SEC to Ease Small Company Stock Rules : Securities: Critics say the move will leave small investors more vulnerable to scams.

The Securities and Exchange Commission voted Wednesday to loosen regulations to make it easier and cheaper for small companies to raise money in the stock and bond markets.

The plan would permit small businesses--many of which have suffered from a dearth of bank loans--to use simpler forms when they register securities offerings with the SEC and when they disclose information to investors.

In addition, the SEC, which wants to cut small companies’ legal and accounting bills, will ease rules so that companies no longer will have to register certain stock and bond sales.

The new rules will apply to companies with up to $25 million in annual revenue and $25 million in outstanding stock in public hands.

At least a third of the 11,500 companies that regularly report results to the public would be affected by the initiative--which SEC Chairman Richard C. Breeden hailed as possibly one of the “most significant” for the SEC in years.

Breeden said the SEC’s efforts “won’t end capital problems for small businesses, but they will help in an important way.”

While the plan has been hailed by many businesses, state regulators and others have blasted it, saying the measures will leave small investors more vulnerable to scams and will not provide needed relief to companies.

State officials also have accused the SEC--whose chairman is a Republican--of playing election-year politics by trying to curry favor with the small business community.

The agency’s “Small Business Initiative” will:

* Allow small companies to sell up to $5 million a year of securities through Regulation A offerings. The current ceiling on such sales, which involve simpler offering forms, is $1.5 million.

* Give companies the option to use an easier question-and-answer registration form for Regulation A sales.

* Permit small companies to publish information about their business before they actually put their securities up for sale. That would allow a company to “test the water” for interest in its stocks and bonds ahead of time.