Capital Offense: The SEC’s Continuing Failure to Address Small Business Financing Concerns

NYU Journal of Law and Business, Vol. 4, No. 1, Fall 2007

University of Florida Levin College of Law Research Paper No. 2011-01

89 Pages Posted: 27 Jan 2011  

Stuart R. Cohn

University of Florida - Levin College of Law

Gregory C. Yadley

Shumaker, Loop and Kendrick, LLP

Date Written: August 10, 2007

Abstract

Despite years of criticism from small business advocates, the Securities and Exchange Commission has made little effort to ameliorate the severe burdens on small companies seeking to raise capital in compliance with the Securities Act of 1933 and SEC regulations. Substantial SEC attention has been given in recent years to improving the capacity of large, publicly-held companies to market securities, but smaller companies have suffered from less-than-benign neglect. Responding to this concern, the SEC recently adopted several proposals, and has others pending, aimed at small business financing. These proposals and adoptions, while modestly helpful, fall far short of addressing the capital formation problems caused principally by SEC regulation and interpretations. In this article, the authors examine the principal hurdles facing small businesses seeking to raise capital under the securities laws, analyze the background and potential bases for the current regulatory regime, offer a critique based upon the twin goals of protecting investors and providing meaningful financing opportunities for smaller businesses and set forth reform recommendations.

Suggested Citation

Cohn, Stuart R. and Yadley, Gregory C., Capital Offense: The SEC’s Continuing Failure to Address Small Business Financing Concerns (August 10, 2007). NYU Journal of Law and Business, Vol. 4, No. 1, Fall 2007 ; University of Florida Levin College of Law Research Paper No. 2011-01. Available at SSRN: https://ssrn.com/abstract=1749610 or http://dx.doi.org/10.2139/ssrn.1749610

Stuart R. Cohn (Contact Author)

University of Florida - Levin College of Law ( email )

P.O. Box 117625
Gainesville, FL 32611-7625
United States

Gregory C. Yadley

Shumaker, Loop and Kendrick, LLP ( email )

North Courthouse Square
1000 Jackson
Toledo, OH 43624-1573
United States

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