Securities Regulation Daily SEC/NASAA agreement strengthens capital raising
Friday, February 17, 2017

SEC/NASAA agreement strengthens capital raising

Michael S. Piwowar, Acting SEC Chairman and Mike Rothman, NASAA’s President and Minnesota’s Commissioner of Commerce, signed an information-sharing agreement (Memorandum of Understanding (MOU)) to strengthen small business capital formation in light of new rules facilitating intrastate crowdfunding and other offerings. New JOBS Act rules took effect in 2015 and 2016; new amendments to foster regional offerings took effect in January 2017, and amendments to provide more flexibility for intrastate crowdfunding offerings will take effect in April 2017.

The new rules. The new rules are designed the curb the frustrations that small businesses have experienced when trying to secure private funding. The SEC began promulgating these rules last year by creating a new exemption to facilitate intrastate offerings. This exemption provides companies with more flexibility to engage in intrastate securities offerings through websites and social media without having to federally register the offerings. The SEC additionally amended Regulation D, hoping that states will subsequently develop regional offering exemptions for companies to raise capital from investors in specific regions of the country rather than just in one state.

The MOU. The MOU will enhance the regulators’ ability to share data about various federal and state securities offering exemptions, in order to better monitor the new rules’ implementation and protect against fraud. Piwowar said that the MOU "not only builds on an already productive relationship between the SEC and state regulators, it also offers additional insights and protections as we help companies grow and create jobs while providing new opportunities to investors." Rothman declared that the MOU "will strengthen collaboration among state and federal securities regulators to help expand small business investment opportunities while also protecting investors." Rothman emphasized that in today’s post-JOBS Act environment, the MOU acts as a collaborative structure to ensure an ongoing dialogue between state and federal regulators.

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