SEC Small Biz Advocate Bill Advances

December 14, 2016

On Dec. 9, the Senate passed the SEC Small Business Advocate Act of 2016 (H.R. 3784), as part of a last-minute legislative push before Congress adjourned for the year. The bill previously passed the House, and now awaits the president’s signature. Shortly after introduction in the House by Rep. John Carney (D-Del.) on Oct. 21, NSBA signed on to a letter of support for H.R. 3784 with others in the small-business community.

H.R. 3784 makes important changes to the Securities and Exchange Commission (SEC) and the way that it is informed on small business issues by creating a new office at the SEC to advocate on behalf of small businesses. The SEC regulates all securities including those issued by small businesses to form capital. The importance of this role cannot be overstated and the form those regulations take often directly impacts how accessible capital is for small businesses.

The head of the Office will be named the Advocate for Small Business Capital Formation and will report directly to the Commission. The Commission will also have the ability to appoint this individual whose role includes advocating on behalf of SMEs and small business investors in resolving significant problems with the Commission or with self-regulatory organizations. Specifically, the Advocate’s position will be modeled after the Office of the Investor Advocate created by the Dodd-Frank Act. The Advocate will be tasked with providing input on regulations impacting small businesses and serve as a resource for small businesses having difficulty dealing with the SEC. The Advocate will also identify challenges regarding access to capital – including for minority and women-owned firms.

The Advocate will submit an annual report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House, detailing the steps it has taken to improve SEC regulation of small business capital formation and what areas of regulation could still be improved. The Commission will be required under the statute to respond to all of the Advocate’s recommendations within three months of submission.

This legislation makes important changes that will provide a boost to capital formation and investment for small businesses, which is critical to growth. NSBA and its members urge President Obama to swiftly sign this legislation into law.

NSBA supports H.R. 3784 because it ensures that small businesses have a strong, independent voice at the SEC that will help business owners across the country access the capital they need to grow and create jobs. The SEC needs to better understand the barriers small businesses endure when attempting to access capital, and how proposed rules and regulations often impact their costs and competitiveness. An Advocate at the SEC will ensure small businesses concerns are identified, addressed and acted upon in a timely manner.