MFA Submits Comments in Response to SEC-Proposed Amendments to Reg. D, Form D and Rule 156

The Managed Funds Association ("MFA") submitted a letter to the SEC regarding the SEC's proposed amendments to Securities Act Regulation D, Form D, and Rule 506.

In the letter, MFA asserted that many of the proposed amendments are duplicative and unnecessary in light of the existing information and regulatory oversight of the private funds advised by SEC-registered advisers and their activities. The letter recommended that certain changes be made to the proposed amendments that would enable regulators to monitor general solicitation activities while ensuring that firms were able to avail themselves of the benefits of the JOBS Act. MFA's comments included the following:

• the elimination of the advance Form D filing requirement, which MFA believes imposes an unnecessary burden on issuers seeking to access the private capital markets;
• the reconsideration of the requirement to file a closing Form D amendment, which MFA believes is not workable for hedge funds or other issuers that engage in continuous offering, given that it is not clear when, if ever, an offering ends;
• the reconsideration of information required by Item 3 (information about persons who control the issuer) and Items 14 and 17 (information as to investors) of Form D, which MFA believes would require additional information not appropriate for public disclosure in a Form D; and
• the reconsideration of the automatic one-year disqualification from relying on Rule 506 for future offerings by an issuer (and its successor and affiliates), which MFA states is an "onerous and disproportional penalty for failure to timely file Form D, especially in light of the continuing uncertainty surrounding what activities constitute general solicitation," and which could adversely impact existing private fund investors;
• the observation that the expansion of Rule 156 under the Securities Act (Investment Company Sales Literature) to private funds is not appropriate; and
• the observation that the requiring of funds to submit all written general solicitation materials to the SEC is not necessary, particularly since funds will be required to retain these materials in their files for inspection by the SEC.

See: MFA Comment Letter to SEC; MFA Blog Press Release. To see the text of proposed revised Form D, go to the page 173 of SEC Release 33-9416.Related News: SEC Publishes Revised Form D (September 23, 2013) SEC Publishes Small Entity Compliance Guide on Rule 506 Disqualifications (September 23, 2013);SEC Publishes Final Rule Amendments to Rule 506 and Rule 144A in Federal Register (July 24, 2013) The SEC Approves JOBS Act Rules (with Delta Strategy Group Meeting Summary) (with Lofchie Comment) (July 10, 2013).