The Securities and Exchange Commission is requesting public comment on ways to simplify, harmonize, and improve the exempt offering framework to expand investment opportunities while maintaining appropriate investor protections and to promote capital formation.
“We are taking a critical look at our exemptions from registration to ensure that our multifaceted private offering framework works for investors and entrepreneurs alike, no matter where they are located in the United States,” said SEC Chairman Jay Clayton. “Input from startups, entrepreneurs, and investors who have first-hand experience with our framework will be key to our efforts to analyze and improve the complex system we have today.”
The concept release seeks input on whether changes should be made to improve the consistency, accessibility, and effectiveness of the Commission’s exemptions for both companies and investors, including identifying potential overlap or gaps within the framework. It also considers, among other things, whether:
- The limitations on who can invest in certain exempt offerings, or the amount they can invest, provide an appropriate level of investor protection or pose an undue obstacle to capital formation or investor access to investment opportunities;
- The Commission should take steps to facilitate a company’s ability to transition from one offering to another or to a registered offering;
- The Commission should expand companies’ ability to raise capital through pooled investment funds;
- Retail investors should be allowed greater exposure to growth-stage companies through pooled investment funds such as interval funds and other closed-end funds; and whether
- The Commission should revise its exemptions governing the secondary trading of securities initially issued in exempt offerings.
On June 18, the Commission also released a staff report on the impact of Regulation Crowdfunding on capital formation and investor protection, which was required to be provided to the Commission no later than three years following the effective date of the crowdfunding rules. The relevant findings of the report are discussed in the concept release.
The public comment period for the concept release will remain open for 90 days following publication of the release in the Federal Register.