Good afternoon. It is a pleasure to address the 43rd Annual Small Business Forum.

In 1980, Congress required this annual Forum to assess the state of play in small business capital formation – one of the three fundamental pillars of the SEC’s statutory mission.

With U.S. equity markets representing nearly half of the world’s equity market cap, today’s discussions on lessons learned from going public and staying public are timely and on point.

Fulfilling our capital formation mission in as broad-based a manner as possible includes promoting and facilitating robust participation by small cap companies in our equity markets.

There is a lively debate about the widening gap between capital raised in private versus public markets, and the possible risks and implications of this trend.

As a general principle, retail investors benefit when companies go public. It results in a higher supply and greater diversity of companies to choose from when making investment decisions.

Access to expanded investment choices, all accompanied by the disclosure, liability, and other protections that come with securities registration, leads to healthier, more robust, and more transparent public markets.

For small cap companies, it can be more challenging to navigate a complex regulatory framework, compete for research analysts’ attention, or ensure sufficient liquidity in the secondary market.

If the dominant model becomes billion-dollar unicorns being backed by many rounds of VC funding and then going public as mega cap companies, it would work against the goal of broad-based capital formation.

At the Commission, our scaled disclosure requirements and phased-in compliance dates are two ways in which we address some of the unique challenges that smaller public companies face.

Under the climate risk disclosure rule finalized last month, smaller reporting companies are exempt from the greenhouse gas emissions and attestation requirements. These companies also benefit from a delayed compliance period, in recognition that additional time is helpful for them to get up to speed as they prepare disclosures for the first time.

Similarly, in the cyber incident reporting rule, smaller reporting companies were provided with additional time to phase in compliance. The Commission adopted the same approach in its reforms to insider trading rules for corporate insiders.

That said, aspiring to improve how we implement our capital formation mission is a worthwhile endeavor, one that best serves the public interest.

To that end, today’s Forum will hopefully yield new and innovative ideas that inform how the Commission can best fulfill its capital formation mission. 

Thank you to Courtney and to today’s panelists, and I look forward to gaining new insights from the discussion.