IB 

Union Calendar No. 311 

114TH CONGRESS 

2D SESSION H. R. 3784 

[Report No. 114–408] 

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 

FEBRUARY 1, 2016 

Additional sponsors: Mr. SHERMAN, Mr. FINCHER, Mrs. CAROLYN B. MALONEY of New York, Miss RICE of New York, Mr. KILDEE, and Ms. 

VELA ́ZQUEZ

FEBRUARY 1, 2016 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on October 21, 2015] 


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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. 


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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’’. 

6 SEC. 2. ESTABLISHMENT OF OFFICE OF THE ADVOCATE 

7 FOR SMALL BUSINESS CAPITAL FORMATION 

8 AND SMALL BUSINESS CAPITAL FORMATION 

9 ADVISORY COMMITTEE. 

10 (a) OFFICE OF THE ADVOCATE FOR SMALL BUSINESS

11 CAPITAL FORMATION.—Section 4 of the Securities Ex12 change Act of 1934 (15 U.S.C. 78d) is amended by adding 

13 at the end the following: 

14 ‘‘(j) OFFICE OF THE ADVOCATE FOR SMALL BUSINESS

15 CAPITAL FORMATION.— 

16 ‘‘(1) OFFICE ESTABLISHED.—There is established 

17 within the Commission the Office of the Advocate for 

18 Small Business Capital Formation (hereafter in this 

19 subsection referred to as the ‘Office’). 

20 ‘‘(2) ADVOCATE FOR SMALL BUSINESS CAPITAL

21 FORMATION.— 

22 ‘‘(A) IN GENERAL.—The head of the Office 

23 shall be the Advocate for Small Business Capital 

24 Formation, who shall— 


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

2 and 

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

4 from among individuals having experience 

5 in advocating for the interests of small busi6 nesses and encouraging small business cap7 ital formation. 

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

9 pay for the Advocate for Small Business Capital 

10 Formation shall be equal to the highest rate of 

11 annual pay for other senior executives who re12 port directly to the Commission. 

13 ‘‘(C) NO CURRENT EMPLOYEE OF THE COM14 MISSION.—An individual may not be appointed 

15 as the Advocate for Small Business Capital For16 mation if the individual is currently employed 

17 by the Commission. 

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

19 Business Capital Formation, after consultation with 

20 the Commission, may retain or employ independent 

21 counsel, research staff, and service staff, as the Advo22 cate for Small Business Capital Formation deter23 mines to be necessary to carry out the functions of the 

24 Office. 


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1 ‘‘(4) FUNCTIONS OF THE ADVOCATE FOR SMALL

2 BUSINESS CAPITAL FORMATION.—The Advocate for 

3 Small Business Capital Formation shall— 

4 ‘‘(A) assist small businesses and small busi5 ness investors in resolving significant problems 

6 such businesses and investors may have with the 

7 Commission or with self-regulatory organiza8 tions; 

9 ‘‘(B) identify areas in which small busi10 nesses and small business investors would benefit 

11 from changes in the regulations of the Commis12 sion or the rules of self-regulatory organizations; 

13 ‘‘(C) identify problems that small businesses 

14 have with securing access to capital, including 

15 any unique challenges to minority-owned and 

16 women-owned small businesses; 

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

18 businesses and small business investors of— 

19 ‘‘(i) proposed regulations of the Com20 mission that are likely to have a significant 

21 economic impact on small businesses and 

22 small business capital formation; and 

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

24 have a significant economic impact on 

25 small businesses and small business capital 


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1 formation of self-regulatory organizations 

2 registered under this title; 

3 ‘‘(E) conduct outreach to small businesses 

4 and small business investors, including through 

5 regional roundtables, in order to solicit views on 

6 relevant capital formation issues; 

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

8 Commission changes in the regulations or orders 

9 of the Commission and to Congress any legisla10 tive, administrative, or personnel changes that 

11 may be appropriate to mitigate problems identi12 fied under this paragraph and to promote the in13 terests of small businesses and small business in14 vestors; 

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

16 proposed recommendations made under subpara17 graph (F); and 

18 ‘‘(H) advise the Investor Advocate on issues 

19 related to small businesses and small business in20 vestors. 

21 ‘‘(5) ACCESS TO DOCUMENTS.—The Commission 

22 shall ensure that the Advocate for Small Business 

23 Capital Formation has full access to the documents 

24 and information of the Commission and any self-regVerDate Sep 11 2014 21:45 Feb 01, 2016 Jkt 059200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6203 E:\BILLS\H3784.RH H3784

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1 ulatory organization, as necessary to carry out the 

2 functions of the Office. 

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

4 ‘‘(A) IN GENERAL.—Not later than Decem5 ber 31 of each year after 2015, the Advocate for 

6 Small Business Capital Formation shall submit 

7 to the Committee on Banking, Housing, and 

8 Urban Affairs of the Senate and the Committee 

9 on Financial Services of the House of Represent10 atives a report on the activities of the Advocate 

11 for Small Business Capital Formation during 

12 the immediately preceding fiscal year. 

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

14 under subparagraph (A) shall include— 

15 ‘‘(i) appropriate statistical informa16 tion and full and substantive analysis; 

17 ‘‘(ii) information on steps that the Ad18 vocate for Small Business Capital Forma19 tion has taken during the reporting period 

20 to improve small business services and the 

21 responsiveness of the Commission and self22 regulatory organizations to small business 

23 and small business investor concerns; 

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

25 issues encountered by small businesses and 


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1 small business investors, including any 

2 unique issues encountered by minority3 owned and women-owned small businesses 

4 and their investors, during the reporting pe5 riod; 

6 ‘‘(iv) an inventory of the items sum7 marized under clause (iii) (including items 

8 summarized under such clause for any prior 

9 reporting period on which no action has 

10 been taken or that have not been resolved to 

11 the satisfaction of the Advocate for Small 

12 Business Capital Formation as of the begin13 ning of the reporting period covered by the 

14 report) that includes— 

15 ‘‘(I) identification of any action 

16 taken by the Commission or the self17 regulatory organization and the result 

18 of such action; 

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

20 item has remained on such inventory; 

21 and 

22 ‘‘(III) for items on which no ac23 tion has been taken, the reasons for in24 action, and an identification of any ofVerDate Sep 11 2014 21:45 Feb 01, 2016 Jkt 059200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6203 E:\BILLS\H3784.RH H3784

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1 ficial who is responsible for such ac2 tion; 

3 ‘‘(v) recommendations for such changes 

4 to the regulations, guidance and orders of 

5 the Commission and such legislative actions 

6 as may be appropriate to resolve problems 

7 with the Commission and self-regulatory or8 ganizations encountered by small businesses 

9 and small business investors and to encour10 age small business capital formation; and 

11 ‘‘(vi) any other information, as deter12 mined appropriate by the Advocate for 

13 Small Business Capital Formation. 

14 ‘‘(C) CONFIDENTIALITY.—No report re15 quired by subparagraph (A) may contain con16 fidential information. 

17 ‘‘(D) INDEPENDENCE.—Each report re18 quired under subparagraph (A) shall be provided 

19 directly to the committees of Congress listed in 

20 such subparagraph without any prior review or 

21 comment from the Commission, any commis22 sioner, any other officer or employee of the Com23 mission, or the Office of Management and Budg24 et. 


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1 ‘‘(7) REGULATIONS.—The Commission shall es2 tablish procedures requiring a formal response to all 

3 recommendations submitted to the Commission by the 

4 Advocate for Small Business Capital Formation, not 

5 later than 3 months after the date of such submission. 

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

7 BUSINESS CAPITAL FORMATION.—The Advocate for 

8 Small Business Capital Formation shall be respon9 sible for planning, organizing, and executing the an10 nual Government-Business Forum on Small Business 

11 Capital Formation described in section 503 of the 

12 Small Business Investment Incentive Act of 1980 (15 

13 U.S.C. 80c–1). 

14 ‘‘(9) RULE OF CONSTRUCTION.—Nothing in this 

15 subsection may be construed as replacing or reducing 

16 the responsibilities of the Investor Advocate with re17 spect to small business investors.’’. 

18 (b) SMALL BUSINESS CAPITAL FORMATION ADVISORY

19 COMMITTEE.—Title I of the Securities Exchange Act of 

20 1934 (15 U.S.C. 78a et seq.) is amended by adding at the 

21 end the following: 

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

23 COMMITTEE. 

24 ‘‘(a) ESTABLISHMENT AND PURPOSE.— 


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

2 within the Commission the Small Business Capital 

3 Formation Advisory Committee (hereafter in this sec4 tion referred to as the ‘Committee’). 

5 ‘‘(2) FUNCTIONS.— 

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

7 provide the Commission with advice on the Com8 mission’s rules, regulations, and policies with re9 gard to the Commission’s mission of protecting 

10 investors, maintaining fair, orderly, and effi11 cient markets, and facilitating capital forma12 tion, as such rules, regulations, and policies re13 late to— 

14 ‘‘(i) capital raising by emerging, pri15 vately held small businesses (‘emerging com16 panies’) and publicly traded companies 

17 with less than $250,000,000 in public mar18 ket capitalization (‘smaller public compa19 nies’) through securities offerings, including 

20 private and limited offerings and initial 

21 and other public offerings; 

22 ‘‘(ii) trading in the securities of emerg23 ing companies and smaller public compa24 nies; and 


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1 ‘‘(iii) public reporting and corporate 

2 governance requirements of emerging com3 panies and smaller public companies. 

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

5 not provide any advice with respect to any poli6 cies, practices, actions, or decisions concerning 

7 the Commission’s enforcement program. 

8 ‘‘(b) MEMBERSHIP.— 

9 ‘‘(1) IN GENERAL.—The members of the Com10 mittee shall be— 

11 ‘‘(A) the Advocate for Small Business Cap12 ital Formation; 

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

14 20, members appointed by the Commission, from 

15 among individuals— 

16 ‘‘(i) who represent— 

17 ‘‘(I) emerging companies engaging 

18 in private and limited securities offer19 ings or considering initial public offer20 ings (‘IPO’) (including the companies’ 

21 officers and directors); 

22 ‘‘(II) the professional advisors of 

23 such companies (including attorneys, 

24 accountants, investment bankers, and 

25 financial advisors); and 


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1 ‘‘(III) the investors in such com2 panies (including angel investors, ven3 ture capital funds, and family offices); 

4 ‘‘(ii) who are officers or directors of 

5 minority-owned small businesses and 

6 women-owned small businesses; 

7 ‘‘(iii) who represent— 

8 ‘‘(I) smaller public companies (in9 cluding the companies’ officers and di10 rectors); 

11 ‘‘(II) the professional advisors of 

12 such companies (including attorneys, 

13 auditors, underwriters, and financial 

14 advisors); and 

15 ‘‘(III) the pre-IPO and post-IPO 

16 investors in such companies (both in17 stitutional, such as venture capital 

18 funds, and individual, such as angel 

19 investors); and 

20 ‘‘(iv) who represent participants in the 

21 marketplace for the securities of emerging 

22 companies and smaller public companies, 

23 such as securities exchanges, alternative 

24 trading systems, analysts, information proc25 essors, and transfer agents; and 


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1 ‘‘(C) 3 non-voting members— 

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

3 the Investor Advocate; 

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

5 the North American Securities Administra6 tors Association; and 

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

8 the Administrator of the Small Business 

9 Administration. 

10 ‘‘(2) TERM.—Each member of the Committee ap11 pointed under subparagraph (B), (C)(ii), or (C)(iii) 

12 of paragraph (1) shall serve for a term of 4 years. 

13 ‘‘(3) MEMBERS NOT COMMISSION EMPLOYEES.— 

14 Members appointed under subparagraph (B), (C)(ii), 

15 or (C)(iii) of paragraph (1) shall not be treated as 

16 employees or agents of the Commission solely because 

17 of membership on the Committee. 

18 ‘‘(c) CHAIRMAN; VICE CHAIRMAN; SECRETARY; AS19 SISTANT SECRETARY.— 

20 ‘‘(1) IN GENERAL.—The members of the Com21 mittee shall elect, from among the members of the 

22 Committee— 

23 ‘‘(A) a chairman; 

24 ‘‘(B) a vice chairman; 

25 ‘‘(C) a secretary; and 


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1 ‘‘(D) an assistant secretary. 

2 ‘‘(2) TERM.—Each member elected under para3 graph (1) shall serve for a term of 3 years in the ca4 pacity for which the member was elected under para5 graph (1). 

6 ‘‘(d) MEETINGS.— 

7 ‘‘(1) FREQUENCY OF MEETINGS.—The Committee 

8 shall meet— 

9 ‘‘(A) not less frequently than four times an10 nually, at the call of the chairman of the Com11 mittee; and 

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

13 Commission. 

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

15 shall give the members of the Committee written no16 tice of each meeting, not later than 2 weeks before the 

17 date of the meeting. 

18 ‘‘(e) COMPENSATION AND TRAVEL EXPENSES.—Each 

19 member of the Committee who is not a full-time employee 

20 of the United States shall— 

21 ‘‘(1) be entitled to receive compensation at a rate 

22 not to exceed the daily equivalent of the annual rate 

23 of basic pay in effect for a position at level V of the 

24 Executive Schedule under section 5316 of title 5, 

25 United States Code, for each day during which the 


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1 member is engaged in the actual performance of the 

2 duties of the Committee; and 

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

4 of business of the member in the performance of serv5 ices for the Committee, be allowed travel expenses, in6 cluding per diem in lieu of subsistence, in the same 

7 manner as persons employed intermittently in the 

8 Government service are allowed expenses under sec9 tion 5703 of title 5, United States Code. 

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

11 the Committee such staff as the chairman of the Committee 

12 determines are necessary to carry out this section. 

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

14 shall— 

15 ‘‘(1) review the findings and recommendations of 

16 the Committee; and 

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

18 or recommendation to the Commission, promptly 

19 issue a public statement— 

20 ‘‘(A) assessing the finding or recommenda21 tion of the Committee; and 

22 ‘‘(B) disclosing the action, if any, the Com23 mission intends to take with respect to the find24 ing or recommendation. 


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1 ‘‘(h) FEDERAL ADVISORY COMMITTEE ACT.—The Fed2 eral Advisory Committee Act (5 U.S.C. App.) shall not 

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

4 (c) ANNUAL GOVERNMENT-BUSINESS FORUM ON

5 SMALL BUSINESS CAPITAL FORMATION.—Section 503(a) of 

6 the Small Business Investment Incentive Act of 1980 (15 

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

8 the Office of the Advocate for Small Business Capital For9 mation and in consultation with the Small Business Cap10 ital Formation Advisory Committee)’’ after ‘‘Securities and 

11 Exchange Commission’’. 


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Union Calendar No. 311 

114TH CONGRESS 

2D SESSION H. R. 3784 

[Report No. 114–408] 

A BILL 

To amend the Securities Exchange Act of 1934 to 

for other purposes. ness Capital Formation Advisory Committee, and Business Capital Formation and a Small Busiestablish an Office of the Advocate for Small 

FEBRUARY 1, 2016 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


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