[Congressional Record Volume 162, Number 18 (Monday, February 1, 2016)]
[House]
[Pages H379-H382]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SEC SMALL BUSINESS ADVOCATE ACT OF 2016
Mr. GARRETT. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 3784) 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, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 3784
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 OFFICE OF THE ADVOCATE FOR SMALL
BUSINESS CAPITAL FORMATION AND 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
[[Page H380]]
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 (hereafter 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 advocating for the interests
of small businesses and 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 currently employed by
the Commission.
``(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 such 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
to minority-owned and women-owned small businesses;
``(D) analyze the potential impact 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 mitigate problems
identified under this paragraph and to 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
after 2015, 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 small business services and the
responsiveness of the Commission and self-regulatory
organizations to small business 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 their investors, during the reporting
period;
``(iv) an inventory of the items summarized under clause
(iii) (including items summarized under such clause for any
prior reporting period on which no action has been taken or
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) that
includes--
``(I) identification of any action taken by the Commission
or the self-regulatory organization and the result of such
action;
``(II) the length of time that each item has remained on
such inventory; and
``(III) for items on which no action has been taken, the
reasons for inaction, and an identification of any official
who is responsible for such action;
``(v) recommendations for such changes to the regulations,
guidance and orders of the Commission and such legislative
actions as may be appropriate to resolve problems with the
Commission and self-regulatory organizations encountered by
small businesses and small business investors and to
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 by 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 such 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 such 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) Establishment and Purpose.--
``(1) Establishment.--There is established within the
Commission the Small Business Capital Formation Advisory
Committee (hereafter in this section referred to as the
`Committee').
``(2) Functions.--
``(A) In general.--The Committee shall provide the
Commission with advice on the Commission's rules,
regulations, and policies with regard to the Commission's
mission of protecting investors, maintaining fair, orderly,
and efficient markets, and facilitating capital formation, as
such rules, regulations, and policies relate to--
``(i) capital raising by emerging, privately held small
businesses (`emerging companies') and publicly traded
companies with less than $250,000,000 in public market
capitalization (`smaller public companies') through
securities offerings, including private and limited offerings
and 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 Commission's enforcement program.
``(b) 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--
``(i) who represent--
``(I) emerging companies engaging in private and limited
securities offerings or considering initial public offerings
(`IPO') (including the companies' officers and directors);
``(II) the professional advisors of such companies
(including attorneys, accountants, investment bankers, and
financial advisors); and
``(III) the investors in such companies (including angel
investors, venture capital funds, and family offices);
``(ii) who are officers or directors of minority-owned
small businesses or women-owned small businesses;
``(iii) who represent--
``(I) smaller public companies (including the companies'
officers and directors);
``(II) the professional advisors of such companies
(including attorneys, auditors, underwriters, and financial
advisors); and
``(III) the pre-IPO and post-IPO investors in such
companies (both institutional, such as venture capital funds,
and individual, such as angel investors); and
``(iv) who represent participants in the marketplace for
the securities of emerging companies and smaller public
companies, such as securities exchanges, alternative trading
systems, analysts, information processors, and transfer
agents; and
``(C) 3 non-voting members--
[[Page H381]]
``(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.
``(c) 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).
``(d) Meetings.--
``(1) Frequency of meetings.--The Committee shall meet--
``(A) not less frequently than four 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.
``(e) 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.
``(f) Staff.--The Commission shall make available to the
Committee such staff as the chairman of the Committee
determines are necessary to carry out this section.
``(g) 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.
``(h) Federal Advisory Committee Act.--The Federal Advisory
Committee Act (5 U.S.C. App.) shall not apply with respect to
the Committee and its activities.''.
(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''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New
Jersey (Mr. Garrett) and the gentleman from Delaware (Mr. Carney) each
will control 20 minutes.
The Chair recognizes the gentleman from New Jersey.
General Leave
Mr. GARRETT. Mr. Chairman, I ask unanimous consent that all Members
may have 5 legislative days in which to revise and extend their remarks
and to include any extraneous material with regard to this bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from New Jersey?
There was no objection.
{time} 1530
Mr. GARRETT. Mr. Speaker, I yield myself such time as I may consume.
I rise in support of H.R. 3784, the SEC Small Business Advocate Act.
I would like to thank the gentleman from Delaware (Mr. Carney) and
the gentleman from Wisconsin (Mr. Duffy) of the Financial Services
Committee, as well as the gentleman from Florida (Mr. Crenshaw) and the
gentleman from Illinois (Mr. Quigley) of the Appropriations Committee,
for working together in a bipartisan manner on this bill. In doing so,
it has resulted in the Financial Services Committee's favorably
reporting H.R. 3784 out of committee by a unanimous vote.
Mr. Speaker, the SEC has a three-part mission: to protect investors,
to maintain fair and orderly and efficient markets, and to also
facilitate capital formation. Yet, if you think about it, the SEC has
really given a short shrift to the capital formation part of its
statutory mandate, and it is to the detriment of entrepreneurs and to
the startup ventures.
Although small companies are at the proverbial forefront of
technological innovation and also of job creation, they often face
significant obstacles in obtaining the necessary capital and funding.
These obstacles, if you will, are often attributable to the
proportionally large burden that security regulations place on them.
They are often written for large public companies, and they are placed
then on small companies which then seek to go public.
By failing to fulfill this important part of its mandated mission,
the SEC is basically hurting the small companies. It is impeding
economic growth, and it is basically hindering job creation, which is
so desperately needed in this country. When the SEC has failed to
advance its mission in facilitating capital formation, Congress has
stepped into this vacuum, most notably through the enactment of the
JOBS Act back in 2012. You see, while the JOBS Act has made it easier
for these companies to go public, the JOBS Act alone has not been
enough. It has not been enough to entirely overcome all of the
obstacles that the companies face in trying to go public.
So now we have H.R. 3784. It creates the SEC small business capital
formation advocate, and he will provide an independent voice for small
business capital formation on par with the SEC's investor advocate.
This new advocate will support the interests of small businesses and
provide guidance to the SEC on advancing a post-JOBS Act capital
formation agenda, something that, unfortunately, if you look at the
track record, the SEC has failed to do for years. The small business
advocate will support the interests not only of entrepreneurs and of
job creators, but they will do so also on behalf of investors.
Finally, it is clear that fundamental change is needed within the SEC
in order to get this agency to focus on the capital formation mandate.
H.R. 3784 will provide a permanent voice for small businesses at the
SEC, and it will help them ensure that the SEC does not neglect,
anymore, this important mandate in the future.
Again, I ask my colleagues to support H.R. 3784 in a bipartisan
manner, just as was done in committee.
Mr. Speaker, I reserve the balance of my time.
Mr. CARNEY. Mr. Speaker, I yield myself such time as I may consume.
I begin by thanking all of those who have worked with us to introduce
and to improve this legislation. I especially want to thank my
colleague and friend, the gentleman from Wisconsin (Mr. Duffy), the
gentleman from Illinois (Mr. Quigley), who will speak in a minute, the
gentleman from Florida (Mr. Crenshaw), and all of our other cosponsors,
as well as the SEC, for their work on this bill. Due to their help and
the bipartisan work on our committee, this legislation received a
unanimous vote out of committee, as the gentleman from New Jersey
pointed out.
Mr. Speaker, small businesses are the cornerstones of our
communities, and they are a major driver of American economic job
growth. In fact, small businesses create over 60 percent of new jobs in
the United States, which is the main point here. If we want to help
businesses create jobs, we need to help small businesses.
From one's employment to one's shopping needs, every American relies
on small business in some way or another. Given the crucial part they
play in our economy, ensuring their success just makes common sense.
That is what this bill is--just a commonsense, bipartisan bill to help
small businesses across our great country.
Despite the important role that small businesses have in driving
economic growth and job creation, they can be underrepresented in
conversations about regulations affecting them at every level of
government, and their
[[Page H382]]
concerns are not always heard. This doesn't just harm small businesses.
It can also adversely impact investors and the public at large.
The SEC has done an admirable job in supporting and in advancing the
priorities of small businesses. This bill, the SEC Small Business
Advocate Act, simply gives the SEC more tools to understand their needs
and concerns. The SEC Small Business Advocate Act mirrors provisions
found in the Dodd-Frank bill, which created the current Office of the
Investor Advocate.
This advocate would open clear avenues of communication to SEC
leadership on issues affecting small-business owners, investors, and
stakeholders. It would also help continue the reforms and progress that
Congress made in passing the JOBS Act, which the gentleman from New
Jersey mentioned, including with issues such as equity crowdfunding and
ideas for venture exchanges and changes to tick size, which the
gentleman from Wisconsin and I have worked on over the past year.
With the resources provided in H.R. 3784, the SEC will have the
ability to pursue meaningful regulatory improvements that could
significantly improve outcomes for small businesses and help them with
their access to capital, which is needed to grow and create jobs.
I am very encouraged that the House has chosen to take up this
bipartisan piece of legislation today and that we are moving forward to
ensure a voice for small business at the SEC.
Again, I thank the SEC for its help on this issue and a special
thanks to my friend and colleague, Congressman Duffy.
I urge all of my colleagues, as the members of the Financial Services
Committee have, to vote ``yes'' on this legislation.
Mr. Speaker, I reserve the balance of my time.
Mr. GARRETT. Mr. Speaker, I reserve the balance of my time.
Mr. CARNEY. Mr. Speaker, I yield 3 minutes to the gentleman from
Illinois (Mr. Quigley).
Mr. QUIGLEY. Mr. Speaker, given that small businesses have accounted
for over 60 percent of the net new jobs created since the end of the
recession, we should be doing more to simplify regulatory compliance so
that small businesses can direct their resources to what they do best:
innovating and growing our economy.
Small businesses and small business investors were not the cause of
the financial crisis and do not pose a significant risk to the rest of
the economy. Yet, regulators like the SEC, which oversee the financial
markets, too often craft regulations by which the costs to small
businesses far outweigh the minimal benefits they may have on our
economy. We need our regulators to take the concerns of small
businesses seriously and to make small business growth a top priority.
That is why I was proud to coauthor the SEC Small Business Advocate
Act, which will establish an Office of the Advocate for Small Business
Capital Formation within the SEC. This office will open a clear avenue
of communication to the SEC leadership on issues affecting small
businesses by maintaining a designated representative to advocate on
their needs.
This advocate will be responsible for helping small businesses
resolve problems with the SEC, analyzing the potential impact of
proposed rules and regulations on small businesses, and reaching out to
small businesses to understand issues related to capital formation. In
addition, this bill formalizes the Advisory Committee on Small and
Emerging Companies, which provides members of the small business
community with another mechanism to communicate their concerns with the
SEC. This legislation will not only improve the regulatory process for
small-business owners, but also for the everyday investors and
consumers who depend on them.
This legislation has widespread support from representatives of the
business community, and it passed unanimously out of committee. I urge
my colleagues to empower small-business owners and entrepreneurs and
support this commonsense, bipartisan legislation.
Mr. GARRETT. Mr. Speaker, I reserve the balance of my time.
Mr. CARNEY. Mr. Speaker, I yield myself the balance of my time.
I close by again asking my colleagues to follow the example of the
Financial Services Committee and vote unanimously to support this bill,
which will help small businesses to access capital and to get the
advice they need from the SEC.
I yield back the balance of my time.
Mr. GARRETT. Mr. Speaker, I yield myself the balance of my time.
Again, I commend the gentleman for his work on this legislation and
for the bipartisan nature of this and of most of the bills, actually,
that will be coming to the floor today that were passed out of
committee in a bipartisan manner.
I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from New Jersey (Mr. Garrett) that the House suspend the
rules and pass the bill, H.R. 3784, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________