19 Sep SEC Small Business Advisory Committee Wraps Up Work

Last week the SEC’s Advisory Committee on Small and Emerging Companies finished its work. The Committee is anticipated to be succeeded by the new Small Business Capital Formation Advisory Committee mandated by statute. A few highlights of their final recommendations to the Commission (all good to me!):

• Private placement brokers – a more than 10 year drumbeat from the hustings has been begging the Commission to allow finders, who introduce capital to companies and stay out of the negotiation, to work without being registered as broker-dealers. This could be a big help to smaller companies who do not get attention from established investment banks.
• Accredited investor – the SEC is contemplating changes to this definition, including possible increases in the minimum income or net worth to qualify as accredited. The Committee requests that the changes not harm the existing private placement market. For example, the definition could be expanded to include financial advisors, CPAs or those meeting other tests of sophistication.
• Smaller reporting companies – the Committee hopes the SEC will complete its rulemaking to extend SRC benefits to companies with a larger public float.
• Reg A+ – the Committee recommended the preemption of state regulation of secondary trading following Reg A+ Tier 2 offerings.
• Tick Size – the Committee suggests letting smaller companies choose the spread between bid and ask on their stocks, which could help them in accessing capital more easily.

Congrats and thanks to my friends on the Committee, including co-Chair Sara Hanks and Greg Yadley, for all your hard and productive work on these important issues.