Commissioners Disagree on SEC Posture toward Small Businesses
Commentary by Steven Lofchie
SEC Chair Gary Gensler and SEC Commissioner Hester M. Peirce weighed in on the agency's current posture toward small business capital formation. Their remarks were delivered at the SEC's 41st Annual Government-Business Forum on Small Business Capital Formation, sponsored by the SEC Office of the Advocate for Small Business.
Chair Gary Gensler
Mr. Gensler highlighted specific measures the SEC has taken in an effort to provide small businesses with "full and equal access" to capital markets and fundraising. He said the SEC (i) took strides to simplify the process of raising capital for small businesses, including via the agency's new Capital Raising Hub, and (ii) simplified the language used in forms and other processes. Mr. Gensler stressed the integral role facilitating capital formation plays in the agency's mission, adding that the goal is to advance stronger market conditions for companies of all sizes, not just large corporations.
Additionally, Mr. Gensler reported that he asked SEC Staff to consider the impact of rulemakings on small reporting companies, noting that aspects of the proposed climate-related disclosure rules apply only to large corporations. Mr. Gensler urged market participants to provide feedback on how SEC rulemaking affects small businesses.
Commissioner Hester M. Peirce
Ms. Peirce emphasized the need for small businesses to be considered in SEC policymaking. She stated that without explicit directive, the SEC would likely only focus on issues relevant to larger companies. Ms. Peirce criticized the SEC's current stance on supporting access for small business capital formation, calling out the agency's "indifference" and sometimes "hostility" toward capital formation.
Ms. Peirce encouraged the SEC to take a more deliberate approach to responding to feedback on policymaking in order to afford the agency direct contact with potentially affected parties. Describing the SEC's past responses to policy recommendations from small business as "non-committal and uninspired," Ms. Peirce said that small businesses face unique challenges worthy of greater consideration.
Commentary
The claim that the burdens of potentially very expensive new climate change disclosure proposals will hurt big businesses more than small businesses, falls short. Simplifying forms may be a nice-to-have, but it is a rather trivial lessening of burdens, particularly when measured against the rush of all the new SEC regulatory proposals over the past few months.