The Securities and Exchange Commission’s Office of the Investor Advocate held the 42nd Annual Small Business Forum—this time convening panels over four days on various topics, including trends and challenges affecting early stage businesses, smaller funds, and accessing the public markets and raising capital by smaller public companies. The Small Business Forum also solicits input from participants and the public regarding measures that would promote capital formation. A number of the Commissioners addressed the Forum participants.
Commissioner Uyeda focused his comments on the challenges facing smaller private funds, including the barriers to entry for emerging fund managers. The Commissioner noted that the prior year’s Forum had recommended that action be taken to support underrepresented emerging fund managers, specifically minorities and women. However, Commissioner Uyeda noted that the Commission has proposed a number of rules that would impose new burdens on private fund advisers and these likely would have a disproportionately significant burden on advisers to small funds and to first-time funds. As a result, the Commissioner suggested that perhaps the Commission might consider easing the burden on emerging fund managers by implementing a longer transition period for compliance with new rules for emerging fund managers. The full text of Commissioner Uyeda’s remarks may be found here.
Commissioner Peirce commented on the accredited investor definition. The Commissioner reintroduced the concept of allowing “investors who had passed a sufficiently rigorous test, taken high-quality investing courses, or had relevant professional degrees” to be included, and considering other options as well. For example, among the other options, she mentioned including “allowing anyone to invest some percentage of her investment portfolio in private companies—a technique already used in the crowdfunding rules—and allowing people assisted by a sophisticated financial intermediary to invest.” Commissioner Peirce also asked panelists to consider other steps that might make it easier for early-stage founders, such as the introduction of a micro-offering exemption that would allow companies $250,000 or $500,000 without registering with the Commission or the stated. Commissioner Peirce’s remarks may be found here.