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Opening Remarks to the Government-Business Forum on Small Business Capital Formation

Chair Mary Jo White

Nov. 17, 2016

Thank you, Keith and Sebastian.  I also want to welcome everyone to today’s Government-Business Forum on Small Business Capital Formation.  I especially want to thank all of the panelists, moderators and participants in today’s program.  The great staff in the Division of Corporation Finance organized today’s Forum and I want to thank them as well.

This Forum – the 35th annual Government-Business Forum – provides a unique opportunity for the Commission to gather with entrepreneurs and leaders of the small business community to hear about the successes and challenges of small businesses seeking to raise capital and grow their businesses.  We always look forward to these discussions and always benefit from your feedback.

Over the past few years, the Commission has taken action on multiple fronts seeking to facilitate capital formation for small and emerging companies while providing appropriate investor protections.  Notably, the Commission has fully implemented all the rulemakings under the JOBS Act and companies are now taking advantage of these new capital raising options – Rule 506(c), Regulation A+, and Regulation Crowdfunding – which are designed to foster new ways for smaller companies to access the capital markets.

Looking beyond the JOBS Act, the Commission recently proposed rules to increase the financial thresholds in the smaller reporting company definition, an area in which this forum made a recommendation last year.  The proposed amendments would expand the number of companies that qualify for SRC status and the scaled disclosure requirements in Regulations S-K and S-X.  The Commission also recently adopted rules that update and modernize the intrastate and regional offering framework to better accommodate how local offerings have evolved.  Last year the forum made recommendations related to Rule 147 and Rule 504, which the Commission considered in adopting final rules.  Consistent with your recommendations, the $5 million limit on Rule 147 offerings was eliminated, the safe harbor was retained, and a new exemption was adopted.

Our work, however, obviously does not end with finalizing those rulemakings.  We are monitoring each of these capital formation options to observe how they are working both in terms of protecting investors and enabling companies to raise money efficiently.

Over the years, the recommendations from this Forum have provided valuable feedback to the Commission as it has considered rules to give smaller companies new ways to access the capital markets.  Now that we have the JOBS Act rules in place, as well as our new rules to facilitate intrastate and regional offerings, we want to make sure that the rules protect investors, promote general confidence in the new markets, and are workable for issuers.  We ask that your recommendations consider how we can best monitor and maintain investor protection and the integrity of these new capital markets, while improving the ability of small businesses to access them in order to grow and drive job creation and economic growth.

Thank you again for your time and efforts today.  I very much look forward to your input.