The Securities and Exchange Commission has requested public comment on ways to simplify and improve private securities offerings in order to expand investment opportunities while maintaining investor protections and promoting capital formation.
“We are taking a critical look at our exemptions from registration to ensure that our multifaceted private offering framework works for investors and entrepreneurs alike, no matter where they are located in the United States,” said SEC chairman Jay Clayton. “Input from startups, entrepreneurs and investors who have first-hand experience with our framework will be key to our efforts to analyze and improve the complex system we have today.”
The SEC is requesting comment on the following:
- Is the SEC’s exempt offering framework, as a whole, consistent, accessible, and effective for both companies and investors or should the SEC consider changes to simplify, improve, or harmonize the exempt offering framework?
- Should there be any changes to improve, harmonize, or streamline any of the capital raising exemptions, specifically: the private placement exemption and Rule 506 of Regulation D, Regulation A, Rule 504 of Regulation D, the intrastate offering exemptions, and Regulation Crowdfunding?
- Are there gaps in the SEC’s framework that may make it difficult, especially for smaller companies, to rely on an exemption from registration to raise capital at key stages of their business cycle?
- Do the limitations on who can invest in certain exempt offerings, or the amount they can invest, provide an appropriate level of investor protection (i.e., are the current levels of investor protection insufficient, appropriate, or excessive), or do the limitations pose an undue obstacle to capital formation or investor access to investment opportunities, including a discussion of the persons and companies that fall within the “accredited investor” definition?
- Should the SEC do more to allow companies to transition from one exempt offering to another and, ultimately, to a registered public offering, if desired, without undue friction or delay?
- Should the SEC take steps to facilitate capital formation in exempt offerings through pooled investment funds, including interval funds and other closed-end funds, and should retail investors be allowed greater exposure to growth-stage companies through pooled investment funds in light of the potential advantages and risks of investing through such funds?
- Should the SEC revise its rules governing exemptions for resales of securities to facilitate capital formation and to promote investor protection by improving secondary market liquidity?
Click here to view the full concept release. Interested parties can submit comments to any or all topics of interest and/or can respond to one, multiple, or all questions. The public comment period will remain open for 90 days following publication in the Federal Register.