Bill Overview
Title: Unlocking Capital for Small Businesses Act of 2022
Description: This bill revises the regulatory treatment of private-placement brokers (brokers who receive transaction-based compensation for the sale of securities to preselected individuals or institutions) and finders (private-placement brokers who do not exceed a specified amount of compensation, transaction value, or number of transactions in a year). Specifically, the bill (1) requires the Securities and Exchange Commission to establish registration requirements for private-placement brokers that are no more stringent than those imposed on crowdfunding portals, (2) allows for membership in any national securities association for private-placement brokers, (3) exempts private-placement brokers from broker regulations, and (4) otherwise modifies provisions related to private-placement brokers and finders.
Sponsors: Rep. Budd, Ted [R-NC-13]
Target Audience
Population: People involved in private placement market
Estimated Size: 500000
- The bill primarily affects private-placement brokers and 'finders', who are involved in the marketing and sale of private securities.
- These private-placement brokers include professionals who facilitate investment opportunities for small businesses with individual or institutional investors.
- The Securities and Exchange Commission is tasked with establishing lighter registration requirements for these brokers, which could encourage more individuals to operate as private-placement brokers due to reduced regulatory burdens.
- Small businesses seeking capital could be positively impacted due to potentially easier access to private placement investments.
- The overall investment community, including angel investors and venture capitalists who often work with finders, will also experience changes in how they engage within the market.
Reasoning
- The policy might primarily benefit individuals involved in the market for private placements, such as brokers and finders, particularly in reducing their regulatory burden.
- Small business owners seeking capital could also experience positive effects, making it easier to find investors.
- Some individuals might experience no impact if they are not directly involved in any form of capital-intensive business operations or securities trading.
- Witnessing the positive impacts would likely take time, and initial monetary effects could be limited due to the modest budget.
- The largest effects will be seen in financial hubs due to the higher concentration of related professionals.
Simulated Interviews
Private Placement Broker (New York, NY)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- The reduced registration requirements will make my job easier and less costly.
- I can take on more clients and focus on matching startups with investors.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 7 |
| Year 10 | 9 | 6 |
| Year 20 | 8 | 6 |
Small Business Owner (Los Angeles, CA)
Age: 32 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- Access to capital is critical for my business growth.
- If brokers can more easily connect me with investors, this policy is very beneficial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
Investment Firm Analyst (Chicago, IL)
Age: 28 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 10/20
Statement of Opinion:
- This policy could expand my firm's opportunities to invest in privately-held companies.
- Fewer regulations may increase the number of business ventures available for investment.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Economic Policy Advisor (Austin, TX)
Age: 50 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 15/20
Statement of Opinion:
- The policy seems like a double-edged sword; while it reduces barriers, it could increase fraudulent activity if not monitored closely.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Independent Financial Advisor (Miami, FL)
Age: 41 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 13/20
Statement of Opinion:
- I see potential for growth in my client base with easier regulatory processes.
- However, there may be increased competition for these services.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 8 | 5 |
Entrepreneur (San Francisco, CA)
Age: 26 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- If this makes it easier to find investors, it is a big win for someone in my position.
- Getting the initial seed fund is pivotal.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Retired (Seattle, WA)
Age: 60 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 20/20
Statement of Opinion:
- Personally, I doubt this policy will directly affect me.
- I don't rely on brokers for my small-scale investments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Regulatory Compliance Officer (Boston, MA)
Age: 38 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- This policy could modify compliance processes, both reducing and complicating duties depending on the implementation.
- We need to track potential increases in non-compliance from new entrants.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 5 |
Small Business Investor (Denver, CO)
Age: 47 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 9/20
Statement of Opinion:
- I hope this makes it easier to navigate regulations and find new investment opportunities.
- The policy could open up more viable ventures.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 5 |
Legal Consultant (Atlanta, GA)
Age: 29 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 11/20
Statement of Opinion:
- The change in regulations will provide more work for legal reviews to ensure compliance.
- It's a positive shift for my business as more looking for guidance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 6 |
Cost Estimates
Year 1: $2000000 (Low: $1500000, High: $2500000)
Year 2: $1800000 (Low: $1400000, High: $2200000)
Year 3: $1500000 (Low: $1200000, High: $1800000)
Year 5: $1200000 (Low: $900000, High: $1500000)
Year 10: $1000000 (Low: $700000, High: $1300000)
Year 100: $1000000 (Low: $700000, High: $1300000)
Key Considerations
- The regulatory changes could significantly impact the dynamics of the private placement market, impacting a substantial number of small businesses and investors.
- Long-term effects might align with economic cycles; the true impact might materialize over several years.
- Legal and operational adjustments by affected parties could shape the future savings and costs associated with the policy.