the Dodd-Frank Act, will eventually make. And it is part of a process designed to ensure that that those decision are informed by detailed and intelligent discussion — from a variety of market participants, including especially smaller companies.

When Dodd-Frank was signed into law, we were determined that the SEC would seek out input from the widest range of market participants.

And it's that determination to hear all voices that shaped this year's Small Business Forum.

We started the day with a panel devoted to sections of Dodd-Frank that will have a particular impact on small business. After that, we heard from a number of organizations with suggestions about how to maintain important investor protections while improving small business capital formation.

This afternoon's breakout groups will carry on from there, continuing the exchange of ideas and the formulation of recommendations in areas such as private placements, securities regulation of smaller public companies and the regulation of M&A brokers and placement agents.

The thoughtful contributions of this morning's panelists, and the recommendations that result from this afternoon's breakout groups, are giving the SEC direct access to a unique and important perspective.

Your input will be especially meaningful as we seek ways to ensure that the new accredited investor and "bad actor" disqualification rules — required for private placements by Dodd-Frank — are workable in practice and do not impose undue regulatory burdens on small business capital formation.

We will need your help as we look for ways to help private companies access capital more cost-effectively.

And we'll need your ideas, as well, as we consider how to continue scaling disclosure and other rules for smaller public companies to reflect the benefits and costs to those companies — and, eventually — to their investors.

Rarely has there been a more important time for us to hear your views — as we work to implement major reform, while keeping America's small business engine running smoothly.

But, as beneficial as it is for Gerry and Meredith and other senior SEC officials to hear directly from you about your needs and concerns, this is just one channel of communications. The SEC has structured the Dodd-Frank rulemaking process to create broad opportunity for public comment, with maximum transparency.

We have a dedicated area on the SEC's website on which anyone with views on Dodd-Frank implementation can post comments, even before rules are formally proposed and the official comment period begins. We encourage all of you familiar with the interests of small business to take advantage of this medium.

We are also making an effort to meet face-to-face with as many stakeholders as possible, and hope that you or other representatives of the small business community will sit down to meet with us on initiatives of particular interest.

And you will be able to monitor the discussion and continue to contribute to it as we move forward. All public comments we receive will be available on our website. Memos describing face-to-face meetings, including participants, issues and handout materials, will be posted, as well. And, we'll also be posting relevant portions of the transcript from this morning's Forum sessions on our website, so that they become a matter of written public record, as well.

We know that our decisions will be better decisions if they are made with input from you.

Before closing, I'd like to acknowledge the state regulators and congressional and federal agency staff who are here today or listening online. We look forward to working with you on the many issues facing small business in this challenging economic environment.

We appreciate all of your support and we look forward to benefitting from your views and expertise and appreciate your willingness to share the perspective of small businesses from across our country.

Thank you.

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Modified: 11/18/2010