• ASA Newsroom

ASA Calls on SEC to Refocus on Capital Formation


WASHINGTON, D.C. - Today, the American Securities Association (ASA) sent a letter to U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler in advance of the Small Business Capital Formation Advisory Committee’s October meeting.

“As a leader in the debate to improve capital formation in the U.S. economy, ASA continues to be disappointed in the SEC’s lack of a capital formation agenda,” ASA CEO Chris Iacovella said. “In fact, many of the agency’s recent rules would negatively impact small business and increase compliance costs for public companies.”

In January, ASA sent a letter to the SEC expressing its capital formation priorities, including improving research coverage for pre-IPO and small public companies and not imposing MiFID II rules on U.S. broker-dealers without going through the notice comment process. Unfortunately, SEC staff indicated in July of 2023, that U.S. broker-dealers can no longer rely on the 2017 no-action letter that allows them to continue receiving hard-dollar payments without having to register under the Advisers Act.

“To combat the drop in research coverage of small and medium enterprises (SMEs) who create jobs in this country, broker-dealers must continue to be permitted to receive hard-dollar payments for research from clients without having to register as investment advisers,” Iacovella said. “While the SEC’s limited no-action relief for advisors has helped, a permanent solution is necessary and any change in agency rules must go through a public notice and comment process.”

“If the SEC reverses its no-action position without following the APA, then an EU regulation not publicly debated in this country would apply to U.S. broker-dealers. This would result in far-reaching consequences—including a decline in research coverage for small issuers, a further disincentive for companies to go public in the United States, and a competitive advantage for the largest Wall Street firms over other broker-dealers,” Iacovella said.

###