U.S. capital markets are a critical source of financing for businesses and governments, particularly small and mid-sized businesses. Unfortunately, the impact of many new financial regulations has reduced the efficient allocation of credit and capital which has dampened the potential for economic growth and job creation. Congress and the SEC should address this concerning trend by reassessing regulations to allow more businesses to readily access U.S. capital markets.

While the U.S. financial system is significantly stronger, better capitalized, and more resilient than it was in 2008, the economy has performed subpar as compared to prior post-recession periods.  Small and mid-sized businesses, in particular, are a great source of economic growth and job creation and financial regulation should be better tailored to support their access to capital.  A continued decline in the number of public companies and a decline in the number of initial-public offerings (IPOs) raises concerns that regulatory burdens are unduly hampering capital formation generally and may reduce small investors’ ready access to investment opportunities.

Many opportunities exist to reduce regulatory burdens for issuers and enhance capital while maintaining important protections for investors.

We believe our proposals will serve to enhance access to financing, providing the opportunity for greater economic growth and job creation:

• Several Jumpstart Our Business Startups Act (JOBS Act) accommodations that are currently available for Emerging Growth Companies (EGCs) should be extended to all issuers of public securities.
• Reform and revise certain existing regulations to reduce the burdens on issuers accessing public markets, such as amending the “smaller reporting company” definition and expanding the Rule 139 safe harbors on continuing research coverage.
• Promote private investment and secondary market trading in restricted securities by amending the definition of accredited investor and revising certain provisions of Reg D.
• Promote greater liquidity in secondary market public resales by making several amendments to Rule 144.