SECTION 1. SHORT TITLE.
    This Act may be cited as the ``SEC Small Business Advocate Act of 
2016''.
SEC. 2. ESTABLISHMENT OF OFFICE OF THE ADVOCATE FOR SMALL BUSINESS 
CAPITAL FORMATION AND SMALL BUSINESS CAPITAL FORMATION ADVISORY 
COMMITTEE.
    (a) Office of the Advocate for Small Business Capital Formation.--
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is 
amended by adding at the end the following:
    ``(j) Office of the Advocate for Small Business Capital 
Formation.--
        ``(1) Office established.--There is established within the 
    Commission the Office of the Advocate for Small Business Capital 
    Formation (hereafter in this subsection referred to as the 
    `Office').
        ``(2) Advocate for small business capital formation.--
            ``(A) In general.--The head of the Office shall be the 
        Advocate for Small Business Capital Formation, who shall--
                ``(i) report directly to the Commission; and
                ``(ii) be appointed by the Commission, from among 
            individuals having experience in advocating for the 
            interests of small businesses and encouraging small 
            business capital formation.
            ``(B) Compensation.--The annual rate of pay for the 
        Advocate for Small Business Capital Formation shall be equal to 
        the highest rate of annual pay for other senior executives who 
        report directly to the Commission.
            ``(C) No current employee of the commission.--An individual 
        may not be appointed as the Advocate for Small Business Capital 
        Formation if the individual is currently employed by the 
        Commission.
        ``(3) Staff of office.--The Advocate for Small Business Capital 
    Formation, after consultation with the Commission, may retain or 
    employ independent counsel, research staff, and service staff, as 
    the Advocate for Small Business Capital Formation determines to be 
    necessary to carry out the functions of the Office.
        ``(4) Functions of the advocate for small business capital 
    formation.--The Advocate for Small Business Capital Formation 
    shall--
            ``(A) assist small businesses and small business investors 
        in resolving significant problems such businesses and investors 
        may have with the Commission or with self-regulatory 
        organizations;
            ``(B) identify areas in which small businesses and small 
        business investors would benefit from changes in the 
        regulations of the Commission or the rules of self-regulatory 
        organizations;
            ``(C) identify problems that small businesses have with 
        securing access to capital, including any unique challenges to 
        minority-owned and women-owned small businesses;
            ``(D) analyze the potential impact on small businesses and 
        small business investors of--
                ``(i) proposed regulations of the Commission that are 
            likely to have a significant economic impact on small 
            businesses and small business capital formation; and
                ``(ii) proposed rules that are likely to have a 
            significant economic impact on small businesses and small 
            business capital formation of self-regulatory organizations 
            registered under this title;
            ``(E) conduct outreach to small businesses and small 
        business investors, including through regional roundtables, in 
        order to solicit views on relevant capital formation issues;
            ``(F) to the extent practicable, propose to the Commission 
        changes in the regulations or orders of the Commission and to 
        Congress any legislative, administrative, or personnel changes 
        that may be appropriate to mitigate problems identified under 
        this paragraph and to promote the interests of small businesses 
        and small business investors;
            ``(G) consult with the Investor Advocate on proposed 
        recommendations made under subparagraph (F); and
            ``(H) advise the Investor Advocate on issues related to 
        small businesses and small business investors.
        ``(5) Access to documents.--The Commission shall ensure that 
    the Advocate for Small Business Capital Formation has full access 
    to the documents and information of the Commission and any self-
    regulatory organization, as necessary to carry out the functions of 
    the Office.
        ``(6) Annual report on activities.--
            ``(A) In general.--Not later than December 31 of each year 
        after 2015, the Advocate for Small Business Capital Formation 
        shall submit to the Committee on Banking, Housing, and Urban 
        Affairs of the Senate and the Committee on Financial Services 
        of the House of Representatives a report on the activities of 
        the Advocate for Small Business Capital Formation during the 
        immediately preceding fiscal year.
            ``(B) Contents.--Each report required under subparagraph 
        (A) shall include--
                ``(i) appropriate statistical information and full and 
            substantive analysis;
                ``(ii) information on steps that the Advocate for Small 
            Business Capital Formation has taken during the reporting 
            period to improve small business services and the 
            responsiveness of the Commission and self-regulatory 
            organizations to small business and small business investor 
            concerns;
                ``(iii) a summary of the most serious issues 
            encountered by small businesses and small business 
            investors, including any unique issues encountered by 
            minority-owned and women-owned small businesses and their 
            investors, during the reporting period;
                ``(iv) an inventory of the items summarized under 
            clause (iii) (including items summarized under such clause 
            for any prior reporting period on which no action has been 
            taken or that have not been resolved to the satisfaction of 
            the Advocate for Small Business Capital Formation as of the 
            beginning of the reporting period covered by the report) 
            that includes--

                    ``(I) identification of any action taken by the 
                Commission or the self-regulatory organization and the 
                result of such action;
                    ``(II) the length of time that each item has 
                remained on such inventory; and
                    ``(III) for items on which no action has been 
                taken, the reasons for inaction, and an identification 
                of any official who is responsible for such action;

                ``(v) recommendations for such changes to the 
            regulations, guidance and orders of the Commission and such 
            legislative actions as may be appropriate to resolve 
            problems with the Commission and self-regulatory 
            organizations encountered by small businesses and small 
            business investors and to encourage small business capital 
            formation; and
                ``(vi) any other information, as determined appropriate 
            by the Advocate for Small Business Capital Formation.
            ``(C) Confidentiality.--No report required by subparagraph 
        (A) may contain confidential information.
            ``(D) Independence.--Each report required under 
        subparagraph (A) shall be provided directly to the committees 
        of Congress listed in such subparagraph without any prior 
        review or comment from the Commission, any commissioner, any 
        other officer or employee of the Commission, or the Office of 
        Management and Budget.
        ``(7) Regulations.--The Commission shall establish procedures 
    requiring a formal response to all recommendations submitted to the 
    Commission by the Advocate for Small Business Capital Formation, 
    not later than 3 months after the date of such submission.
        ``(8) Government-business forum on small business capital 
    formation.--The Advocate for Small Business Capital Formation shall 
    be responsible for planning, organizing, and executing the annual 
    Government-Business Forum on Small Business Capital Formation 
    described in section 503 of the Small Business Investment Incentive 
    Act of 1980 (15 U.S.C. 80c-1).
        ``(9) Rule of construction.--Nothing in this subsection may be 
    construed as replacing or reducing the responsibilities of the 
    Investor Advocate with respect to small business investors.''.
    (b) Small Business Capital Formation Advisory Committee.--Title I 
of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is 
amended by adding at the end the following:
  ``SEC. 40. SMALL BUSINESS CAPITAL FORMATION ADVISORY COMMITTEE.
    ``(a) Establishment and Purpose.--
        ``(1) Establishment.--There is established within the 
    Commission the Small Business Capital Formation Advisory Committee 
    (hereafter in this section referred to as the `Committee').
        ``(2) Functions.--
            ``(A) In general.--The Committee shall provide the 
        Commission with advice on the Commission's rules, regulations, 
        and policies with regard to the Commission's mission of 
        protecting investors, maintaining fair, orderly, and efficient 
        markets, and facilitating capital formation, as such rules, 
        regulations, and policies relate to--
                ``(i) capital raising by emerging, privately held small 
            businesses (`emerging companies') and publicly traded 
            companies with less than $250,000,000 in public market 
            capitalization (`smaller public companies') through 
            securities offerings, including private and limited 
            offerings and initial and other public offerings;
                ``(ii) trading in the securities of emerging companies 
            and smaller public companies; and
                ``(iii) public reporting and corporate governance 
            requirements of emerging companies and smaller public 
            companies.
            ``(B) Limitation.--The Committee shall not provide any 
        advice with respect to any policies, practices, actions, or 
        decisions concerning the Commission's enforcement program.
    ``(b) Membership.--
        ``(1) In general.--The members of the Committee shall be--
            ``(A) the Advocate for Small Business Capital Formation;
            ``(B) not fewer than 10, and not more than 20, members 
        appointed by the Commission, from among individuals--
                ``(i) who represent--

                    ``(I) emerging companies engaging in private and 
                limited securities offerings or considering initial 
                public offerings (`IPO') (including the companies' 
                officers and directors);
                    ``(II) the professional advisors of such companies 
                (including attorneys, accountants, investment bankers, 
                and financial advisors); and
                    ``(III) the investors in such companies (including 
                angel investors, venture capital funds, and family 
                offices);

                ``(ii) who are officers or directors of minority-owned 
            small businesses or women-owned small businesses;
                ``(iii) who represent--

                    ``(I) smaller public companies (including the 
                companies' officers and directors);
                    ``(II) the professional advisors of such companies 
                (including attorneys, auditors, underwriters, and 
                financial advisors); and
                    ``(III) the pre-IPO and post-IPO investors in such 
                companies (both institutional, such as venture capital 
                funds, and individual, such as angel investors); and

                ``(iv) who represent participants in the marketplace 
            for the securities of emerging companies and smaller public 
            companies, such as securities exchanges, alternative 
            trading systems, analysts, information processors, and 
            transfer agents; and
            ``(C) three non-voting members--
                ``(i) one of whom shall be appointed by the Investor 
            Advocate;
                ``(ii) one of whom shall be appointed by the North 
            American Securities Administrators Association; and
                ``(iii) one of whom shall be appointed by the 
            Administrator of the Small Business Administration.
        ``(2) Term.--Each member of the Committee appointed under 
    subparagraph (B), (C)(ii), or (C)(iii) of paragraph (1) shall serve 
    for a term of 4 years.
        ``(3) Members not commission employees.--Members appointed 
    under subparagraph (B), (C)(ii), or (C)(iii) of paragraph (1) shall 
    not be treated as employees or agents of the Commission solely 
    because of membership on the Committee.
    ``(c) Chairman; Vice Chairman; Secretary; Assistant Secretary.--
        ``(1) In general.--The members of the Committee shall elect, 
    from among the members of the Committee--
            ``(A) a chairman;
            ``(B) a vice chairman;
            ``(C) a secretary; and
            ``(D) an assistant secretary.
        ``(2) Term.--Each member elected under paragraph (1) shall 
    serve for a term of 3 years in the capacity for which the member 
    was elected under paragraph (1).
    ``(d) Meetings.--
        ``(1) Frequency of meetings.--The Committee shall meet--
            ``(A) not less frequently than four times annually, at the 
        call of the chairman of the Committee; and
            ``(B) from time to time, at the call of the Commission.
        ``(2) Notice.--The chairman of the Committee shall give the 
    members of the Committee written notice of each meeting, not later 
    than 2 weeks before the date of the meeting.
    ``(e) Compensation and Travel Expenses.--Each member of the 
Committee who is not a full-time employee of the United States shall--
        ``(1) be entitled to receive compensation at a rate not to 
    exceed the daily equivalent of the annual rate of basic pay in 
    effect for a position at level V of the Executive Schedule under 
    section 5316 of title 5, United States Code, for each day during 
    which the member is engaged in the actual performance of the duties 
    of the Committee; and
        ``(2) while away from the home or regular place of business of 
    the member in the performance of services for the Committee, be 
    allowed travel expenses, including per diem in lieu of subsistence, 
    in the same manner as persons employed intermittently in the 
    Government service are allowed expenses under section 5703 of title 
    5, United States Code.
    ``(f) Staff.--The Commission shall make available to the Committee 
such staff as the chairman of the Committee determines are necessary to 
carry out this section.
    ``(g) Review by Commission.--The Commission shall--
        ``(1) review the findings and recommendations of the Committee; 
    and
        ``(2) each time the Committee submits a finding or 
    recommendation to the Commission, promptly issue a public 
    statement--
            ``(A) assessing the finding or recommendation of the 
        Committee; and
            ``(B) disclosing the action, if any, the Commission intends 
        to take with respect to the finding or recommendation.
    ``(h) Federal Advisory Committee Act.--The Federal Advisory 
Committee Act (5 U.S.C. App.) shall not apply with respect to the 
Committee and its activities.''.
    (c) Annual Government-Business Forum on Small Business Capital 
Formation.--Section 503(a) of the Small Business Investment Incentive 
Act of 1980 (15 U.S.C. 80c-1(a)) is amended by inserting ``(acting 
through the Office of the Advocate for Small Business Capital Formation 
and in consultation with the Small Business Capital Formation Advisory 
Committee)'' after ``Securities and Exchange Commission''.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.
(This measure has not been amended since it was passed by the House on February 1, 2016.  SEC Small Business Advocate Act of 2016 (Sec. 2) This bill amends the Securities Exchange Act of 1934 to establish within the Securities and Exchange Commission (SEC) an Office of the Advocate for Small Business Capital Formation. The Advocate for Small Business Capital Formation shall:  assist small businesses and small business investors in resolving significant problems they may have with the SEC or with self-regulatory organizations;   identify areas in which such businesses and investors would benefit from changes in SEC regulations or the rules of such organizations;   identify problems that small businesses have with securing access to capital, including any unique challenges to minority-owned and women-owned small businesses;   analyze the potential impact on such businesses and investors of proposed SEC regulations and proposed rules that are likely to have a significant economic impact on small businesses and small business capital formation;   conduct outreach to such businesses and investors to solicit views on relevant capital formation issues;   propose to the SEC changes in its regulations or orders, and propose to Congress legislative, administrative, or personnel changes, to mitigate problems identified and to promote the interests of such businesses and investors;   consult with the Investor Advocate on such proposals and advise the Investor Advocate on small business-related issues; submit annual reports on its activities to specified congressional committees; and be responsible for planning, organizing, and executing the annual Government-Business Forum on Small Business Capital Formation.  The bill also establishes the Small Business Capital Formation Advisory Committee, which shall provide the SEC with advice on SEC rules, regulations, and policies regarding its mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation, as they relate to:   capital raising by emerging, privately held small businesses and publicly traded companies with less than $250 million in public market capitalization through securities offerings;  trading in the securities of such businesses and companies; and   public reporting and corporate governance requirements of such businesses and companies.  The SEC shall assess the committee's recommendations and disclose any action it intends to take with respect to such recommendations. 
SEC Small Business Advocate Act of 2016