By SBIA | January 17, 2018
SBIA’s BDC Council is pleased to share formal recommendations with the SEC for a series of reforms to improve capital access and market efficiency for middle market and lower middle market businesses. In a letter to SEC Chair Jay Clayton, BDC Council Executive Director Tonnie Wybensinger and Council Chair Ian Simmonds outlined the adverse impacts of the SEC’s AFFE rule on BDC investors, including decreased liquidity, reduced institutional ownership, and fewer key investor protections.
Business Development Companies, or BDCs, make direct investments in small and middle market U.S. businesses, providing essential growth capital to help create jobs and spur economic development. While BDCs fill a critical need in the capital access framework, they also provide key investment opportunities for retail investors and retirees.
The consequences of the SEC’s cumbersome AFFE rule, though unintended, have caused several major indices to exclude BDCs from eligibility, closing off valuable investment opportunities and causing BDC investors to exit the sector.
SBIA’s BDC Council calls on the SEC to act quickly and make the regulatory or guidance changes necessary to alleviate the negative impacts of its AFFE rule.