The SEC Office of the Advocate for Small Business Capital Formation has launched a new section of the Commission’s website outlining the “fundamentals of capital raising.”
One of the main missions of the SEC is to facilitate capital formation for both smaller and larger firms.
The Office of the Advocate is a relatively new section of the SEC that was created by Congress in recognition of the SEC’s shortfall in helping smaller firms.
The “Building Blocks” section outlines items like:
Types of securities including SAFEs, Convertibles, Debt, and Equity.
Regarding exemptions available, these include Reg D (506c/b, 504), Reg CF, Reg A+, and Registered Offerings/IPOs. Securities crowdfunding options include Reg CF, Reg A+, and Reg D 506c.
Later-stage options include SPACs and public offerings.
There is also a section that describes what happens if a company does not comply with securities law.
While the Office of the Advocate is tasked with aiding smaller firms, some have criticized the current Commission as being anti-capital formation as it has taken moves to make it more difficult to raise funding via private securities. One of the top items on the agenda of the SEC is to reform Reg D, including the definition of an accredited investors – a move that is perceived as an attempt to make it more difficult for smaller investors to participate in private securities offerings.
