September 25, 2019

ICI and MFA Respond to SEC Concept Release on Securities Act Registration Exemptions

The Investment Company Institute ("ICI") and the Managed Funds Association ("MFA") responded to an SEC concept release on Securities Act registration exemptions that facilitate capital raising.

As previously covered, 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). In the concept release, the SEC stated that the U.S. capital markets would benefit from a comprehensive review of the design and scope of the framework.

The ICI recommended that the SEC foster investor protection by:

  • easing regulatory burdens in order to encourage growth in registered funds;

  • recognizing the key differences between private and public market offerings that would make private market offerings unsuitable for direct investment by retail investors; and

  • increasing retail investors' access to private markets through regulated funds.

The MFA stated that the SEC's existing framework for exempt offerings "functions well in many respects," and urged the SEC not to make changes that would disrupt the use of existing exemptions from registration. In particular, the MFA asked that the SEC not propose substantive changes to Rule 506 of Regulation D.