[114th Congress Public Law 284]
[From the U.S. Government Publishing Office]
[[Page 130 STAT. 1447]]
Public Law 114-284
114th Congress
An Act
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. <<NOTE: Dec. 16, 2016 - [H.R. 3784]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <<NOTE: SEC Small
Business Advocate Act of 2016.>>
SECTION 1. <<NOTE: 15 USC 78a note.>> 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 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) <<NOTE: Appointment.>> 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) <<NOTE: Consultation.>> Staff of office.--The
Advocate for Small Business Capital Formation, after
consultation with the Commission, may retain or employ
independent counsel, research staff, and
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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--
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``(i) <<NOTE: Analysis.>> 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) <<NOTE: Summary.>> 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) <<NOTE: Records.>> 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) <<NOTE: Recommenda- tions.>>
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) <<NOTE: Procedures. Deadline.>> 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
[[Page 130 STAT. 1450]]
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. <<NOTE: 15 USC 78qq.>> 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);
[[Page 130 STAT. 1451]]
``(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) three non-voting members--
``(i) one of whom shall be appointed by the
Investor Advocate;
``(ii) one of whom shall be appointed by the
North American Securities Administrators
Association; and
``(iii) one 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) <<NOTE: Deadline.>> 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
[[Page 130 STAT. 1452]]
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) <<NOTE: Public information.>> each time the Committee
submits a finding or recommendation to the Commission, promptly
issue a public statement--
``(A) <<NOTE: Assessment.>> 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''.
Approved December 16, 2016.
LEGISLATIVE HISTORY--H.R. 3784:
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HOUSE REPORTS: No. 114-408 (Comm. on Financial Services).
CONGRESSIONAL RECORD, Vol. 162 (2016):
Feb. 1, considered and passed House.
Dec. 9, considered and passed Senate.
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