Remarks at 2022 Small Business Forum

Thank you, Martha [Miller] for hosting the 41^st Annual Small Business Forum and for inviting such talented and inspirational individuals to address how entrepreneurs can thrive outside of capital raising hubs.  This issue is near and dear to my heart: for over four years in my role as Commissioner, I have attempted to shine a light on the need to make it easier for capital to flow not just to the coasts, but to the entrepreneurs looking to build businesses in their hometowns across this great country.  I am eager to learn from today’s panelists lessons drawn from their experiences and suggestions for how we can change the regulatory environment to allow more people like them to flourish. 

I hope that the Commission will pay close attention to not only the panel conversations today and throughout the week, but also to the policy recommendations resulting from the Small Business Forum.  The Forum is unique among capital formation events.  Not only does the public have the opportunity to provide direct feedback to the Commission, but the Commission is required to issue a public statement responding to the policy recommendations made by the public.[i]  Absent such an explicit directive to consider suggestions for improving the environment for small business capital formation, the Commission likely would focus on issues more relevant to larger companies.

Heightening the importance of this year’s Forum is the Commission’s current posture of, at best, indifference, and at times, hostility to facilitating capital formation.[ii]  As it happens, today is the tenth anniversary of President Obama signing into law the Jumpstart Our Business Startups (JOBS) Act.[iii]  That bipartisan legislation required the SEC to write rules lessening the burdens on small companies seeking to raise capital.  Some of the Act’s provisions were things we could have done on our own.  Congress and the President got fed up waiting for the Commission to take small business capital formation seriously.

In line with the Commission’s more general indifference to small business capital formation, the Commission has responded to policy recommendations made by past Forums in a non-committal and uninspired way.  The Commission’s response to ideas raised last year as potential game-changers was no different.  For example, last year, the Forum recommended “[e]stablish[ing] a micro-offering exemption with minimal disclosure requirements,” and the Commission responded by noting that the Commission had already considered and rejected such an idea, but that the Commission would “continue to consider” the recommendation.[iv]  Worthwhile policy recommendations to “[r]evise Regulation Crowdfunding to remove the GAAP financial statement requirement for businesses seeking to raise a small amount” and to “[p]rovide state preemption for secondary transactions for shares issued under Regulation A and Regulation Crowdfunding” received similar responses.[v]

One area in which we have made recent progress and should build on it relates to the accredited investor definition.  In 2020, when the Commission amended the accredited investor rule to include certain financial professionals, it also stated that it “may designate [additional] qualifying professional certifications, designations, and other credentials by order.”[vi]  Along these same lines, last year’s Forum recommended that the Commission expand the definition “to include other measures of sophistication, such as specialized industry knowledge or professional credentials,”[vii] and “include an investor certification course or test whose curriculum has been approved by FINRA or the SEC.”[viii]  I hope that, taking up the Commission’s invitation, “[m]embers of the public [will] propose to the Commission” such certifications, designations, and other credentials at investorcredentials@sec.gov.[ix]  

I also hope that the Commission and forum participants will find inspiration in the success of the JOBS Act.  In all of our work, we should be inspired to take into account the unique challenges faced by small businesses in raising capital and the unique benefits that small businesses offer. 

Speaking of inspiration, I want to take a moment to thank Martha Miller, our first Advocate for Small Business Capital Formation, who recently announced her departure.  Since December 2018, Martha has worked tirelessly to establish the Office of the Advocate for Small Business Capital Formation and has assembled a first-class team that will carry on her great work after she leaves.  Martha’s energy, creativity, and can-do attitude is contagious and her absence will be felt throughout the Commission.  Thank you, Martha for your service. 

To the public, enjoy the rest of the forum and please know that my door is always open for discussions on these and other subjects.[x]