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Remarks to the Small Business Capital Formation Advisory Committee

Washington D.C.

Sept. 19, 2023

Good afternoon. As this is the second meeting for the new members of this committee, I hope that you are settling into your roles. I have some thoughts for your consideration as you formulate recommendations to the Commission during your tenure on this committee.

First, the Commission’s rules do not need to result in all-or-nothing outcomes. For example, the Commission may consider amendments to Regulation D, including updates to the accredited investor definition. A simple way to think about the definition is a binary approach – a person can invest up to 100% of his or her assets if he or she qualifies as an accredited investor, including through the net worth or annual income tests. If that person is $1 short, then he or she cannot invest anything. This has been the approach for the past 40 years. Does this approach continue to make sense? Not to me. The accredited definition can seem to be both over-inclusive and under-inclusive at the same time. The Commission ought to be spending time to reconsider how Regulation D and the accredited investor definition can operate to protect investors, facilitate capital formation, and allow more opportunities to be shared with more investors. For example, could an individual be permitted to invest a limited percentage of his or her investments or another financial measure? Given the requirements of Regulation Best Interest and investment adviser fiduciary duties, should there be a different role for financial professionals? This approach may allow for Main Street investor to have exposure to growth-stage companies, as part of a diversified investment portfolio.

Second, the Commission’s rules must address, in a meaningful way, any potential disparate impact on women and minority-owned businesses and asset management firms, as well as historically underinvested communities. While I raised this issue during this committee’s last meeting,[1] it is worth emphasizing again because the large volume of rules that the Commission has adopted, or may soon adopt, could disproportionately impact those groups. For example, last month, the Commission adopted rules to impose additional requirements on registered investment advisers to private funds.[2] I was disappointed that the Commission dismissively responded to these concerns by suggesting that women and minority-owned investment advisers can avoid the costs of the rule by reducing their assets under management to below the threshold that would require them to register as investment advisers.[3] Telling underrepresented groups to not grow their business is not a reasonable regulatory approach.

Please consider these two guideposts as you engage in discussions during today’s meeting and future meetings. As you carry out your duties on this committee, you will have the support of the staff of the Office of the Advocate for Small Business Capital Formation (the “Office”). Since Congress created the Office in 2019, its staff has worked tirelessly to advance the interests of small businesses and their investors. The staff’s efforts over the past sixteen months are especially deserving of recognition because it has carried out the Office’s mission without a permanent director, who serves as the Advocate for Small Business Capital Formation. Notwithstanding this lack of permanent leadership, the Office has successfully hosted its annual small business forum, published its annual report to Congress, and helped organize six meetings of this committee.

I hope that you have an engaging discussion for the afternoon session on alternative funding options for small businesses, and I look forward to speaking to you again at the committee’s next meeting.

[1] See Mark T. Uyeda, Remarks to the Small Business Capital Formation Advisory Committee (June 14, 2023), available at

[2] Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews, Advisers Act Release No. 6383 (Aug. 23, 2023) [88 FR 63206 (Sept. 14, 2023)], available at

[3] See Mark T. Uyeda, Statement on Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews (Aug. 23, 2023), available at

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