Good morning. Welcome to the first meeting for the Committee in 2025. I expect that this year will be a busy and exciting one for this Committee as I have asked the Commission staff to explore ways to improve capital-raising opportunities for entrepreneurs and to empower retail investment in private companies.[1] These topics are at the heart of this Committee’s expertise, and I hope that you will have opportunities to share your views with the staff, the Commission, and the public.
Turning to today’s agenda, I am pleased that the Committee continues to discuss ways to support and facilitate capital formation for emerging fund managers. The lack of appropriately tailored disclosure for smaller advisers starting their business is concerning, because it can lead to disproportionate compliance burdens and create barriers to entry. I look forward to reviewing the input from Ashok Kamal and Sara Zulkosky on these issues, and any recommendations from the Committee to address them.
This afternoon, the Committee will discuss the challenges faced by small public companies that are not listed on a national securities exchange. I believe that scaled disclosure requirements is important for smaller companies, as the costs for preparing disclosure can disproportionately burden smaller companies.[2] Small public companies that are not listed on an exchange may face even more unique challenges. For example, unlisted companies with a public float of less than $75 million are ineligible to use shelf registration statements.[3]
There may also be investor protection concerns associated with small companies whose stock have relatively low liquidity and may be more prone to manipulation. However, do these concerns justify not permitting small companies – that may be in greater need for capital than larger, listed companies – to use shelf registration statements and quickly access the capital markets when timing and other conditions are ideal? I look forward to reviewing a readout of Dan Zinn’s thoughts on this and other issues facing small, unlisted companies, as well as the Committee’s discussion on potential solutions to those issues.
Thank you, and I hope that you have a productive meeting.
[1] Mark T. Uyeda, Remarks at the Florida Bar’s 41st Annual Federal Securities Institute and M&A Conference (Feb. 24, 2025), available at https://www.sec.gov/newsroom/speeches-statements/uyeda-remarks-florida-bar-022425.
[2] See, e.g., Mark T. Uyeda, Remarks at the Practising Law Institute’s 55th Annual Institute on Securities Regulation (Nov. 7, 2023).
[3] See rule 415(a)(1)(x) and Form S-3 General Instructions I.B.1 and I.B.6.
