Businesses have argued that the rule will make it easier for them to raise capital and create jobs.

“You're talking about companies that are further along in their lifecycle and are looking for millions of dollars,” said D.J. Paul, a fundraising consultant for small companies who sits on an SEC advisory committee. “Those tend to be companies that deploy that money toward the creation of jobs and actual research and development.”

High-Frequency Trading

Investors who put money into firms through the mini-IPOs could eventually trade the shares on so-called venture exchanges, which are being studied by the SEC. The less-regulated markets could become a home for smaller companies whose shares trade less frequently, SEC Chair Mary Jo White said last month.

State officials have fought efforts to limit their involvement in smaller stock offerings, saying such deals are often risky and can be a source of fraud. Under the SEC's rules, they will retain the authority to vet offerings under $20 million that lack standard financial disclosures, such as audited statements and periodic financial updates.

Companies that provide the enhanced disclosures and limit the participation of less wealthy investors will be able to avoid state review of their deals.

The SEC also unanimously approved a proposal that all high-frequency traders register with the Financial Industry Regulatory Authority (Finra), the brokerage industry's self-regulator. Some proprietary-trading firms have taken advantage of a regulatory exemption to avoid Finra oversight of their business.

The SEC's plan would change that, giving Finra the ability to conduct compliance exams and bring enforcement actions for violations.

“This measure would significantly strengthen regulatory oversight over active proprietary trading firms and the strategies they use,” White said.

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