The SEC issued a concept release reviewing the framework for exempt offerings (largely focused on private placements, but also covering other topics, such as intrastate offerings and Regulation Crowdfunding). The agency is requesting public comment on ways to simplify, harmonize and improve the agency's framework. The SEC staff also published a report on market experience with Regulation Crowdfunding.
In the concept release, the SEC noted that, because several exemptions from registration have been introduced, expanded or otherwise revised, U.S. capital markets would benefit from a comprehensive review of the design and scope of the framework. The SEC is intending, through revisions to the exempt offering framework, to expand investment opportunities and promote capital formation while maintaining appropriate investor protections.
The concept release seeks input on, among other things, whether:
the SEC's exempt offering framework is "consistent, accessible, and effective" for companies and investors;
the SEC should consider changes to "simplify, improve, or harmonize" the exempt offering framework;
there should be any changes to streamline the capital-raising exemptions within the framework;
there are gaps in the framework that make it difficult to rely on an exemption from registration to raise capital at key stages of the business cycle;
the limitations on "who can invest in certain exempt offerings, or the amount they can invest, provide an appropriate level of investor protection" or "pose an undue obstacle to capital formation or investor access to investment opportunities";
the SEC should do more to allow companies to transition from one exempt offering to another and, eventually, to a registered public offering without undue friction or delay;
the SEC should take steps to facilitate capital formation in exempt offerings through pooled investment funds;
retail investors should be allowed greater exposure to growth-stage companies through pooled investment funds; and
the SEC should revise its rules governing exemptions for "resales of securities to facilitate capital formation and to promote investor protection by improving secondary market liquidity."
Separately, the SEC released a staff report on the "impact of Regulation Crowdfunding on capital formation and investor protection." The findings of the report that are relevant are assessed in the concept release. Notably, while the staff report is quite comprehensive, it does not provide information as to whether investors in crowdfunding transactions made or lost money.
The comment period will remain open for 90 days from the publication of the release in the Federal Register.
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