Text: H.R.3784 — 114th Congress (2015-2016)All Bill Information (Except Text)

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Public Law No: 114-284 (12/16/2016)

 
[114th Congress Public Law 284]
[From the U.S. Government Publishing Office]



[[Page 130 STAT. 1447]]

Public Law 114-284
114th Congress

                                 An Act


 
 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. <<NOTE: Dec. 16, 2016 -  [H.R. 3784]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: SEC Small 
Business Advocate Act of 2016.>> 
SECTION 1. <<NOTE: 15 USC 78a note.>> 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) <<NOTE: Appointment.>>  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) <<NOTE: Consultation.>>  Staff of office.--The 
        Advocate for Small Business Capital Formation, after 
        consultation with the Commission, may retain or employ 
        independent counsel, research staff, and

[[Page 130 STAT. 1448]]

        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--

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                          ``(i) <<NOTE: Analysis.>>  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) <<NOTE: Summary.>>  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) <<NOTE: Records.>>  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) <<NOTE: Recommenda- tions.>>  
                      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) <<NOTE: Procedures. Deadline.>>  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

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        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. <<NOTE: 15 USC 78qq.>>  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);

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                          ``(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) <<NOTE: Deadline.>>  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

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        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) <<NOTE: Public information.>>  each time the Committee 
        submits a finding or recommendation to the Commission, promptly 
        issue a public statement--
                    ``(A) <<NOTE: Assessment.>>  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''.

    Approved December 16, 2016.

LEGISLATIVE HISTORY--H.R. 3784:
---------------------------------------------------------------------------

HOUSE REPORTS: No. 114-408 (Comm. on Financial Services).
CONGRESSIONAL RECORD, Vol. 162 (2016):
            Feb. 1, considered and passed House.
            Dec. 9, considered and passed Senate.

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