Opening Remarks at Meeting of SEC Advisory Committee on Small and Emerging Companies

Chair Mary Jo White

Dec. 17, 2014

Good morning, and welcome to today´s meeting of the SEC´s Advisory Committee on Small and Emerging Companies.

I want to extend a special welcome to the new members of the Committee as well as to those members who are returning. Each of you bring to this Committee a wealth of knowledge, expertise, and insights about the needs of small businesses and the impact that our rules can and do have on this important part of our economy. I know you have busy schedules and multiple demands on your time, so I want to express my deep appreciation for your willingness to serve. Your thoughts, ideas, and recommendations will help the Commission´s thinking on the many important issues affecting small and emerging businesses.

I want to thank Stephen Graham and Chris Jacobs for agreeing to lead this Committee again as its Co-Chairs. I would also like to take a moment to recognize the invaluable contributions of Heath Abshure, who yesterday announced that he will be moving on from his current position as Arkansas Securities Commissioner and as the NASAA representative for this Committee. Heath has been a dedicated and energetic advocate for investors throughout his distinguished career, starting as a SEC attorney and then as the Arkansas Securities Commissioner and President of NASAA. He has always been a friend of the agency and we will all miss having him on the Committee. Lastly, I would like to thank Keith Higgins and the staff of the Division of Corporation Finance for their hard work in supporting the activities of this Committee and helping to organize this meeting.

You do not need any of us to tell you that small businesses play a crucial role in the growth of our nation´s economy and the creation of new jobs. Small businesses are a vital but often underrepresented segment of the American economy. This Committee plays a critical role in ensuring that the views of small business owners, investors, and other stakeholders in this business community are clearly heard at the Commission.

Now I know you have an ambitious agenda for today, but I want to take a few moments to provide a very brief update on a few of the initiatives that have been of interest to this Committee:

• JOBS Act Rulemakings — First, we are working hard to finalize the JOBS Act rulemakings. Last summer, we adopted the final rules that eliminated the general solicitation prohibition in Rule 506 offerings, designed to help small businesses solicit new investors more easily. We also have a pending related rule proposed. We know many of you are eager for us to finalize the rulemakings for Regulation A+ and crowdfunding. We are too. We have received lots of thoughtful and varying comments on both proposals. Completion of these rulemakings remains an important priority and the staff is working hard on the recommendations for the final rules.
  
• Tick Size — Tick size is another important issue that the Committee has considered. Earlier this year, the Commission directed the exchanges and FINRA to develop and file a plan for a pilot program that would widen the quoting and trading increment for certain smaller-capitalization stocks.

  In November, the Commission published a notice soliciting comment on the plan. The comment period will run until December 22, next Monday. We appreciate the feedback — and welcome more. I am hopeful that a pilot program will yield data that will better inform our thinking about ways to build more robust markets for smaller public companies.

• Disclosure Effectiveness Review — Staff in the Division of Corporation Finance is currently conducting a comprehensive review of the disclosure requirements for public companies. The goal is to find ways to improve the disclosure regime for the benefit of both companies and investors. This includes looking at whether additional scaling of the disclosure requirements for smaller companies would be appropriate. I look forward to reviewing the staff´s recommendations on how to update the requirements to facilitate timely, material disclosure by companies and shareholders´ access to that information.
• Accredited Investor — The accredited investor definition, which is the focus of your meeting today, is a very important topic for us. The Dodd-Frank Act requires the Commission to undertake a review of the accredited investor definition in its entirety as it relates to natural persons.

  And, the Commission staff, including staff from the Division of Corporation Finance and the Division of Economic and Risk Analysis, has been conducting a comprehensive review of this definition.

  The goal of the review is to assess whether we are properly identifying the population of investors who should be able to purchase securities in offerings without the protections afforded by the registration requirements of the Securities Act. A critical part of the staff´s review is soliciting and considering input from the public and other interested parties. And there are varying views. We recently received recommendations regarding the accredited investor definition from the SEC´s Investor Advisory Committee. Those recommendations are very helpful, and we will be very interested to hear this Committee´s insights at today´s meeting.

• Outreach — Public outreach to small businesses is essential to our efforts to inform ourselves. Just last month, we held our 33rd Government-Business Forum here at the SEC headquarters. This Forum brought together from across the country small business executives, their advisors, investors, and government officials to discuss and think about creative ways that our rules could be improved to help small businesses.

  I look forward to reviewing the recommendations from the Forum participants once they have been finalized.

  We also recently launched a new initiative with the U.S. Small Business Administration to host public events across the country to inform small business owners and entrepreneurs about the options for capital-raising. SEC staff members, including from our Office of Small Business Policy, worked closely with SBA staff to highlight the ways that small businesses can raise funds and to answer questions from small business owners. We have already held two of these well-attended events, with more in the works.

Let me stop here and thank you again for your service on this Committee. I look forward to receiving the report on your meeting today and to continuing our dialogue to help small businesses in America.