SEC Holds Government-Business Forum on Small Business Capital Formation

The Securities and Exchange Commission held an annual event where business leaders and government officials gathered to discuss how to improve small business capital formation.

The SEC’s Government-Business Forum on Small Business Capital Formation took place Dec. 12 and was hosted by the National Center for the Middle Market at the Ohio State University in Columbus. Topics included facilitating access to capital for small businesses, accredited investor status, crowdfunding, and enabling capital formation for traditionally underserved communities.

SEC Chairman Jay Clayton spoke about the complex patchwork of regulatory exemptions that facilitate various investment opportunities, which the SEC is examining to harmonize. He also spoke of how the SEC-driven “Main Street” investor participation in capital markets has traditionally been focused on public markets.

Other panelists emphasized the need to expand the definition of an accredited investor (and thus individuals who can participate in various private offerings) to include expertise-based qualifications, rather than the current income-driven definition. Panelists also pointed out the current $200,000 income-based definition is subject to high levels of variance across the country. In addition, panelists also agreed that more education is needed surrounding the complex process of raising capital, which can intimidate entrepreneurs and lead to a lack of access to capital markets.

SEC Commissioners Robert Jackson, Hester Peirce, and Elad Roisman, as well as Chairman Clayton, used the forum to hear from a wide variety of those involved in the capital formation process across the United States.

This event highlights the SEC’s focus on increasing access to capital for small and midsized companies, as well as streamlining the regulatory framework imposed on capital providers.