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Source: Securities and Exchange Commission

Nov. 9, 2020

Thank you, Carla [Garrett] and my continuing gratitude to all of the members of the Committee for your work. Today’s agenda promises to further the dialogue on two important issues that are front of mind for me: developing a sensible framework for finders and identifying concrete actions the Commission can take to help small businesses address their ongoing capital needs in the face of economic stress resulting from COVID-19. I am eager to hear your thoughts on these subjects, so I will keep my remarks brief.

Last month’s proposed exemption put forth a framework for finders to engage in certain limited activities without registering as brokers. We have received a number of thoughtful comments to date that represent a variety of perspectives on the proposal. Some early themes are starting to emerge. For example, there is concern that the utility of the proposed framework could be limited if state securities laws are not amended or preempted[1] or if only natural persons are permitted to qualify as finders under the exemption.[2] Other commenters have raised questions about potential ambiguities in the scope of activities that a Tier 2 Finder would be able to engage in when discussing issuer information.[3] I hope that you, in addition to discussing these topics, will share your views on other questions that I have raised previously, including: whether the scope of the proposed framework should be expanded to secondary offerings. Is Commission guidance needed regarding discrete topics within the finders umbrella, such as the activities of private fund advisers, M&A brokers, or real estate brokers? For those watching online, please consider adding your thoughts to the comment file, which remains open until November 12, 2020.[4]

The afternoon’s conversation will be equally important. I am curious to hear the latest sentiment of the small business community in light of the ongoing COVID-19 pandemic. Last week, the Commission extended for an additional eighteen months the temporary relief with respect to the financial statement review requirements in Regulation Crowdfunding: an idea that was initially born here on this Committee. Please keep the recommendations coming. Let us know if there are targeted changes that can be made to facilitate improved access to the capital markets for small businesses during this ongoing pandemic and the longed-for post-pandemic period. Thank you, and I look forward to today’s discussions.

 

[1] See, e.g., Letter from G. Philip Rutledge, Partner, Bybel Rutledge LLP (Oct. 28, 2020), https://www.sec.gov/comments/s7-13-20/s71320-7952167-224889.pdf (“Rutledge Letter”); Letter from Richard A. Weintraub PC dba Weintraub Law Group PC (Oct. 8, 2020), https://www.sec.gov/comments/s7-13-20/s71320-7888889-224233.htm; Letter from Robert J. Dickson, Partner, McCracken (Oct. 21, 2020), https://www.sec.gov/comments/s7-13-20/s71320-7928983-224609.pdf.

[2] See e.g., Letter from David E. Case, Esq., Aisa Pacific Advisory (Oct. 8, 2020), https://www.sec.gov/comments/s7-13-20/s71320-7888882-224230.htm; Letter from Brian A. Lebrecht, Keith M. Woodwell, Thomas A. Brady, Clyde Snow & Sessions, PC (Nov. 5, 2020), https://www.sec.gov/comments/s7-13-20/s71320-7984279-225089.pdf; Rutledge Letter.

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