During their July 15 open telephone meeting, the SEC’s Advisory Committee on Small and Emerging Companies continued discussion on the regulatory treatment of “finders” and disclosure effectiveness relating to small businesses.
The Committee acknowledged the importance of “finders” and other intermediaries in the capital-raising efforts of small businesses, citing limited broker-dealer involvement due to the smaller deal sizes these efforts yield. It was expressed that although “finders” and similar intermediaries have always been present in our economic system, they currently operate outside regulatory guidance. In order to legitimize this practice and move forward with any recommendations to the SEC, the Committee agreed that certain issues such as the definition and segmentation of covered persons, scope of activities of “finders,” thresholds, disqualifications and regulation and reporting should first be considered and resolved.
The Committee also announced the SEC’s continued consideration of the recommendations made on February 1, 2013 regarding regulatory relief provided to smaller reporting companies with regard to disclosure. The Committee discussed expanding this regulatory relief to include relief provided to EGCs under the JOBS Act. Specific issues and considerations were identified to achieve this proposed expansion, of which the effectiveness of disclosing the ratio of median annual total compensation of all employees to that of CEOs garnered further deliberation, as did mandatory audit firm rotation requirements. Additionally, the definition of an “accelerated filer” was proposed as a topic of discussion for the upcoming September committee meeting.
A full replay of the meeting webcast will be made available on the SEC website: http://www.sec.gov/news/otherwebcasts/2015/advisory-committee-small-emerging-companies-071515.shtml