A group representing small business investors joined larger funds in calling for changes to a proposed Securities and Exchange Commission rule that would place conditions and fund limits on using derivatives.
The SEC’s rule, first proposed in December, would place overly burdensome restrictions on business development companies that invest in small- and medium-sized firms, Small Business Investor Alliance President Brett Palmer said in a March 28 comment letter to the SEC.
Palmer said the rule doesn’t differentiate enough between funds regulated by the Investment Act of 1940, also known as ’40 Act funds. He said the failure to distinguish business development companies from other funds “goes in the opposite direction of what Congress intended, for instance, by capping their use of derivatives to that of what a ’40 Act fund should be doing, or by treating their revolving lending facilities as financial commitment transactions, thereby subjecting them to coverage requirements.”
The Small Business Investor Alliance, a Washington-base