The Securities and Exchange Commission under Chairman Jay Clayton has taken an outsized focus on ensuring small businesses have the opportunity to flourish, and a new office within the agency is taking that mission directly to Main Street.
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Friday marks the 100th day since the creation of the agency’s Office of the Advocate for Small Business Capital Formation (OASB), a long title for an office with a relatively simple mission: make sure the regulatory system works for the majority of U.S. job creators who are looking to raise funding.
While the SEC has routinely heard from small businesses through the federal rulemaking process, which allows individuals or companies to submit written comments on proposed regulations, it’s taking a new, advocacy-centric approach with the OSAB, reaching organizations that may not have a government relations operations and perhaps haven’t interacted with the agency before.
“We’re a new office, and we have a different mission than anyone else has had here,” director Martha Miller told FOX Business. “The more issues that we can identify where we can recommend solutions to fix those issues, help people outside the small business community recognize the impact the solutions would have and ultimately get those solutions adopted so we can have better capital flow in this country.”
The office was created as part of a law enacted in 2016 under former President Barack Obama. The reach of OSAB goes beyond what one might typically think of as a small business, soliciting input from companies with as much as $250 million in outstanding public shares. Still, it does have a specific mission to examine challenges faced specifically by minority and women-owned small businesses, as well as those affected by natural disasters.
So far, Miller has been to five cities: Kansas City (both Missouri and Kansas), Overland Park, Kansas, Denver and Boulder, Colorado. One of their first big initiatives will be creating a portal to give company executives information on regulations around capital raising and other issues impacting small business.
“We need to do some plain English education for small businesses and small business investors to help them understand what are the frameworks and the rules,” Miller said. There are “really good opportunities for us to create educational content that’s really approachable.”
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While the SEC has taken a number of steps to ease regulatory constraints on small businesses – including loosening the restrictions on when companies can talk to investors before launching an initial public offering – the Trump administration has also put added pressure on operations with tariffs on $250 billion in Chinese goods, duties that were increased on Friday to 25 percent from 10 percent.
“It’s made a big difference on our business,” Tom Lix, CEO of Cleveland Whiskey, told reporters on Thursday. “Our access to capital was changed, the rate of financing for the business has changed because we can’t show that growth curve we had prior to 2018 because of our export business.”
As trade talks between the U.S. and China continue, the administration has given no indication on when it may raise those duties. The SEC, however, continues to trudge forward with its own actions that could provide small relief.
Miller said to expect additional rulemaking “coming out very soon” catered to small businesses, including one to allow some low-revenue companies to avoid some federal reporting requirements. While the actions may seem small to outside observers, the decreased compliance costs can be a significant saver for Main Street and those seeking to scale their operations.
The push by Miller and others underscores SEC Chairman Jay Clayton’s focus on small businesses. It’s a topic that comes up in the bulk of his public speeches and one that Clayton says serves as a foundation for many of the agency’s actions.
“Right now, for a Main Street investor to get involved in our private markets is really expensive, and I continue to look for ways that we can get them access with the same kind of protection that they have in the public markets for substantially less money,” he previously told FOX Business.
“Even when investing in the private market is permitted under applicable law, the cost is almost prohibitive for ordinary people. And our private markets have [in some cases] outperformed our public markets," he added.