I 

114TH CONGRESS 

1ST SESSION H. R. 3784 

To amend the Securities Exchange Act of 1934 to establish an Office of 

the Advocate for Small Business Capital Formation and a Small Business 

Capital Formation Advisory Committee, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 21, 2015 

Mr. CARNEY (for himself, Mr. DUFFY, Mr. QUIGLEY, and Mr. CRENSHAW) 

introduced the following bill; which was referred to the Committee on Financial Services 

A BILL 

To amend the Securities Exchange Act of 1934 to establish 

an Office of the Advocate for Small Business Capital 

Formation and a Small Business Capital Formation Advisory Committee, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘SEC Small Business 

5 Advocate Act of 2015’’. 


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1 SEC. 2. ESTABLISHMENT OF OFFICE OF THE ADVOCATE 

2 FOR SMALL BUSINESS CAPITAL FORMATION 

3 AND SMALL BUSINESS CAPITAL FORMATION 

4 ADVISORY COMMITTEE. 

5 (a) OFFICE OF THE ADVOCATE FOR SMALL BUSI6 NESS CAPITAL FORMATION.—Section 4 of the Securities 

7 Exchange Act of 1934 (15 U.S.C. 78d) is amended by 

8 adding at the end the following: 

9 ‘‘(j) OFFICE OF THE ADVOCATE FOR SMALL BUSI10 NESS CAPITAL FORMATION.— 

11 ‘‘(1) OFFICE ESTABLISHED.—There is estab12 lished within the Commission the Office of the Advo13 cate for Small Business Capital Formation (here14 after in this subsection referred to as the ‘Office’). 

15 ‘‘(2) ADVOCATE FOR SMALL BUSINESS CAPITAL

16 FORMATION.— 

17 ‘‘(A) IN GENERAL.—The head of the Of18 fice shall be the Advocate for Small Business 

19 Capital Formation, who shall— 

20 ‘‘(i) report directly to the Commission; 

21 and 

22 ‘‘(ii) be appointed by the Commission, 

23 from among individuals having experience 

24 in advocating for the interests of small 

25 businesses and encouraging small business 

26 capital formation. 


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1 ‘‘(B) COMPENSATION.—The annual rate of 

2 pay for the Advocate for Small Business Cap3 ital Formation shall be equal to the highest rate 

4 of annual pay for other senior executives who 

5 report directly to the Commission. 

6 ‘‘(C) NO CURRENT EMPLOYEE OF THE

7 COMMISSION.—An individual may not be ap8 pointed as the Advocate for Small Business 

9 Capital Formation if the individual is currently 

10 employed by the Commission. 

11 ‘‘(3) STAFF OF OFFICE.—The Advocate for 

12 Small Business Capital Formation, after consulta13 tion with the Commission, may retain or employ 

14 independent counsel, research staff, and service 

15 staff, as the Advocate for Small Business Capital 

16 Formation determines to be necessary to carry out 

17 the functions of the Office. 

18 ‘‘(4) FUNCTIONS OF THE ADVOCATE FOR

19 SMALL BUSINESS CAPITAL FORMATION.—The Advo20 cate for Small Business Capital Formation shall— 

21 ‘‘(A) assist small businesses and small 

22 business investors in resolving significant prob23 lems such businesses and investors may have 

24 with the Commission or with self-regulatory or25 ganizations; 


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1 ‘‘(B) identify areas in which small busi2 nesses and small business investors would ben3 efit from changes in the regulations of the 

4 Commission or the rules of self-regulatory orga5 nizations; 

6 ‘‘(C) identify problems that small busi7 nesses have with securing access to capital; 

8 ‘‘(D) analyze the potential impact on small 

9 businesses and small business investors of— 

10 ‘‘(i) proposed regulations of the Com11 mission that are likely to have a significant 

12 economic impact on small businesses and 

13 small business capital formation; and 

14 ‘‘(ii) proposed rules that are likely to 

15 have a significant economic impact on 

16 small businesses and small business capital 

17 formation of self-regulatory organizations 

18 registered under this title; 

19 ‘‘(E) conduct outreach to small businesses 

20 and small business investors, including through 

21 regional roundtables, in order to solicit views on 

22 relevant capital formation issues; 

23 ‘‘(F) to the extent practicable, propose to 

24 the Commission changes in the regulations or 

25 orders of the Commission and to Congress any 


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1 legislative, administrative, or personnel changes 

2 that may be appropriate to mitigate problems 

3 identified under this paragraph and to promote 

4 the interests of small businesses and small busi5 ness investors; 

6 ‘‘(G) consult with the Investor Advocate on 

7 proposed recommendations made under sub8 paragraph (F); and 

9 ‘‘(H) advise the Investor Advocate on 

10 issues related to small businesses and small 

11 business investors. 

12 ‘‘(5) ACCESS TO DOCUMENTS.—The Commis13 sion shall ensure that the Advocate for Small Busi14 ness Capital Formation has full access to the docu15 ments and information of the Commission and any 

16 self-regulatory organization, as necessary to carry 

17 out the functions of the Office. 

18 ‘‘(6) ANNUAL REPORT ON ACTIVITIES.— 

19 ‘‘(A) IN GENERAL.—Not later than De20 cember 31 of each year after 2015, the Advo21 cate for Small Business Capital Formation shall 

22 submit to the Committee on Banking, Housing, 

23 and Urban Affairs of the Senate and the Com24 mittee on Financial Services of the House of 

25 Representatives a report on the activities of the 


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1 Advocate for Small Business Capital Formation 

2 during the immediately preceding fiscal year. 

3 ‘‘(B) CONTENTS.—Each report required 

4 under subparagraph (A) shall include— 

5 ‘‘(i) appropriate statistical information 

6 and full and substantive analysis; 

7 ‘‘(ii) information on steps that the 

8 Advocate for Small Business Capital For9 mation has taken during the reporting pe10 riod to improve small business services and 

11 the responsiveness of the Commission and 

12 self-regulatory organizations to small busi13 ness and small business investor concerns; 

14 ‘‘(iii) a summary of the most serious 

15 issues encountered by small businesses and 

16 small business investors during the report17 ing period; 

18 ‘‘(iv) an inventory of the items sum19 marized under clause (iii) (including items 

20 summarized under such clause for any 

21 prior reporting period on which no action 

22 has been taken or that have not been re23 solved to the satisfaction of the Advocate 

24 for Small Business Capital Formation as 


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1 of the beginning of the reporting period 

2 covered by the report) that includes— 

3 ‘‘(I) identification of any action 

4 taken by the Commission or the self5 regulatory organization and the result 

6 of such action; 

7 ‘‘(II) the length of time that each 

8 item has remained on such inventory; 

9 and 

10 ‘‘(III) for items on which no ac11 tion has been taken, the reasons for 

12 inaction, and an identification of any 

13 official who is responsible for such ac14 tion; 

15 ‘‘(v) recommendations for such 

16 changes to the regulations, guidance and 

17 orders of the Commission and such legisla18 tive actions as may be appropriate to re19 solve problems with the Commission and 

20 self-regulatory organizations encountered 

21 by small businesses and small business in22 vestors and to encourage small business 

23 capital formation; and 


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1 ‘‘(vi) any other information, as deter2 mined appropriate by the Advocate for 

3 Small Business Capital Formation. 

4 ‘‘(C) CONFIDENTIALITY.—No report re5 quired by subparagraph (A) may contain con6 fidential information. 

7 ‘‘(D) INDEPENDENCE.—Each report re8 quired under subparagraph (A) shall be pro9 vided directly to the committees of Congress 

10 listed in such subparagraph without any prior 

11 review or comment from the Commission, any 

12 commissioner, any other officer or employee of 

13 the Commission, or the Office of Management 

14 and Budget. 

15 ‘‘(7) REGULATIONS.—The Commission shall es16 tablish procedures requiring a formal response to all 

17 recommendations submitted to the Commission by 

18 the Advocate for Small Business Capital Formation, 

19 not later than 3 months after the date of such sub20 mission. 

21 ‘‘(8) GOVERNMENT-BUSINESS FORUM ON SMALL

22 BUSINESS CAPITAL FORMATION.—The Advocate for 

23 Small Business Capital Formation shall be respon24 sible for planning, organizing, and executing the an25 nual Government-Business Forum on Small BusiVerDate Sep 11 2014 04:42 Oct 22, 2015 Jkt 059200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3784.IH H3784

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1 ness Capital Formation described in section 503 of 

2 the Small Business Investment Incentive Act of 

3 1980 (15 U.S.C. 80c–1). 

4 ‘‘(9) RULE OF CONSTRUCTION.—Nothing in 

5 this subsection may be construed as replacing or re6 ducing the responsibilities of the Investor Advocate 

7 with respect to small business investors.’’. 

8 (b) SMALL BUSINESS CAPITAL FORMATION ADVI9 SORY COMMITTEE.—Title I of the Securities Exchange 

10 Act of 1934 (15 U.S.C. 78a et seq.) is amended by adding 

11 at the end the following: 

12 ‘‘SEC. 40. SMALL BUSINESS CAPITAL FORMATION ADVISORY 

13 COMMITTEE. 

14 ‘‘(a) ESTABLISHMENT AND PURPOSE.— 

15 ‘‘(1) ESTABLISHMENT.—There is established 

16 within the Commission the Small Business Capital 

17 Formation Advisory Committee (hereafter in this 

18 section referred to as the ‘Committee’). 

19 ‘‘(2) FUNCTIONS.— 

20 ‘‘(A) IN GENERAL.—The Committee shall 

21 provide the Commission with advice on the 

22 Commission’s rules, regulations, and policies 

23 with regard to the Commission’s mission of pro24 tecting investors, maintaining fair, orderly, and 

25 efficient markets, and facilitating capital formaVerDate Sep 11 2014 04:42 Oct 22, 2015 Jkt 059200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3784.IH H3784

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1 tion, as such rules, regulations, and policies re2 late to— 

3 ‘‘(i) capital raising by emerging, pri4 vately held small businesses (‘emerging 

5 companies’) and publicly traded companies 

6 with less than $250,000,000 in public mar7 ket capitalization (‘smaller public compa8 nies’) through securities offerings, includ9 ing private and limited offerings and initial 

10 and other public offerings; 

11 ‘‘(ii) trading in the securities of 

12 emerging companies and smaller public 

13 companies; and 

14 ‘‘(iii) public reporting and corporate 

15 governance requirements of emerging com16 panies and smaller public companies. 

17 ‘‘(B) LIMITATION.—The Committee shall 

18 not provide any advice with respect to any poli19 cies, practices, actions, or decisions concerning 

20 the Commission’s enforcement program. 

21 ‘‘(b) MEMBERSHIP.— 

22 ‘‘(1) IN GENERAL.—The members of the Com23 mittee shall be— 

24 ‘‘(A) the Advocate for Small Business Cap25 ital Formation; 


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1 ‘‘(B) not fewer than 10, and not more than 

2 20, members appointed by the Commission, 

3 from among individuals— 

4 ‘‘(i) who represent— 

5 ‘‘(I) emerging companies engag6 ing in private and limited securities 

7 offerings or considering initial public 

8 offerings (‘IPO’) (including the com9 panies’ officers and directors); 

10 ‘‘(II) the professional advisors of 

11 such companies (including attorneys, 

12 accountants, investment bankers, and 

13 financial advisors); and 

14 ‘‘(III) the investors in such com15 panies (including angel investors, ven16 ture capital funds, and family offices); 

17 ‘‘(ii) who represent— 

18 ‘‘(I) smaller public companies 

19 (including the companies’ officers and 

20 directors); 

21 ‘‘(II) the professional advisors of 

22 such companies (including attorneys, 

23 auditors, underwriters, and financial 

24 advisors); and 


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1 ‘‘(III) the pre-IPO and post-IPO 

2 investors in such companies (both in3 stitutional, such as venture capital 

4 funds, and individual, such as angel 

5 investors); and 

6 ‘‘(iii) who represent participants in 

7 the marketplace for the securities of 

8 emerging companies and smaller public 

9 companies, such as securities exchanges, 

10 alternative trading systems, analysts, infor11 mation processors, and transfer agents; 

12 and 

13 ‘‘(C) 3 non-voting members— 

14 ‘‘(i) 1 of whom shall be appointed by 

15 the Investor Advocate; 

16 ‘‘(ii) 1 of whom shall be appointed by 

17 the North American Securities Administra18 tors Association; and 

19 ‘‘(iii) 1 of whom shall be appointed by 

20 the Administrator of the Small Business 

21 Administration. 

22 ‘‘(2) TERM.—Each member of the Committee 

23 appointed under subparagraph (B), (C)(ii), or 

24 (C)(iii) of paragraph (1) shall serve for a term of 4 

25 years. 


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1 ‘‘(3) MEMBERS NOT COMMISSION EMPLOY2 EES.—Members appointed under subparagraph (B), 

3 (C)(ii), or (C)(iii) of paragraph (1) shall not be 

4 treated as employees or agents of the Commission 

5 solely because of membership on the Committee. 

6 ‘‘(c) CHAIRMAN; VICE CHAIRMAN; SECRETARY; AS7 SISTANT SECRETARY.— 

8 ‘‘(1) IN GENERAL.—The members of the Com9 mittee shall elect, from among the members of the 

10 Committee— 

11 ‘‘(A) a chairman; 

12 ‘‘(B) a vice chairman; 

13 ‘‘(C) a secretary; and 

14 ‘‘(D) an assistant secretary. 

15 ‘‘(2) TERM.—Each member elected under para16 graph (1) shall serve for a term of 3 years in the 

17 capacity for which the member was elected under 

18 paragraph (1). 

19 ‘‘(d) MEETINGS.— 

20 ‘‘(1) FREQUENCY OF MEETINGS.—The Com21 mittee shall meet— 

22 ‘‘(A) not less frequently than four times 

23 annually, at the call of the chairman of the 

24 Committee; and 


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1 ‘‘(B) from time to time, at the call of the 

2 Commission. 

3 ‘‘(2) NOTICE.—The chairman of the Committee 

4 shall give the members of the Committee written no5 tice of each meeting, not later than 2 weeks before 

6 the date of the meeting. 

7 ‘‘(e) COMPENSATION AND TRAVEL EXPENSES.— 

8 Each member of the Committee who is not a full-time em9 ployee of the United States shall— 

10 ‘‘(1) be entitled to receive compensation at a 

11 rate not to exceed the daily equivalent of the annual 

12 rate of basic pay in effect for a position at level V 

13 of the Executive Schedule under section 5316 of title 

14 5, United States Code, for each day during which 

15 the member is engaged in the actual performance of 

16 the duties of the Committee; and 

17 ‘‘(2) while away from the home or regular place 

18 of business of the member in the performance of 

19 services for the Committee, be allowed travel ex20 penses, including per diem in lieu of subsistence, in 

21 the same manner as persons employed intermittently 

22 in the Government service are allowed expenses 

23 under section 5703 of title 5, United States Code. 


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1 ‘‘(f) STAFF.—The Commission shall make available 

2 to the Committee such staff as the chairman of the Com3 mittee determines are necessary to carry out this section. 

4 ‘‘(g) REVIEW BY COMMISSION.—The Commission 

5 shall— 

6 ‘‘(1) review the findings and recommendations 

7 of the Committee; and 

8 ‘‘(2) each time the Committee submits a finding 

9 or recommendation to the Commission, promptly 

10 issue a public statement— 

11 ‘‘(A) assessing the finding or recommenda12 tion of the Committee; and 

13 ‘‘(B) disclosing the action, if any, the Com14 mission intends to take with respect to the find15 ing or recommendation. 

16 ‘‘(h) FEDERAL ADVISORY COMMITTEE ACT.—The 

17 Federal Advisory Committee Act (5 U.S.C. App.) shall not 

18 apply with respect to the Committee and its activities.’’. 

19 (c) ANNUAL GOVERNMENT-BUSINESS FORUM ON

20 SMALL BUSINESS CAPITAL FORMATION.—Section 503(a) 

21 of the Small Business Investment Incentive Act of 1980 

22 (15 U.S.C. 80c–1(a)) is amended by inserting ‘‘(acting 

23 through the Office of the Advocate for Small Business 

24 Capital Formation and in consultation with the Small 


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1 Business Capital Formation Advisory Committee)’’ after 

2 ‘‘Securities and Exchange Commission’’. 

Æ 


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