Crowdfund Insider | JD Alois | Feb 28, 2023

Since SEC Chair Gary Gensler was sworn into office in April 2021, the SEC has pursued none of the SEC Small Business Capital Formation Advisory Committee’s (SBCFAC) recommendations.

• The SEC Small Business Capital Formation Advisory Committee (SBCFAC) was created by Congress in recognition that smaller firms too frequently did not garner the support they need. The Committee formally provides feedback to the Commission and, ostensibly, the SEC should be reviewing and pursuing the recommendations.
• Example recommendations the SBCFAC has made tot he commission only to be ignored.  What all of these issues have in common is that the Commission has ignored the advice from people with boots-on-the-ground experience:
  • In May 2021, the SBCAF told the Commission to improve access to capital for “underrepresented founders and investors, including women, minorities, and founders outside of prominent tech hubs.

See:  The Real Story of Access to Capital

• During a meeting of the Committee in February 2022, SBCFAC noted that accredited investors are a “critical source of early-stage capital for small businesses in communities across the country, and changes that would shrink the pool of currently accredited investors would have a detrimental effect on small business capital formation.
• The Committee also recommended that the Commission “consider creating a new exemption for local and/or micro-investments that would not be limited to accredited investors.”
• the same meeting called on the Commission to provide better support for entrepreneurial ecosystems. This included leaving Reg D as it is, reiterating its support of broadening the definition of an accredited investor while recommending a micro-exemption – that would not be limited to accredited investors.
• It is not clear if the SEC has ever issued a response to the recommendations of the SBCFAC, even though it is mandated by law.

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