79–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–529 

SMALL BUSINESS ACCESS TO CAPITAL AFTER A 

NATURAL DISASTER ACT 

JANUARY 29, 2018.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

[To accompany H.R. 4792] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 4792) to amend the Securities Exchange Act of 1934 to 

expand access to capital for small businesses affected by hurricanes 

or other natural disasters, and for other purposes, having considered the same, report favorably thereon without amendment and 

recommend that the bill do pass. 

PURPOSE AND SUMMARY

On January 18, 2018, Representative Nydia Vela ́zquez introduced H.R. 4792, the ‘‘Small Business Access to Capital After a 

Natural Disaster Act,’’ which amends the Securities Exchange Act 

of 1934 to require the Securities and Exchange Commission’s (SEC) 

Advocate for Small Business Capital Formation (Small Business 

Advocate) to identify any unique challenges to small businesses affected by hurricanes or natural disasters when assessing problems 

that the small businesses have with securing access to capital. This 

bill further requires that in its annual report the Small Business 

Advocate must include a summary of any unique issues encountered by small businesses affected by hurricanes or natural disasters. 

BACKGROUND AND NEED FOR LEGISLATION

In the 114th Congress, Congress passed and President Obama 

signed into law, H.R. 3874, the SEC Small Business Advocate Act 

of 2016 (P.L. 114–284). This law created within the SEC the Office 

2 

for Small Business Capital Formation (OSBCF) and the Small 

Business Capital Formation Advisory Committee (Advisory Committee) within the Securities and Exchange Commission (SEC). 

The OSBCF will be led by the Advocate for Small Business Capital 

Formation, who will be appointed by and reports to the Commission, with the responsibility to, among other things: • Help small businesses resolve problems with the SEC; • Analyze the potential impact of proposed rules and regulations that are likely to have a significant effect on small businesses; and • Reach out to small businesses to understand issues related 

to capital formation. 

The Advisory Committee provides advice to the Commission on 

rules and policies related to capital formulation, securities trading, 

and reporting and governance requirements for emerging and 

smaller public companies. 

Prior to the enactment of H.R. 3874, the responsibility to facilitate and promote capital formation resided within the SEC’s Office 

of Small Business Policy (OSBP), which is housed within the SEC’s 

Division of Corporation Finance. OSBP answers questions on disclosure and other issues relating to smaller public companies, including those classified as ‘‘smaller reporting companies,’’ and on 

limited, private, and intrastate offerings of securities. OSBP also 

processes requests for waivers of disqualification arising under rule 

262 of Regulation A and rule 505(b)(2)(iii) and rule 506(d)(2)(ii) of 

Regulation D. In addition, OSBP reaches out to smaller companies 

to facilitate capital formation. These efforts include coordinating 

the annual SEC Government-Business Forum on Small Business 

Capital Formation, which focuses on the current status of issues 

and programs related to small business capital formation. 

Unfortunately, the OSBP is a functional office rather than an advocacy office. The OSBP does not advocate for changes to the securities laws for smaller public companies, small businesses seeking 

equity capital, or investors in those companies or businesses. The 

OSBP does not advance initiatives to make equity capital more 

readily available to smaller issuers. Rather than neglecting the 

needs of small businesses, a permanent office dedicated to small 

business capital formation within the SEC is a logical outcome of 

the JOBS Act since the SEC has taken little to no action to advance the many recommendations the agency has received from its 

annual Government-Business Forum on Small Business Capital 

Formation (Forum) to help small businesses and EGCs access the 

capital markets. 

A major purpose of the Forum is to identify unnecessary impediments to small business capital formation and find ways to eliminate or reduce them. Each Forum develops recommendations for 

government and private action to improve the environment for 

small business capital formation. But the SEC rarely, if ever, acts 

on the recommendations made by the Forum’s participants, which 

include small business executives, venture capitalists, government 

officials, trade association representatives, lawyers, accountants, 

academics and small business advocates. The law promotes capital 

formation and creates an office within the SEC to advocate for the 

job creators and entrepreneurs seeking equity capital as well as 

their investors. The office will then be able to leverage the recVerDate Sep 11 2014 04:24 Jan 31, 2018 Jkt 079006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\HR529.XXX HR529
3 

ommendations the SEC has collected and prompt the SEC to act 

on those most likely to help small businesses and EGCs access the 

capital markets. 

At a December 2, 2015, Subcommittee on Capital Markets and 

Government Sponsored Enterprises hearing, Chris Mathieu, Chief 

Financial Officer of Horizon Technology Finance, who testified on 

behalf of the Small Business Investor Alliance (SBIA), stated that 

‘‘the SEC Small Business Advocate Act strengthens the voice of 

small business at the SEC by making significant changes to the 

way the SEC hears from small business stakeholders; responds to 

stakeholder requests; and makes recommendations to Congress and 

the SEC to improve the ability of small business to access capital.’’ 

Mr. Mathieu further noted that ‘‘[s]maller business investors have 

a much lower threshold for pain and the SEC needs to understand 

the challenges of scale when creating policy.’’ At the same hearing, 

Brian Hahn, the chief financial officer of GlycoMimetics, testifying 

on behalf of the Biotechnology Industry Organization (BIO), stated 

that ‘‘[t]he Small Business Advocate would serve as a partner to 

the existing Investor Advocate, giving small businesses an independent voice at the SEC and helping the SEC to understand the 

impact of regulatory burdens on growing companies as it considers 

new compliance requirements.’’ 

On September 13, 2017, SEC Chairman Jay Clayton along with 

Commissioners Michael Piwowar and Kara Stein issued a joint 

statement to announce the launch of a nationwide search for candidates for a new senior executive position at the SEC, the Advocate for Small Business Capital Formation and specifically noted, 

‘‘The Advocate will be a powerful voice for small businesses and 

small business investors, providing assistance, conducting outreach 

to better understand their concerns and recommending improvements to the regulatory environment.’’ 

Even though the SEC has yet to appoint its first Small Business 

Advocate, the need to expand the Advocate’s area of focus is worthy 

of Congressional action. The specific goal of H.R. 4792 is to have 

the Small Business Advocate facilitate increased access to capital 

to small businesses affected by hurricanes or natural disasters so 

that communities affected by the devastation that accompanies 

such events can recover faster. 

Recent natural disasters, such as Hurricane Harvey in Texas, 

Hurricane Irma in Puerto Rico, and the wildfires in California, 

have wreaked havoc on individuals and communities across the 

country. Small businesses are not exempt from this devastation 

and can be especially vulnerable to natural disasters due to the 

costs of rebuilding or loss of revenue from people being displaced. 

According to the Federal Emergency Management Agency 

(FEMA), nearly 40 percent of small businesses do not reopen their 

doors after a natural disaster. Additionally, a survey of 500 small 

businesses conducted by Nationwide in 2015 found that 75 percent 

of small businesses do not develop plans to prepare for disasters. 

Even more troubling is that only 18 percent of companies that have 

fewer than 50 employees have a disaster recovery plan. 

One of the SEC’s core missions is to facilitate capital formation, 

and as the Commission rightly is refocusing on this duty, the new 

Office of the Small Business Advocate provides an important resource for identifying ways to improve access to capital for small 

4 

businesses. Specifically, the Small Business Advocate’s responsibilities include: (1) helping small businesses resolve problems with 

the SEC; (2) analyzing the potential impact of proposed rules and 

regulations that are likely to have a significant effect on small 

businesses; and (3) reaching out to small businesses to understand 

issues related to capital formation. Further, the Small Business 

Advocate’s annual report to Congress can be a helpful resource for 

Congress to consider how to improve capital formation. 

H.R. 4792 reminds the Small Business Advocate that these responsibilities go beyond the consideration of issues that affect small 

businesses operating in the normal course and requires the Advocate to identify unique issues which inhibit access to capital formation that small businesses face in the aftermath of a natural disaster. Considering the essential role small businesses play to generate jobs and investment in their local communities, the SEC 

Small Business Advocate and the Advisory Committee identifying 

ways to improve capital formation in areas affected by natural disasters could benefit our whole country and the entire economy by 

encouraging investment in such areas after natural disasters, 

thereby jumpstarting those local economies as they recover amidst 

devastation and reducing the degree to which businesses otherwise 

may need to rely on more bureaucratic programs to survive or reopen. 

HEARINGS

The Committee on Financial Services held a hearing examining 

matters relating to H.R. 4792 on November 3, 2017. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

January 17, 2018, and January 18, 2018, and ordered H.R. 4792 

to be reported favorably to the House without amendment by a recorded vote of 57 yeas to 0 nays (Record vote no. FC–150), a 

quorum being present. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. The sole recorded 

vote was on a motion by Chairman Hensarling to report the bill favorably to the House without amendment. The motion was agreed 

to by a recorded vote of 57 yeas to 0 nays (Record vote no. FC–150), 

a quorum being present. 

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Insert graphic folio 6 here HR529.001

Representative 

Mr. Hensarling ---------------

Mr. McHenry------------------ Mr. King _____________________ _ 

Mr. Royce (CA) ·---------------

Mr. Lucas-------------------- Mr. Pearce ___________________ _ 

Mr. Posey ____________________ _ 

Mr. Luetkemeyer--------------

Mr. Huizenga ----------------

Mr. Duffy---------------------

Mr. Stivers -------------------

Mr. Hultgren·-----------------

Mr. Ross---------------------

Mr. Pittenger-----------------

Mrs. Wagner·----------------- Mr. Barr _____________________ _ 

Mr. Rothfus ------------------

Mr. Messer-------------------

Mr. Tipton-------------------- Mr. Williams _________________ _ 

Mr. Poliquin------------------ Mrs. Love. ___________________ _ Mr. Hill ______________________ _ 

Mr. Emmer-------------------

Mr. Zeldin ___________________ _ 

Mr. Trott·---------------------

Mr. Loudermilk---------------

Mr. Mooney fJN) _____________ _ 

Mr. MacArthur----------------

Mr. Davidson-----------------

Mr. Budd---------------------

Mr. Kustoff (TN)___ ___________ _ 

Ms. Tenney-------------------

Mr. Hollingsworth ____________ _ 

Record vote no. FC-150 

Yea Nay 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

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X 

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X 

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X 

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X 

X 

Present Representative 

Ms. Maxine Waters (CA) ______ _ 

Mrs. Carolyn B. Maloney (NY) __ 

Ms. Velazquez _______________ _ 

Mr. Sherman-----------------

Mr. Meeks ___________________ _ 

Mr. Capuano ----------------- Mr. Clay _____________________ _ 

Mr. Lynch --------------------

Mr. David Scott (GA) ----------

Mr. AI Green (TJ() -------------

Mr. Cleaver·------------------

Ms. Moore--------------------

Mr. Ellison -------------------

Mr. Perlmutter----------------

Mr. H1mes --------------------

Mr. foster--------------------

Mr. Kildee --------------------

Mr. Delaney ------------------

Ms. Sinema ------------------

Mrs. Beatty·------------------

Mr. Heck---------------------

Mr. Vargas-------------------

Mr. Gottheimer ---------------

Mr. Gonzalez (TJ() -------------

Mr. Crist---------------------

Mr. Kihuen -------------------

Yea Nay 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

Present 
6 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the findings and recommendations of the Committee based on oversight activities under clause 2(b)(1) of rule X 

of the Rules of the House of Representatives, are incorporated in 

the descriptive portions of this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee states that H.R. 4792 will expand access to capital for small businesses affected by natural disasters by requiring the SEC’s Advocate for Small Business Capital 

Formation to identify any unique capital formation challenges to 

small businesses facing and recovering from hurricanes or other 

natural disasters. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, January 26, 2018. 

Hon. JEB HENSARLING, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 4792, the Small Business 

Access to Capital After a Natural Disaster Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Stephen Rabent. 

Sincerely, 

KEITH HALL, Director. 

Enclosure. 

H.R. 4792—Small Business Access to Capital After a Natural Disaster Act 

H.R. 4792 would expand the functions of the Office of the Advocate for Small Business Capital Formation within the Securities 

and Exchange Commission (SEC) to include identifying problems 

that small businesses affected by hurricanes or other natural disasVerDate Sep 11 2014 04:24 Jan 31, 2018 Jkt 079006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR529.XXX HR529
7 

ters experience when trying to secure access to capital. The office 

would be required to summarize any issues identified in an existing annual report. 

Using information from the SEC, CBO estimates that implementing H.R. 4792 would cost less than $500,000 over the 2018– 

2022 period for the agency to broaden the scope of its current activities. Moreover, the SEC is authorized to collect fees sufficient 

to offset its annual appropriation; therefore, CBO estimates that 

the net effect on discretionary spending would be negligible, assuming appropriation actions consistent with that authority. 

Enacting H.R. 4792 would not affect direct spending or revenues; 

therefore, pay-as-you-go procedures do not apply. 

CBO estimates that enacting H.R. 4792 would not increase net 

direct spending or on-budget deficits in any of the four consecutive 

10-year periods beginning in 2028. 

H.R. 4792 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA). 

If the SEC increases fees to offset the costs associated with implementing the bill, H.R. 4792 would increase the cost of an existing mandate on private entities required to pay those assessments. 

CBO estimates that the incremental cost of the mandate would be 

small and would fall well below the annual threshold for privatesector mandates established in UMRA ($156 million in 2017, adjusted annually for inflation). 

The CBO staff contacts for this estimate are Stephen Rabent (for 

federal costs) and Rachel Austin (for mandates). The estimate was 

approved by H. Samuel Papenfuss, Deputy Assistant Director for 

Budget Analysis. 

FEDERAL MANDATES STATEMENT

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995. 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 

8 

DUPLICATION OF FEDERAL PROGRAMS

In compliance with clause 3(c)(5) of rule XIII of the Rules of the 

House of Representatives, the Committee states that no provision 

of the bill establishes or reauthorizes: (1) a program of the Federal 

Government known to be duplicative of another Federal program; 

(2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public 

Law 111–139; or (3) a program related to a program identified in 

the most recent Catalog of Federal Domestic Assistance, published 

pursuant to the Federal Program Information Act (Pub. L. No. 95– 

220, as amended by Pub. L. No. 98–169). 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, (115th Congress), the following statement is made concerning directed rulemakings: The 

Committee estimates that the bill requires no directed rulemakings 

within the meaning of such section. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section cites H.R. 4792 as the ‘‘Small Business Access to 

Capital After a Natural Disaster Act’’. 

Section 2. Access to capital for rural-area small businesses 

This section amends section 4 of the Securities Exchange Act of 

1934 to require the Small Business Advocate to identify problems 

that small businesses affected by hurricanes or other natural disasters have with securing access to capital and to summarize such 

issues in the Small Business Advocate’s annual report. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

SECURITIES EXCHANGE ACT OF 1934 

TITLE I—REGULATION OF SECURITIES EXCHANGES 

* * * * * * * 

9 

SECURITIES AND EXCHANGE COMMISSION

SEC. 4. (a) There is hereby established a Securities and Exchange 

Commission (hereinafter referred to as the ‘‘Commission’’) to be 

composed of five commissioners to be appointed by the President by 

and with the advice and consent of the Senate. Not more than 

three of such commissioners shall be members of the same political 

party, and in making appointments members of different political 

parties shall be appointed alternately as nearly as may be practicable. No commissioner shall engage in any other business, vocation, or employment than that of serving as commissioner, nor 

shall any commissioner participate, directly or indirectly, in any 

stock-market operations or transactions of a character subject to 

regulation by the Commission pursuant to this title. Each commissioner shall hold office for a term of five years and until his successor is appointed and has qualified, except that he shall not so 

continue to serve beyond the expiration of the next session of Congress subsequent to the expiration of said fixed term of office, and 

except (1) any commissioner appointed to fill a vacancy occurring 

prior to the expiration of the term for which his predecessor was 

appointed shall be appointed for the remainder of such term, and 

(2) the terms of office of the commissioners first taking office after 

the enactment of this title shall expire as designated by the President at the time of nomination, one at the end of one year, one at 

the end of two years, one at the end of three years, one at the end 

of four years, and one at the end of five years, after the date of the 

enactment of this title. 

(b) APPOINTMENT AND COMPENSATION OF STAFF AND LEASING AUTHORITY.— 

(1) APPOINTMENT AND COMPENSATION.—The Commission 

shall appoint and compensate officers, attorneys, economists, 

examiners, and other employees in accordance with section 

4802 of title 5, United States Code. 

(2) REPORTING OF INFORMATION.—In establishing and adjusting schedules of compensation and benefits for officers, attorneys, economists, examiners, and other employees of the Commission under applicable provisions of law, the Commission 

shall inform the heads of the agencies referred to under section 

1206 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b) and Congress of such 

compensation and benefits and shall seek to maintain comparability with such agencies regarding compensation and benefits. 

(3) LEASING AUTHORITY.—Nothwithstanding any other provision of law, the Commission is authorized to enter directly into 

leases for real property for office, meeting, storage, and such 

other space as is necessary to carry out its functions, and shall 

be exempt from any General Services Administration space 

management regulations or directives. 

(c) Notwithstanding any other provision of law, in accordance 

with regulations which the Commission shall prescribe to prevent 

conflicts of interest, the Commission may accept payment and reimbursement, in cash or in kind, from non-Federal agencies, organizations, and individuals for travel, subsistence, and other necessary expenses incurred by Commission members and employees 

10 

in attending meetings and conferences concerning the functions or 

activities of the Commission. Any payment or reimbursement accepted shall be credited to the appropriated funds of the Commission. The amount of travel, subsistence, and other necessary expenses for members and employees paid or reimbursed under this 

subsection may exceed per diem amounts established in official 

travel regulations, but the Commission may include in its regulations under this subsection a limitation on such amounts. 

(d) Notwithstanding any other provision of law, former employers 

of participants in the Commission’s professional fellows programs 

may pay such participants their actual expenses for relocation to 

Washington, District of Columbia, to facilitate their participation in 

such programs, and program participants may accept such payments. 

(e) Notwithstanding any other provision of law, whenever any fee 

is required to be paid to the Commission pursuant to any provision 

of the securities laws or any other law, the Commission may provide by rule that such fee shall be paid in a manner other than in 

cash and the Commission may also specify the time that such fee 

shall be determined and paid relative to the filing of any statement 

or document with the Commission. 

(f) REIMBURSEMENT OF EXPENSES FOR ASSISTING FOREIGN SECURITIES AUTHORITIES.—Notwithstanding any other provision of law, 

the Commission may accept payment and reimbursement, in cash 

or in kind, from a foreign securities authority, or made on behalf 

of such authority, for necessary expenses incurred by the Commission, its members, and employees in carrying out any investigation 

pursuant to section 21(a)(2) of this title or in providing any other 

assistance to a foreign securities authority. Any payment or reimbursement accepted shall be considered a reimbursement to the appropriated funds of the Commission. 

(g) OFFICE OF THE INVESTOR ADVOCATE.— 

(1) OFFICE ESTABLISHED.—There is established within the 

Commission the Office of the Investor Advocate (in this subsection referred to as the ‘‘Office’’). 

(2) INVESTOR ADVOCATE.— 

(A) IN GENERAL.—The head of the Office shall be the Investor Advocate, who shall— 

(i) report directly to the Chairman; and 

(ii) be appointed by the Chairman, in consultation 

with the Commission, from among individuals having 

experience in advocating for the interests of investors 

in securities and investor protection issues, from the 

perspective of investors. 

(B) COMPENSATION.—The annual rate of pay for the Investor Advocate shall be equal to the highest rate of annual pay for other senior executives who report to the 

Chairman of the Commission. 

(C) LIMITATION ON SERVICE.—An individual who serves 

as the Investor Advocate may not be employed by the 

Commission— 

(i) during the 2-year period ending on the date of appointment as Investor Advocate; or 

11 

(ii) during the 5-year period beginning on the date 

on which the person ceases to serve as the Investor 

Advocate. 

(3) STAFF OF OFFICE.—The Investor Advocate, after consultation with the Chairman of the Commission, may retain or employ independent counsel, research staff, and service staff, as 

the Investor Advocate deems necessary to carry out the functions, powers, and duties of the Office. 

(4) FUNCTIONS OF THE INVESTOR ADVOCATE.—The Investor 

Advocate shall— 

(A) assist retail investors in resolving significant problems such investors may have with the Commission or 

with self-regulatory organizations; 

(B) identify areas in which investors would benefit from 

changes in the regulations of the Commission or the rules 

of self-regulatory organizations; 

(C) identify problems that investors have with financial 

service providers and investment products; 

(D) analyze the potential impact on investors of— 

(i) proposed regulations of the Commission; and 

(ii) proposed rules of self-regulatory organizations 

registered under this title; and 

(E) 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 investors. 

(5) ACCESS TO DOCUMENTS.—The Commission shall ensure 

that the Investor Advocate has full access to the documents of 

the Commission and any self-regulatory organization, as necessary to carry out the functions of the Office. 

(6) ANNUAL REPORTS.— 

(A) REPORT ON OBJECTIVES.— 

(i) IN GENERAL.—Not later than June 30 of each 

year after 2010, the Investor Advocate 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 objectives of the Investor Advocate for the following fiscal year. 

(ii) CONTENTS.—Each report required under clause 

(i) shall contain full and substantive analysis and explanation. 

(B) REPORT ON ACTIVITIES.— 

(i) IN GENERAL.—Not later than December 31 of 

each year after 2010, the Investor Advocate 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 Investor Advocate during 

the immediately preceding fiscal year. 

(ii) CONTENTS.—Each report required under clause 

(i) shall include— 

12 

(I) appropriate statistical information and full 

and substantive analysis; 

(II) information on steps that the Investor Advocate has taken during the reporting period to improve investor services and the responsiveness of 

the Commission and self-regulatory organizations 

to investor concerns; 

(III) a summary of the most serious problems 

encountered by investors during the reporting period; 

(IV) an inventory of the items described in subclause (III) that includes— 

(aa) identification of any action taken by 

the Commission or the self-regulatory organization and the result of such action; 

(bb) the length of time that each item has 

remained on such inventory; and 

(cc) 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 administrative 

and legislative actions as may be appropriate to 

resolve problems encountered by investors; and 

(VI) any other information, as determined appropriate by the Investor Advocate. 

(iii) INDEPENDENCE.—Each report required under 

this paragraph shall be provided directly to the Committees listed in clause (i) 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. 

(iv) CONFIDENTIALITY.—No report required under 

clause (i) may contain confidential information. 

(7) REGULATIONS.—The Commission shall, by regulation, establish procedures requiring a formal response to all recommendations submitted to the Commission by the Investor 

Advocate, not later than 3 months after the date of such submission. 

(8) OMBUDSMAN.— 

(A) APPOINTMENT.—Not later than 180 days after the 

date on which the first Investor Advocate is appointed 

under paragraph (2)(A)(i), the Investor Advocate shall appoint an Ombudsman, who shall report directly to the Investor Advocate. 

(B) DUTIES.—The Ombudsman appointed under subparagraph (A) shall— 

(i) act as a liaison between the Commission and any 

retail investor in resolving problems that retail investors may have with the Commission or with self-regulatory organizations; 

(ii) review and make recommendations regarding 

policies and procedures to encourage persons to 

present questions to the Investor Advocate regarding 

compliance with the securities laws; and 

13 

(iii) establish safeguards to maintain the confidentiality of communications between the persons described in clause (ii) and the Ombudsman. 

(C) LIMITATION.—In carrying out the duties of the Ombudsman under subparagraph (B), the Ombudsman shall 

utilize personnel of the Commission to the extent practicable. Nothing in this paragraph shall be construed as 

replacing, altering, or diminishing the activities of any ombudsman or similar office of any other agency. 

(D) REPORT.—The Ombudsman shall submit a semiannual report to the Investor Advocate that describes the 

activities and evaluates the effectiveness of the Ombudsman during the preceding year. The Investor Advocate 

shall include the reports required under this section in the 

reports required to be submitted by the Inspector Advocate 

under paragraph (6). 

(h) EXAMINERS.— 

(1) DIVISION OF TRADING AND MARKETS.—The Division of 

Trading and Markets of the Commission, or any successor organizational unit, shall have a staff of examiners who shall— 

(A) perform compliance inspections and examinations of 

entities under the jurisdiction of that Division; and 

(B) report to the Director of that Division. 

(2) DIVISION OF INVESTMENT MANAGEMENT.—The Division of 

Investment Management of the Commission, or any successor 

organizational unit, shall have a staff of examiners who shall— 

(A) perform compliance inspections and examinations of 

entities under the jurisdiction of that Division; and 

(B) report to the Director of that Division. 

(i) SECURITIES AND EXCHANGE COMMISSION RESERVE FUND.— 

(1) RESERVE FUND ESTABLISHED.—There is established in the 

Treasury of the United States a separate fund, to be known as 

the ‘‘Securities and Exchange Commission Reserve Fund’’ (referred to in this subsection as the ‘‘Reserve Fund’’). 

(2) RESERVE FUND AMOUNTS.— 

(A) IN GENERAL.—Except as provided in subparagraph 

(B), any registration fees collected by the Commission 

under section 6(b) of the Securities Act of 1933 (15 U.S.C. 

77f(b)) or section 24(f) of the Investment Company Act of 

1940 (15 U.S.C. 80a-24(f)) shall be deposited into the Reserve Fund. 

(B) LIMITATIONS.—For any 1 fiscal year— 

(i) the amount deposited in the Fund may not exceed $50,000,000; and 

(ii) the balance in the Fund may not exceed 

$100,000,000. 

(C) EXCESS FEES.—Any amounts in excess of the limitations described in subparagraph (B) that the Commission 

collects from registration fees under section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) or section 24(f) of the 

Investment Company Act of 1940 (15 U.S.C. 80a-24(f)) 

shall be deposited in the General Fund of the Treasury of 

the United States and shall not be available for obligation 

by the Commission. 

14 

(3) USE OF AMOUNTS IN RESERVE FUND.—The Commission 

may obligate amounts in the Reserve Fund, not to exceed a 

total of $100,000,000 in any 1 fiscal year, as the Commission 

determines is necessary to carry out the functions of the Commission. Any amounts in the reserve fund shall remain available until expended. Not later than 10 days after the date on 

which the Commission obligates amounts under this paragraph, the Commission shall notify Congress of the date, 

amount, and purpose of the obligation. 

(4) RULE OF CONSTRUCTION.—Amounts collected and deposited in the Reserve Fund shall not be construed to be Government funds or appropriated monies and shall not be subject to 

apportionment for the purpose of chapter 15 of title 31, United 

States Code, or under any other authority. 

(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 

15 

to øminority-owned and women-owned small businesses¿ 

minority-owned small businesses, women-owned small 

businesses, and small businesses affected by hurricanes or 

other natural disasters; 

(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 øminority-owned and women-owned small businesses¿ minority-owned small businesses, women-owned small 

16 

businesses, and small businesses affected by hurricanes 

or other natural disasters 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). 

17 

(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. 

* * * * * * * 

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