Bridging The Gap: Remarks Before The Northwest Securities Institute, SEC Commissioner Hester M. Peirce, Portland, Oregon, May 30, 2025

Thank you to the Oregon and Washington State Bars for hosting this event. I must begin with my disclaimer: my views are my own as a Commissioner and not necessarily those of the SEC or my fellow Commissioners.

Whenever I visit the Northwest, even with my deeply ingrained allegiance to the Midwest, I cannot help but appreciate the region’s natural beauty. My trip here has given me a welcome occasion to reflect on the unique geographic features that you all enjoy with regularity. Most notably is the Willamette River, which splits the city of Portland between east and west, in the same way the Cuyahoga River does to my native Cleveland. The Willamette is breathtaking, as it was when poet Samuel L. Simpson wrote of it in 1868:

From the Cascades’ frozen gorges,
Leaping like a child at play,
Winding, widening through the valley,
Bright Willamette glides away;
Onward ever,
Lovely River,
Softly calling to the sea;
Time that scars us,
Maims and mars us,
Leaves no track or trench on thee.[1]

Time has scarred, maimed, and marred since I last participated in the Northwest Securities Institute in 2018. The pandemic and associated shutdowns certainly left their mark, as did many other events in the last seven years. But challenging situations of all sorts elicit human inventiveness and diligence. That capacity to take on obstacles is evident all around us.

Consider the twelve bridges across the Willamette connecting the city of Portland. Each bridge has a unique look that reflects its intended purpose. The city’s oldest bridge, the Burlington Northern Railroad Bridge, served only locomotives.[2] The recently overhauled Sellwood Bridge, by contrast, accommodates cars, pedestrians, and cyclists alike.[3] The Fremont Bridge is just for cars. Each is an engineering marvel designed to span the Willamette as it takes its “flowery path to the sea.”[4]

No less impressive than the work of Portland’s bridge builders are efforts to bridge the capital gap for growing businesses. As with bridging the Willamette, bridging the capital gap takes many different forms. On one hand a local baker may be looking to raise one hundred thousand dollars from her local community to renovate the kitchen. On the other hand, a cutting-edge artificial intelligence company may need tens of millions of dollars to fund compute costs to train and enhance its large language model. These two hypothetical companies have different capital needs, and different types of investors may be interested in allocating their capital to them.

One of our most important jobs as securities regulators is ensuring that our rules accommodate commercially viable fundraising paths for the smallest and largest companies and every company in between. Regulators cannot guarantee that investors will want to fund any particular company, but regulatory barriers should not prevent companies that have good uses for capital from getting it.

Regulation D—and in particular Rule 506(b)—may be the most efficient path for both the baker and the AI company. That both rely on the same exemption may be fine. After all, our goal should be that entrepreneurs and investors can transact quickly and efficiently while maintaining sufficient investor protections. In what legal wrapper that transaction occurs is a secondary consideration. But the degree to which the market favors Rule 506(b) over the other exemptive options the securities laws provide makes me wonder what more we could do to encourage uptake of the more purpose-built fundraising paths we have.

The various exemptions from registration that our securities laws provide were designed and intended to serve different purposes, and I look forward to this Commission’s efforts to animate those ideals. Fundraisings conducted under Rule 504, Regulation Crowdfunding, and Regulation A generally have higher transaction costs than those conducted under Rule 506(b) of Reg D. For younger or smaller companies, we could lower disclosure burdens in crowdfunding offerings. The Small Business Capital Formation Advisory Committee recommended, for example, that we “increase the offering threshold at which reviewed financial statement are required from $124,000 to $350,000.”[5] For more mature or larger companies, we could allow At-The-Market Offerings in Regulation A to enable exchange-traded companies to sell their stock at a price reflective of the market. We also could expand state preemption for Reg A—perhaps a dangerous suggestion with state securities regulators in attendance, but all of us share the goal of ensuring that businesses can start and grow. We also can facilitate capital formation for small businesses by creating a streamlined micro-offering exemption for companies raising up to $500,000, which might accomplish what Rule 504 was unable to do for companies that need an efficient way to raise a small amount of capital.

This Commission also has work to do in the public markets. In my last appearance at this conference, I expressed concern at the relatively low number of IPOs.[6] Sadly, today, the story has gotten worse with just 72 IPOs in 2024 compared to 134 in 2018.[7] Companies that once would have been eager IPO candidates are much more cautious about crossing into the public markets. While vibrant private markets are wonderful, public markets are essential: investors—regardless of accreditation status—can access them with the benefit of more robust price discovery provided by public market liquidity. The Commission should scale its requirements for public companies to allow new and growing companies to ease into the full panoply of public company reporting requirements. My fellow Commissioner Mark Uyeda has made this point as well—while the Commission has created different categories of public companies, from large accelerated filer down to smaller reporting company, we can do more to scale disclosure across those categories.[8] It is worth asking whether each disclosure item is appropriate for all companies, small, medium, and large. More generally, a comprehensive assessment of public company disclosure requirements would help identify ones that are more costly than they are worth regardless of company size.

Portland’s twelve bridges offer lots of ways to traverse the Willamette. So too should viable options exist for the full spectrum of capital-seeking companies and investors of all types. The current Commission should refine and augment existing options for private market capital raising and take a fresh look at the costs of raising money in the public markets.

Thank you again for having me and I look forward to our conversation.