The SEC today requested public comment on ways to simplify, harmonize, and improve the exempt offering framework to expand private investment opportunities while maintaining appropriate investor protections and to promote capital formation.
The concept release seeks input on whether changes should be made to improve the consistency, accessibility and effectiveness of the SEC'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 SEC should take steps to facilitate a company's ability to transition from one offering to another or to a registered offering
- The SEC 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
- The SEC should revise its exemptions governing the secondary trading of securities initially issued in exempt offerings
Among other things, the SEC poses various questions on topics such as whether there should be any changes to Rule 506 (the release includes a discussion of the "accredited investor" definition), Regulation A, Rule 504, the intrastate offering exemptions and Regulation Crowdfunding and whether there may be gaps in the Commission’s framework that may make it difficult, especially for smaller companies, to rely on an exemption from registration to raise capital at key stages of their business cycle.
The public comment period for the concept release will remain open for 90 days following publication of the release in the Federal Register, following which the SEC may (or may not) propose specific rule changes.