Easing Curbs on ‘Going Public’ Urged : * Stocks: SEC Chairman Breeden wants to help small businesses raise cash through stock offerings during the credit crunch.

Less than a week after stepping into the fray over big pay for corporate executives, the nation’s top stock regulator is proposing ways to help small business raise money during the credit crunch.

Securities and Exchange Commission Chairman Richard Breeden was prepared to outline proposals to lift the regulatory burden on small companies that can’t afford to “go public”--raising money through a public stock offering.

While more and more companies have been going to the securities markets to raise money, Breeden says not all can afford to pay the registration fees and hire the lawyers and accountants necessary to comply with the mountain of SEC regulations.

Breeden is expected to outline his agenda for the remaining two years of his term in a speech Tuesday before the National Press Club in Washington.

SEC officials said last week that final details were still being worked out on the capital-raising proposals. But Breeden has already revealed parts of his plan, including:

* Simplifying SEC disclosure forms required of companies seeking to sell stock or bonds to the public.

* Widening the number of companies that qualify to use existing SEC small-company forms, which are cheaper and easier than the weighty disclosure required of corporate giants such as Exxon and IBM.

* Increasing beyond 10% the amount of stock a mutual fund or other investment company can invest in a single company.

Breeden’s plans, which have raised concerns among state-level regulators and bankers, are expected to bring allegations that he’s shifting the SEC’s position on hot political issues in a presidential election year.

But Breeden, a former White House aide, has denied any political motivation behind the small-business proposals or plans to give shareholders a say on executive compensation packages.

“The principal focus here is to make it easier for smaller companies to enter the public marketplace,” Breeden said.

Traditionally, banks have been the main source of capital for small, growing companies, but the current banking crisis has sharply cut the amount of money available for new loans.

People familiar with the SEC proposals say new, simplified forms, using a question and answer format, would be easier for investors to read as well as for companies to complete without requiring high-priced legal help.

Companies now cannot begin soliciting potential investors until their registration is approved by the SEC. Another Breeden proposal would allow small companies to “test the waters” to see if there is a market for their securities before committing their resources to registration fees.

Traditionally, banks have been the main source of capital for small, growing companies. But the current banking crisis has sharply cut the amount of money available for new loans.

“The banking system is simply not providing the volume of loans that it did before,” Breeden said. But the alternative of trying to raise money in the securities markets can be too expensive.

“Those costs are very similar whether the amount of securities you’re registering is $3 million or $300 million,” Breeden said.

While small companies have applauded Breeden’s proposals, other sectors have adopted a wait-and-see attitude.

“We’re cautiously intrigued,” said Diane Casey, executive director of the Independent Bankers Assn. of America, whose members--mostly small-town and country bankers--could suffer a big loss of business if small companies are allowed to raise money elsewhere.

State regulators, most of whom require additional paperwork and fees to settle sales of securities in their jurisdictions, point out that a simplified registration form is not a new idea.

The North American Securities Administrators’ Assn., a group of state-level stock regulators, said 30 of its member states have been using a simplified, fill-in-the blanks form known as the Small Corporate Offering Registration, or SCOR, form since 1989.

The group is also worried that a “quick political fix,” in the words of Massachusetts’ Deputy Secretary of State Neal Sullivan, might upset the delicate balance between protecting investors and encouraging investment in fledging companies.

“Our worst fear is that someone will just jump in for the sake of doing something quickly, disrupting the system and permitting, through deregulation, a lot of fraud in the marketplace,” said NASAA President Lewis Brothers, who is also director of Virginia’s Division of Securities and Retail Franchising.