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

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

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

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

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

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

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

Speaker of the House of Representatives.

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