Opening Remarks to the Government-Business Forum on Small Business Capital Formation
Chair Mary Jo White
Nov. 20, 2014
I want to reiterate the welcome to everyone to today’s Government-Business Forum on Small Business Capital Formation. I especially want to thank all of the panelists and participants in today’s program. You all serve as our eyes and ears in the small business community, giving us critical insight into the impact of our rules on small businesses, and we are always eager to engage in discussions with you and benefit from your recommendations. And, I also want to thank the staff of the Division of Corporation Finance and the Division of Trading and Markets for their work in organizing today’s Forum.
- simplifying the disclosure and reporting requirements for smaller companies and allowing smaller companies to provide less burdensome, scaled disclosures
- shortening the holding periods for resales of securities under the Rule 144 safe harbor from one year to six months for reporting companies
- exempting compensatory employee stock options from registration under the Exchange Act of 1934
- providing a transition period for smaller reporting companies from the say-on-pay and frequency votes required under the Dodd-Frank Act; and
- developing a pilot program to assess the impact of tick size on market liquidity for small-cap companies.
As you know from your agenda, today’s Forum will explore a number of important issues that affect small businesses.
The second panel will focus on the accredited investor definition, a very important subject for us and for you. As you know, the Commission staff, including staff from the Division of Corporation Finance and the Division of Economic and Risk Analysis, is conducting a comprehensive review of the accredited investor definition as it relates to natural persons. The goal of the reviews is to assess whether we are properly identifying the population of investors who should be able to purchase securities in a securities offering without the protection afforded by the registration requirements of the Securities Act. A critical part of the staff’s review is soliciting and considering input from the public and other interested parties, obviously and importantly including those of you here today, so we are anxious to hear your insights on this important topic.
After the morning panel discussions, as is the tradition of the Forum, we will ask you to join breakout groups to discuss and draft specific recommendations on the topics covered in the two panels. We will also ask you for recommendations on the disclosure effectiveness review that the Division of Corporation Finance is undertaking and on exempt securities offerings. And let me emphasize how very interested we are in the recommendation you make.
As we assess your recommendations, we always consider carefully the impact that the suggested changes would have on investors – both in terms of what risks they may face, but also whether the change would serve to attract investors to small business investing. Obviously, regulatory changes that compromise investor protections or raise concerns for investors about investing will ultimately cost the small business community more than any benefit derived from the proposed change. Investor confidence – confidence in small business investing and in the fairness of the capital raising process – is an important guide as you discuss, test and formulate your recommendations and as we consider them. It is really the marriage of investor protection and better ways to facilitate more capital formation that makes our markets the envy of the world. I very much look forward to the output from today.
Thank you again for your efforts today to help us to improve the ability of small businesses to access our capital markets, to grow and drive job creation and economic growth.