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Word Games: Finding Common Ground in the Reg A+ Preemption Fight
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Towering above the barren legislative landscape of the 112th and 113th Congresses is the singular bipartisan achievement of their obstreperous tenancy – the JOBS Act of 2012.
Legal
NASAA Uses Congressional Back Channels to Fight SEC on Reg A+ Pre-emption
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The North American Securities Administrators Association (NASAA) commanded a private sit down with SEC Chairwomen Mary Jo White and Commissioner Luis Aguilar on April 9 to discuss federal pre-emption issues the state securities regulators group sees as a problem in the proposed rulemaking on Regulation A+, the expanded securities offering exemption mandated by the JOBS Act. A former SEC director, Tom Sporkin of BuckleySandler, has been hired by the group to put muscle behind the association’s threats fight the proposed exemption rule, which would allow issuers to bypass state blue sky laws if they are raising less than $50 million of capital. Sporkin attended the April 9meeting with the commissioners. Faith Anderson, NASAA’s general counsel, told Growth Capital Investor in an interview that her take-away from the meeting was, “the SEC wants to have a partnership with the states,” and she thinks the coordinated state review process NASAA has developed would be seriously considered by the SEC. Of the 53 territories that currently have the power to regulate whether companies can issue debt and issue equity securities to investors, 48 have signed on to the streamlined review process.
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Regulation A+: A Sleeping Giant for Small Business Capital Formation?
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Since the 1930s Regulation A has been unremarkable as a little known and little used “exemption” from the full SEC registration process – intended to allow smaller companies to access public markets through a streamlined SEC registration process – with “reviewed”
Legal
Secondary Market Key to Success of New Reg A+ Offerings
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The development of a reasonably liquid secondary market for trading securities issued under the newly reformed Regulation A exemption proposed by the Securities and Exchange Commission is critical to the future growth and success of the offering structure for raising emerging growth capital, say both its proponents and critics. Without one, many cap markets pros say the new Tier II “A+” offerings will offer few advantages over the standard S-1 registered offerings while incurring most of the costs, and continue to be the neglected stepchild of the public offerings market. But with a secondary market to facilitate investor exits, Reg A+ boosters see a Goldilocks-like equity offering structure that could become the go-to channel to bridge young private emerging growth companies, some of them financed via publicly marketed private offerings, into the public markets. The SEC published a draft of the reformed Reg A rules in late December as an amendment to the Securities Act labeled Section 3(b)(2). The proposal splits Reg A offerings into Tier I and Tier II types.
