69–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 115–104 

SMALL BUSINESS CAPITAL FORMATION ENHANCEMENT 

ACT 

MAY 1, 2017.—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. 1312] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 1312) to amend the Small Business Investment Incentive 

Act of 1980 to require an annual review by the Securities and Exchange Commission of the annual government-business forum on 

capital formation that is held pursuant to such Act, having considered the same, report favorably thereon with an amendment and 

recommend that the bill as amended do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Small Business Capital Formation Enhancement 

Act’’. 

SEC. 2. ANNUAL REVIEW OF GOVERNMENT-BUSINESS FORUM ON CAPITAL FORMATION. 

Section 503 of the Small Business Investment Incentive Act of 1980 (15 U.S.C. 

80c–1) is amended by adding at the end the following: 

‘‘(e) The Commission shall— 

‘‘(1) review the findings and recommendations of the forum; and 

‘‘(2) each time the forum submits a finding or recommendation to the Commission, promptly issue a public statement— 

‘‘(A) assessing the finding or recommendation of the forum; and 

‘‘(B) disclosing the action, if any, the Commission intends to take with respect to the finding or recommendation. 

‘‘(f) FORUM FINDINGS.—Nothing in this section shall require the Commission to 

agree to or act upon any finding or recommendation of the forum.’’. 

2 

PURPOSE AND SUMMARY

Introduced by Representative Poliquin on March 2, 2017, H.R. 

1312 the ‘‘Small Business Capital Formation Enhancement Act,’’ 

requires the SEC to respond to recommendations offered by its annual Government Business Forum on Small Business Capital Formation (Forum). The Forum has met annually since 1981 and generates a list of findings and recommendations; however, the SEC 

is under no obligation to respond to the Forum’s recommendations 

and findings. H.R. 1312 would require the SEC to respond to any 

findings and recommendations put forth by the Forum. This statutory obligation is consistent with the current requirements related 

to the findings and recommendations offered by the Investor Advisory Committee as required by Title IX of the Dodd-Frank Act. 

BACKGROUND AND NEED FOR LEGISLATION

In 1980, Congress required the SEC to conduct an annual government-business forum to review the current status of problems 

and programs relating to small business capital formation. A summary of the proceedings of the forum—known as the GovernmentBusiness Forum on Small Business Capital Formation—and any 

related findings and recommendations are submitted to, among 

other things, the SEC and appropriate congressional committees 

for review. The Forum has generated a number of sound recommendations that the Financial Services Committee has used to 

develop legislation, including many provisions of the bipartisan 

JOBS Act. 

Unfortunately, the SEC is not statutorily obligated to respond to 

the Forum’s recommendations and findings. Although Congress has 

deemed the recommendations worthy of response and action, the 

SEC has not. Interestingly, SEC Commissioners typically offer 

opening statements at Forum meetings that praise the Forum’s 

work and the expertise of its members. For example, at the November 19, 2015, commencement of the forum, former SEC Chair 

White noted that: 

This is . . . the latest in a remarkable series of open and 

direct discussions that has given the Commission critical 

insight into the impact of our rules on small businesses 

and on their efforts to raise capital. This Forum can be 

counted on to be another frank and productive conversation, and we welcome all of your perspectives as leaders of 

the small business community. 

Despite that acknowledgement, the SEC typically does not utilize 

the work of the Forum. As noted by now-acting SEC Chairman 

Mike Piwowar at the 2015 Forum: 

Given your tremendous efforts to develop thoughtful recommendations, I believe the Commission should respond 

to each one. By statute, the Commission is required to respond to each recommendation provided by the Investor 

Advisory Committee. It should not take a law to require 

the Commission to respond to the Forum’s recommendations—it is more of a matter of common courtesy and good 

government. 

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H.R. 1312, the Small Business Capital Formation Enhancement 

Act, remedies the discrepancy pointed out by Acting Chairman 

Piwowar. 

HEARINGS

The Committee on Financial Services’ Subcommittee on Capital 

Markets and Government Sponsored Enterprises held a hearing examining matters relating to similar legislation on December 2, 

2015. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

March 9, 2017 and ordered H.R. 1312 to be reported favorably to 

the House as amended by a recorded vote of 58 yeas to 0 nay (recorded vote no. FC–33), 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. An amendment offered by Representative Poliquin was agreed to by a voice vote. The 

sole record vote was a motion by Chairman Hensarling to report 

the bill favorably to the House as amended. That motion was 

agreed to by a recorded vote of 58 yeas to 0 nay (record vote no. 

FC–33), a quorum being present. 

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Insert graphic folio 5 HR104.001

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. Zeldtn 

Mr. Trott 

Mr. Loudermilk 

Mr. Mooney (WV) __ __ 

Mr. MacArti!Ur .. 

Mr. Davidson 

Mr. Budd 

Mr. Kustoff (TN) ............ .. 

X Ms. Maxine Waters (CA) ..... 

Mrs. Carolyn B. Maloney (NY) __ 

Ms. Velazquez ..... __ ...... .. 

X Mr. Sherman ___ ............ .. 

Mr. Meeks . _ ... __ .......... . 

Mr. Capuano 

Mr. Clay 

Mr. lynch __ ................ . 

Mr. David Scott (GA) ... 

Mr. AI Green (TX) 

Mr. Cleaver 

Ms. Moore _ 

Mr. Ellison 

Mr. Perlmutter __ ........... .. 

Mr. Himes 

Mr. Foster __ 

Mr. Kildee. 

Mr. Delaney 

Ms. Sinema .. 

Mrs. Beatty ............. .. 

Mr. Heck ................. . 

Mr. Vargas 

Mr. Gottheimer ............ .. 

Mr. Gonzalez (TX) 

Mr. Cnst 

Mr. Kihuen 

Ms. Tenney ~ 

Mr. Hollingsworth .... _ )\ 

Yea Nay Present 

~ 

X 

X 

X 

X 

X 

~ 

~ 

X 

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)\ 

~ 

)\ 

X 

X 

X 

X 

X 

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X 
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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. 1312 will remedy the SEC’s lack of response to the Government-Business Forum 

on Small Business Capital Formation’s recommendations and findings by statutorily obligating the SEC to respond to any findings 

and recommendations put forth by the Forum. 

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. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own 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, March 22, 2017. 

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. 1312, the Small Business 

Capital Formation Enhancement Act. 

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

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

Sincerely, 

MARK P. HADLEY

(For Keith Hall). 

Enclosure. 

6 

H.R. 1312—Small Business Capital Formation Enhancement Act 

H.R. 1312 would require the Securities and Exchange Commission (SEC) to review and assess the recommendations generated at 

an annual forum of government agencies and business professionals convened to discuss small business capital formation. The 

SEC also would be required to disclose any actions it intends to 

take in response to any finding or recommendation made by the 

forum. 

Based on an analysis of information from the SEC, CBO esti- mates that implementing H.R. 1312 would cost less than $500,000 

to complete the review and assessment of recommendations. Under 

current law, 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. 1312 would not affect direct spending or revenues; 

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

that enacting H.R. 1312 would not increase net direct spending or 

on-budget deficits in any of the four consecutive 10-year periods beginning in 2028. 

H.R. 1312 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

not affect the budgets of state, local, or tribal governments. 

The CBO staff contact for this estimate is Stephen Rabent. The 

estimate was approved by H. Samuel Papenfuss, Deputy Assistant 

Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

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

H.R. 1312 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

DUPLICATION OF FEDERAL PROGRAMS

Pursuant to section 3(c)(5) of rule XIII, the Committee states 

that no provision of H.R. 1312 establishes or reauthorizes a program of the Federal Government known to be duplicative of another Federal program, a program that was included in any report 

from the Government Accountability Office to Congress pursuant to 

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section 21 of Public Law 111–139, or a program related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, 115th Cong. (2017), the 

Committee states that H.R. 1312 contains no directed rulemaking. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short Title. 

This section cites H.R. 1312 as the ‘‘Small Business Capital Formation Enhancement Act.’’ 

Section 2. Annual review of government-business forum on capital 

formation. 

This section requires the Securities and Exchange Commission to 

review the findings and recommendations of the forum. It also requires the Commission to assess the finding and disclose any action 

the Commission intends to take with respect to the finding or recommendation. 

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 (new matter is printed in italics 

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

roman): 

SMALL BUSINESS INVESTMENT INCENTIVE ACT OF 1980 

* * * * * * * 

TITLE V—CAPITAL FORMATION 

* * * * * * * 

ANNUAL GOVERNMENT-BUSINESS FORUM ON CAPITAL FORMATION

SEC. 503. (a) Pursuant to the consultation called for in section 

502, the Securities and Exchange Commission (acting through the 

Office of the Advocate for Small Business Capital Formation and 

in consultation with the Small Business Capital Formation Advisory Committee) shall conduct an annual Government-business 

forum to review the current status of problems and programs relating to small business capital formation. 

(b) The Commission shall invite other Federal agencies, such as 

the Department of the Treasury, the Board of Governors of the 

Federal Reserve System, the Small Business Administration, organizations representing State securities commissioners, and leading 

small business and professional organizations concerned with capital formation, to participate in the planning for such forums. 

(c) The Commission may request any of the Federal departments, 

agencies, or organizations such as those specified in subsection (b), 

or other groups or individuals, to prepare statements and reports 

8 

to be delivered at such forums. Such departments and agencies 

shall cooperate in this effort. 

(d) A summary of the proceedings of such forums and any findings or recommendations thereof shall be prepared and transmitted 

to the participants, appropriate committees of the Congress, and 

others who may be interested in the subject matter. 

(e) The Commission shall— 

(1) review the findings and recommendations of the forum; 

and 

(2) each time the forum submits a finding or recommendation 

to the Commission, promptly issue a public statement— 

(A) assessing the finding or recommendation of the 

forum; and 

(B) disclosing the action, if any, the Commission intends 

to take with respect to the finding or recommendation. 

(f) FORUM FINDINGS.—Nothing in this section shall require the 

Commission to agree to or act upon any finding or recommendation 

of the forum. 

Æ