In remarks at the 40th Annual Government-Business Forum on Small Business Capital Formation, SEC Commissioner Hester M. Peirce outlined recommendations on facilitating capital formation.

The recommendations included:

  • examining the development of educational credentials, examinations or certification criteria as the basis of investor accreditation;
  • proposed registration exemption for finders and other proposed parameters for finders;
  • a streamlined exemption enabling small businesses to raise up to $500,000, subject to notification and antifraud requirements;
  • codifying temporary relief from crowdfunding requirements;
  • expanding the qualifying venture capital fund exemption under  Section 3(c)(1) of the Investment Company Act; and
  • expanding the eligibility criteria for qualifying venture capital fund investments.

Commentary Steven Lofchie

Commissioner Peirce faces an uphill battle. There is a fundamental trade-off between helping small businesses raise money and protecting small investors (which necessarily implies limiting their ability to make investments in small businesses). Given its current direction, the SEC is likely to prioritize the protection of small investors over the ability of small businesses to raise money. However, persistence is a virtue.

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