Public firms must submit to regulation by the Securities and Exchange Commission (SEC) and the exchange on which their shares are traded. Regulation means more paperwork to file and more attorneys’ fees to ensure that laws are not unintentionally broken. In the US, public firms must file annual and quarterly reports with the SEC, and corporate insiders who buy and sell the firm’s stock must report their transactions to the SEC. The firm must register most public offerings of securities (including the initial public offering) with the SEC and receive SEC approval before selling the securities to the public. Experts on public policy have known for some time that most employment growth in the US comes from small businesses. To foster future growth, in 1992 the SEC adopted a series of rules to make it easier for small firms to raise public equity finan- cing. The new regulations allow a firm to evaluate the potential market for its shares before committing to the time and expense of preparing a formal offering document. Firms are allowed to raise up to $1 million without registering the sale with the SEC. They can register securities worth up to $5 million through the simpler and less costly Regulation A process rather than undergoing a full SEC review. The SEC estimates that the new regulations will reduce the cost of raising public equity by smaller firms by up to one-third. In addition, small public firms (by SEC definition, whose with sales less than $25 million and market values of equity below $25 million) will be able to file shorter, less comprehensive quarterly and annual SEC reports, thus reducing management’s paperwork time and costs.