More than three years after Congress asked the Securities and Exchanges Commission (SEC) to present a report on reforms to capital formation, SEC has repackaged a May 2021 session by The Office of the Advocate for Small Business Capital Formation to say it has “delivered a report to Congress.”
The report contains numerous recommendations, almost all of which SEC answers with: they’ll keep looking at it.
Among the recommendations are to establish a micro-offering exemption with minimal disclosure requirements, provide state preemption for secondary transactions for shares issued under Regulation A and Regulation Crowdfunding, clarify the status of digital assets to make clear when it is a security, expand the accredited investor definition, expand retail investor access to funds that invest in private offerings, create more and better wealth-building opportunities for retail investors, adopt rules and coordinate with the states to allow community investment funds, and much more.
SEC has done pretty much none of this, with its repeated reply to these recommendations in the report being “the Commission will consider this Forum recommendation and consult.”
That’s while the Congressional Budget Office rings the alarm bell due to a drop in new small businesses, leading CBO to ask the government to “make regulatory policies less burdensome for new firms in particular.”
The government has done nothing on that front, with Congress too failing to reformed the archaic Securities Act 1933 that killed internet innovation in 2010 due to prohibitions on crowdfunding, leading to the now all powerful tech monopolies which have censored even politicians.
This new report will maybe slightly shift the needle for Congress, with a new law needed to modernize the whole capital formation system so as to be fit for the digital age and to take into account the transformation code has brought both to business formation and to investing in entrepreneurship.