SEC Holds Forum on Small Business Capital Formation
Commentary by Steven Lofchie
The SEC held its 34th annual Government-Business Forum on Small Business Capital Formation. Regulators at the Forum discussed initiatives to facilitate capital formation for small and emerging companies.
Chair White outlined recent SEC efforts supporting capital formation for small and emerging companies including:
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finalizing rules in connection with the JOBS Act that permit startups and small businesses to raise capital by offering and selling securities through crowdfunding;
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finalizing rules on Regulation A (popularly known as "Regulation A+"), which allows for lightly regulated offerings of up to $50 million in securities during a 12-month period; and
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approving a proposal for a two-year pilot program that would widen the minimum quoting and trading increments - i.e., tick sizes - for smaller companies.
There can be "no doubt," Commissioner Aguilar stated, that facilitating an environment that nurtures and breeds successful startups and small companies is critical to the health of our greater economy. He warned his audience that rules alone are not a panacea for the financing challenges faced by small companies.
Commentary
Why are small and medium sized companies electing to stay private, raising money through private offerings instead of going public? This is a big question, but one that would benefit from serious ongoing examination. Perhaps, the ability to raise money through SEC registration and the freedom to provide liquidity through exchange trading are not carrots that could make suffering the stick of regulatory requirements a hurt worth enduring.