Tobin J Arthur • March 25, 2015

onemedBrett Johnson of OneMedPlace has closely followed the progression of the pending Regulation A+ rules. Today he posted this update with the hope that the SEC vote to approve is forthcoming.

“Three years after the signing The JOBS Act into law Title IV (Regulation A+) may finally become a reality. If the Commissioners follow the unanimous recommendations of the Advisory Committee they will vote for preemption of states involvement in securities offerings.  This would eliminate a major obstacle for issuers (a second tier of regulation that creates cost and uncertainty for smaller public issuers) and could help return small IPOs to the levels that once existed when America was the global leader in taking companies public. It would deliver a victory for the Obama Administration 1

This vote comes on the heels of a March 4th meeting at the SEC in which discussed the need for Venture Exchanges 2 and improving Secondary Markets in private securities by experts David Weild, Vince Molinari, AnnMarie Tierney and Michael Pieciak. SEC head Mary Jo White attended the hearing throughout the day as did at least two other SEC commissioners underscoring the SECs recognition of the need to improve small company capital formation.

To watch video from archive link CLICK HERE.

Reg. A+ is an important first step in bringing back small IPOs which once represented 80% of all IPOs in the United States.  This law, which has been referred to as “IPO lite,” would significantly decrease the costs of companies raising up to $50 million in gross proceeds to prepare, file and maintain disclosure statements with the SEC.  The heart of the discussion revolved around Regulation A and the preemption of state-by-state Blue Sky laws that require companies to also be reviewed and approved by individual State regulators before issuing shares to the public. The added cost, delay and uncertainty and the current pre-JOBS Act limit of $5 million has made Reg. A unattractive. It has been used infrequently since it was created in 1934 in an effort to stimulate job growth in response to the Great Depression of 1929-1939.  States don’t like preemption because 50 State commissioners are neutered and cut out of the action which can include the collection of state filing fees. Recognizing this, their organization, the North American Securities Administrators Association (NASAA) presented a creative solution: Coordinated Review. This creates a point person at one state would then pass judgment on behalf of all 50. But the sentiment of the committee was that this still forces a company to go through a second regulatory hurdle and that behind the scenes, you still have not eliminated the cost, delays and unpredictability of gaining approval in the underlying states. State regulators would still judge the merits of an offering as they did in 1980 when Massachusetts denied Apple Computer the right to offer shares within Massachusetts in their IPO. They felt it was too risky.”

To read Brett’s full post CLICK HERE.

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