Legal
Regulation A’s Destiny a Big Unknown
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SEC Silent on Promise of Expanded Size and Broadened Investor Eligibility
Some six months after the JOBS Act became law, the Securities and Exchange Commission has primarily focused on providing guidance for emerging growth company initial public offerings and on proposing rules to lift the ban on general solicitations for Rule 506 offerings under Regulation D. Rules specific to crowdfunding are expected to surface early next year. Yet nothing but silence surrounds rulemaking or guidance that would clear the way for issuers to sell up to $50 million in unregistered securities under Regulation A – up from $5 million today – to any investor regardless of income or net worth criteria. Unlike its mandates on other provisions in the JOBS Act, Congress didn’t give the SEC a deadline to address the exemption, which has been informally dubbed “Regulation A+.”
So even though the commission has sought comments on it, it’s unknown when the agency might take up the matter. SEC officials could not be reached. Yet how the commission crafts rules could determine whether companies actually use the financing option, observers say.
