[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 2867 Introduced in Senate (IS)]

<DOC>






114th CONGRESS
  2d Session
                                S. 2867

To amend the Securities Exchange Act of 1934 to establish an Office of 
the Advocate for Small Business Capital Formation and a Small Business 
     Capital Formation Advisory Committee, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 27, 2016

 Ms. Heitkamp (for herself, Mr. Heller, and Mr. Peters) introduced the 
 following bill; which was read twice and referred to the Committee on 
                  Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
To amend the Securities Exchange Act of 1934 to establish an Office of 
the Advocate for Small Business Capital Formation and a Small Business 
     Capital Formation Advisory Committee, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``SEC Small Business Advocate Act of 
2016''.

SEC. 2. ESTABLISHMENT OF THE OFFICE OF THE ADVOCATE FOR SMALL BUSINESS 
              CAPITAL FORMATION AND THE SMALL BUSINESS CAPITAL 
              FORMATION ADVISORY COMMITTEE.

    (a) Office of the Advocate for Small Business Capital Formation.--
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is 
amended by adding at the end the following:
    ``(j) Office of the Advocate for Small Business Capital 
Formation.--
            ``(1) Office established.--There is established within the 
        Commission the Office of the Advocate for Small Business 
        Capital Formation (in this subsection referred to as the 
        `Office').
            ``(2) Advocate for small business capital formation.--
                    ``(A) In general.--The head of the Office shall be 
                the Advocate for Small Business Capital Formation, who 
                shall--
                            ``(i) report directly to the Commission; 
                        and
                            ``(ii) be appointed by the Commission, from 
                        among individuals having experience in--
                                    ``(I) advocating for the interests 
                                of small businesses; and
                                    ``(II) encouraging small business 
                                capital formation.
                    ``(B) Compensation.--The annual rate of pay for the 
                Advocate for Small Business Capital Formation shall be 
                equal to the highest rate of annual pay for other 
                senior executives who report directly to the 
                Commission.
                    ``(C) No current employee of the commission.--An 
                individual may not be appointed as the Advocate for 
                Small Business Capital Formation if the individual is 
                employed by the Commission at the time of the 
                appointment.
            ``(3) Staff of office.--The Advocate for Small Business 
        Capital Formation, after consultation with the Commission, may 
        retain or employ independent counsel, research staff, and 
        service staff, as the Advocate for Small Business Capital 
        Formation determines to be necessary to carry out the functions 
        of the Office.
            ``(4) Functions of the advocate for small business capital 
        formation.--The Advocate for Small Business Capital Formation 
        shall--
                    ``(A) assist small businesses and small business 
                investors in resolving significant problems that the 
                businesses and investors may have with the Commission 
                or with self-regulatory organizations;
                    ``(B) identify areas in which small businesses and 
                small business investors would benefit from changes in 
                the regulations of the Commission or the rules of self-
                regulatory organizations;
                    ``(C) identify problems that small businesses have 
                with securing access to capital, including any unique 
                challenges faced by minority-owned and women-owned 
                small businesses;
                    ``(D) analyze the potential impacts on small 
                businesses and small business investors of--
                            ``(i) proposed regulations of the 
                        Commission that are likely to have a 
                        significant economic impact on small businesses 
                        and small business capital formation; and
                            ``(ii) proposed rules that are likely to 
                        have a significant economic impact on small 
                        businesses and small business capital formation 
                        of self-regulatory organizations registered 
                        under this title;
                    ``(E) conduct outreach to small businesses and 
                small business investors, including through regional 
                roundtables, in order to solicit views on relevant 
                capital formation issues;
                    ``(F) to the extent practicable, propose to the 
                Commission changes in the regulations or orders of the 
                Commission and to Congress any legislative, 
                administrative, or personnel changes that may be 
                appropriate to--
                            ``(i) mitigate problems identified under 
                        this paragraph; and
                            ``(ii) promote the interests of small 
                        businesses and small business investors;
                    ``(G) consult with the Investor Advocate on 
                proposed recommendations made under subparagraph (F); 
                and
                    ``(H) advise the Investor Advocate on issues 
                related to small businesses and small business 
                investors.
            ``(5) Access to documents.--The Commission shall ensure 
        that the Advocate for Small Business Capital Formation has full 
        access to the documents and information of the Commission and 
        any self-regulatory organization, as necessary to carry out the 
        functions of the Office.
            ``(6) Annual report on activities.--
                    ``(A) In general.--Not later than December 31 of 
                each year beginning in 2016, the Advocate for Small 
                Business Capital Formation shall submit to the 
                Committee on Banking, Housing, and Urban Affairs of the 
                Senate and the Committee on Financial Services of the 
                House of Representatives a report on the activities of 
                the Advocate for Small Business Capital Formation 
                during the immediately preceding fiscal year.
                    ``(B) Contents.--Each report required under 
                subparagraph (A) shall include--
                            ``(i) appropriate statistical information 
                        and full and substantive analysis;
                            ``(ii) information on steps that the 
                        Advocate for Small Business Capital Formation 
                        has taken during the reporting period to 
                        improve--
                                    ``(I) small business services; and
                                    ``(II) the responsiveness of the 
                                Commission and self-regulatory 
                                organizations with respect to small 
                                businesses and small business investor 
                                concerns;
                            ``(iii) a summary of the most serious 
                        issues encountered by small businesses and 
                        small business investors, including any unique 
                        issues encountered by minority-owned and women-
                        owned small businesses and investors in those 
                        small businesses, during the reporting period;
                            ``(iv) an inventory of the items summarized 
                        under clause (iii), including--
                                    ``(I) items summarized under that 
                                clause for any prior reporting period--
                                            ``(aa) on which no action 
                                        has been taken; or
                                            ``(bb) that have not been 
                                        resolved to the satisfaction of 
                                        the Advocate for Small Business 
                                        Capital Formation as of the 
                                        beginning of the reporting 
                                        period covered by the report;
                                    ``(II) identification of any action 
                                taken by the Commission or the self-
                                regulatory organization and the result 
                                of the action;
                                    ``(III) the length of time that 
                                each item has remained on the 
                                inventory; and
                                    ``(IV) for items on which no action 
                                has been taken--
                                            ``(aa) the reasons for the 
                                        inaction; and
                                            ``(bb) an identification of 
                                        any official who is responsible 
                                        for taking action;
                            ``(v) recommendations for legislative 
                        actions and changes to the regulations, 
                        guidance, and orders of the Commission that may 
                        be appropriate to--
                                    ``(I) resolve problems with the 
                                Commission and self-regulatory 
                                organizations encountered by small 
                                businesses and small business 
                                investors; and
                                    ``(II) encourage small business 
                                capital formation; and
                            ``(vi) any other information, as determined 
                        appropriate by the Advocate for Small Business 
                        Capital Formation.
                    ``(C) Confidentiality.--No report required under 
                subparagraph (A) may contain confidential information.
                    ``(D) Independence.--Each report required under 
                subparagraph (A) shall be provided directly to the 
                committees of Congress listed in that subparagraph 
                without any prior review or comment from the 
                Commission, any commissioner, any other officer or 
                employee of the Commission, or the Office of Management 
                and Budget.
            ``(7) Regulations.--The Commission shall establish 
        procedures requiring a formal response to all recommendations 
        submitted to the Commission by the Advocate for Small Business 
        Capital Formation, not later than 3 months after the date of 
        the submission.
            ``(8) Government-business forum on small business capital 
        formation.--The Advocate for Small Business Capital Formation 
        shall be responsible for planning, organizing, and executing 
        the annual Government-Business Forum on Small Business Capital 
        Formation described in section 503 of the Small Business 
        Investment Incentive Act of 1980 (15 U.S.C. 80c-1).
            ``(9) Rule of construction.--Nothing in this subsection may 
        be construed as replacing or reducing the responsibilities of 
        the Investor Advocate with respect to small business 
        investors.''.
    (b) Small Business Capital Formation Advisory Committee.--Title I 
of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 
amended by adding at the end the following:

``SEC. 40. SMALL BUSINESS CAPITAL FORMATION ADVISORY COMMITTEE.

    ``(a) Definitions.--In this section--
            ``(1) the term `Committee' means the Small Business Capital 
        Formation Advisory Committee established under subsection (b);
            ``(2) the term `emerging companies' means emerging, 
        privately held small businesses;
            ``(3) the term `IPO' means initial public offering; and
            ``(4) the term `smaller public companies' means publicly 
        traded companies with less than $250,000,000 in public market 
        capitalization.
    ``(b) Establishment and Purpose.--
            ``(1) Establishment.--There is established within the 
        Commission the Small Business Capital Formation Advisory 
        Committee.
            ``(2) Functions.--
                    ``(A) In general.--The Committee shall provide the 
                Commission with advice on the rules, regulations, and 
                policies of the Commission with regard to the mission 
                of the Commission of protecting investors, maintaining 
                fair, orderly, and efficient markets, and facilitating 
                capital formation, as those rules, regulations, and 
                policies relate to--
                            ``(i) capital raising--
                                    ``(I) by--
                                            ``(aa) emerging companies; 
                                        and
                                            ``(bb) smaller public 
                                        companies; and
                                    ``(II) through securities 
                                offerings, including--
                                            ``(aa) private and limited 
                                        offerings; and
                                            ``(bb) initial and other 
                                        public offerings;
                            ``(ii) trading in the securities of 
                        emerging companies and smaller public 
                        companies; and
                            ``(iii) public reporting and corporate 
                        governance requirements of emerging companies 
                        and smaller public companies.
                    ``(B) Limitation.--The Committee shall not provide 
                any advice with respect to any policies, practices, 
                actions, or decisions concerning the enforcement 
                program of the Commission.
    ``(c) Membership.--
            ``(1) In general.--The members of the Committee shall be--
                    ``(A) the Advocate for Small Business Capital 
                Formation;
                    ``(B) not fewer than 10, and not more than 20, 
                members appointed by the Commission, from among 
                individuals who--
                            ``(i) represent emerging companies engaging 
                        in private and limited securities offerings or 
                        considering an IPO, including the officers and 
                        directors of the emerging companies;
                            ``(ii) represent the professional advisors 
                        of emerging companies, including--
                                    ``(I) attorneys;
                                    ``(II) accountants;
                                    ``(III) investment bankers; and
                                    ``(IV) financial advisors;
                            ``(iii) represent the investors in emerging 
                        companies, including--
                                    ``(I) angel investors;
                                    ``(II) venture capital funds; and
                                    ``(III) family offices;
                            ``(iv) are officers or directors of 
                        minority-owned small businesses and women-owned 
                        small businesses;
                            ``(v) represent smaller public companies, 
                        including the officers and directors of the 
                        companies;
                            ``(vi) represent the professional advisors 
                        of smaller public companies, including--
                                    ``(I) attorneys;
                                    ``(II) auditors;
                                    ``(III) underwriters; and
                                    ``(IV) financial advisors;
                            ``(vii) represent the pre-IPO and post-IPO 
                        investors in smaller public companies, which 
                        include investors that are--
                                    ``(I) institutional, such as 
                                venture capital funds; and
                                    ``(II) individual, such as angel 
                                investors; and
                            ``(viii) represent participants in the 
                        marketplace for the securities of emerging 
                        companies and smaller public companies, 
                        including--
                                    ``(I) securities exchanges;
                                    ``(II) alternative trading systems;
                                    ``(III) analysts;
                                    ``(IV) information processors; and
                                    ``(V) transfer agents; and
                    ``(C) 3 non-voting members--
                            ``(i) 1 of whom shall be appointed by the 
                        Investor Advocate;
                            ``(ii) 1 of whom shall be appointed by the 
                        North American Securities Administrators 
                        Association; and
                            ``(iii) 1 of whom shall be appointed by the 
                        Administrator of the Small Business 
                        Administration.
            ``(2) Term.--Each member of the Committee appointed under 
        subparagraph (B), (C)(ii), or (C)(iii) of paragraph (1) shall 
        serve for a term of 4 years.
            ``(3) Members not commission employees.--Members appointed 
        under subparagraph (B), (C)(ii), or (C)(iii) of paragraph (1) 
        shall not be treated as employees or agents of the Commission 
        solely because of membership on the Committee.
    ``(d) Chairman; Vice Chairman; Secretary; Assistant Secretary.--
            ``(1) In general.--The members of the Committee shall 
        elect, from among the members of the Committee--
                    ``(A) a chairman;
                    ``(B) a vice chairman;
                    ``(C) a secretary; and
                    ``(D) an assistant secretary.
            ``(2) Term.--Each member elected under paragraph (1) shall 
        serve for a term of 3 years in the capacity for which the 
        member was elected under paragraph (1).
    ``(e) Meetings.--
            ``(1) Frequency of meetings.--The Committee shall meet--
                    ``(A) not less frequently than 4 times annually, at 
                the call of the chairman of the Committee; and
                    ``(B) from time to time, at the call of the 
                Commission.
            ``(2) Notice.--The chairman of the Committee shall give the 
        members of the Committee written notice of each meeting, not 
        later than 2 weeks before the date of the meeting.
    ``(f) Compensation and Travel Expenses.--Each member of the 
Committee who is not a full-time employee of the United States shall--
            ``(1) be entitled to receive compensation at a rate not to 
        exceed the daily equivalent of the annual rate of basic pay in 
        effect for a position at level V of the Executive Schedule 
        under section 5316 of title 5, United States Code, for each day 
        during which the member is engaged in the actual performance of 
        the duties of the Committee; and
            ``(2) while away from the home or regular place of business 
        of the member in the performance of services for the Committee, 
        be allowed travel expenses, including per diem in lieu of 
        subsistence, in the same manner as persons employed 
        intermittently in the Government service are allowed expenses 
        under section 5703 of title 5, United States Code.
    ``(g) Staff.--The Commission shall make available to the Committee 
such staff as the chairman of the Committee determines is necessary to 
carry out this section.
    ``(h) Review by Commission.--The Commission shall--
            ``(1) review the findings and recommendations of the 
        Committee; and
            ``(2) each time the Committee submits a finding or 
        recommendation to the Commission, promptly issue a public 
        statement--
                    ``(A) assessing the finding or recommendation of 
                the Committee; and
                    ``(B) disclosing the action, if any, the Commission 
                intends to take with respect to the finding or 
                recommendation.
    ``(i) Federal Advisory Committee Act.--The Federal Advisory 
Committee Act (5 U.S.C. App.) shall not apply with respect to the 
Committee and the activities of the Committee.''.
    (c) Annual Government-Business Forum on Small Business Capital 
Formation.--Section 503(a) of the Small Business Investment Incentive 
Act of 1980 (15 U.S.C. 80c-1(a)) is amended by inserting ``, acting 
through the Office of the Advocate for Small Business Capital Formation 
and in consultation with the Small Business Capital Formation Advisory 
Committee,'' after ``Securities and Exchange Commission''.
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