Legal
Mary Jo White

SEC’s White Reiterates Support for Tick Size Pilot

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Seems that the SEC’s new head is both tough and flexible – flexible in her approach to the plight of stranded emerging growth companies without support from market-makers and research analysts. In recent appearances Mary Jo White, the agency’s new chair, has declared that a “one size fits all” approach to the markets is a poor model for securities regulation, and that one example of how poorly such an approach works is in the area of share price decimalization. Just last week White reiterated her support for a tick size pilot program that would study whether increasing the minimum pricing increment for small cap company shares – or allowing companies to choose their own “tick” size – would create greater liquidity by encouraging market-making and sell-side research coverage of emerging growth companies. The comments, coming in remarks White made at a securities traders association conference in Washington last week, reiterated her earlier statements that the tick size study should be greenlighted sooner rather than later. White told reporters that she had instructed SEC staff to move ahead with developing a tick size pilot program with the major U.S. exchanges.

Legal
SEC

Repeal of General Solicitation Ban Ushers in New Era for Private Offerings

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Last week’s long-anticipated repeal of the ban on public advertising of private securities offerings either ushers in a new era of transparent, information-rich, digitally-greased, and crowd-vetted capital markets, or it is a leap into the abyss that will pervert the most trusted capital markets in the world into a carnival midway of investment hustlers, crowd madness panderers and common thieves. That seems to be the consensus, or lack thereof, of regulators and growth capital professionals surveyed in the wake of the SEC’s action to implement the mandate set by Congress a year ago when it passed the JOBS Act. On July 10, the Securities and Exchange Commission held an open meeting regarding its nine-month old proposal to repeal the ban on the advertising and general solicitation of Regulation D securities offerings. Although the amendment, known as Rule 506(c), was ultimately adopted, concerns regarding investor protection were raised by two commissioners, Elisse Walter and Luis Aguilar. 

Walter’s concerns about the risks of fraud and the promotion of investments inappropriate to less sophisticated investors came short of persuading her to vote against the repeal. Aguilar was blunter in his criticism, decrying the Commission’s move to repeal the ban before approving additional mitigating rules aimed at keeping “bad actors” out of the market and strengthening disclosure requirements for private offerings.

Legal

FINRA Readies Crowdfunding Portal Rules for Comment

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FINRA’s executive board approved the publication for comment of proposed rules for regulating equity crowdfunding portals created under Title III of the JOBS Act at its regular meeting July 11. The proposed rules address among other things the membership application process for funding portals, fraud and manipulation, just and equitable principles of trade, communications with the public, supervision and anti-money laundering. FINRA expects to publish the Notice when the SEC releases its proposed rules pursuant to Title III of the JOBS Act for comment.  

Markets

Forum Fuels Ideas, Offers Little on JOBS Act Timing

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With few exceptions, the Securities and Exchange Commission’s annual Government-Business Forum on Small Business Capital Formation has been an exercise in futility over the last several years: Participants typically recommend promising reforms to facilitate small company finance, but year after year the suggestions go nowhere. This year, however, the 31st rendition of the meeting on Thursday centered not on mere proposals but on The JOBS Act, the bipartisan piece of legislation geared toward loosening regulations on small companies and making it easier for them raise capital. Yet in one sense the forum produced the same ineffective vibe as it had in past years. JOBS Act topics discussed – including crowdfunding, Regulation A reform and the removal of the ban on general solicitation in Rule 506 offerings – are in limbo and are likely to remain in that state for some time. Commission staff gave no indication as to when it would release rules to implement the provisions, which in April were signed into law.