12:15 PM Pacific
The proposed rules have been posted, here. Thanks to Kyle Hulten for the heads up in the comments below.
7:46 AM Pacific
Well, the next step is to look at these proposed rules. I don't see them on the SEC site just yet, though I might not be looking in the right spots.
7:43 AM Pacific
Commissioners vote to approve publishing the proposed rules. Meeting is adjourned. SEC Chair Schapiro doesn't hesitate to defend herself and the staff. She says she thinks it's interesting that those concerned with the Commission being late on these rules under the JOBS Act, aren't concerned with lateness of the rules under Dodd-Frank. Go slow is the watchword on the latter.
Schapiro regrets ever floating the idea of interim rules. Should have set expectations all along that the rules would be proposed rules. And she thinks it right and proper that the SEC hear further comment from parties with valuable things to say yet, who haven't yet been heard. She may be referring to state regulators?
7:40 AM Pacific
Commissioner Gallagher emphasizes that Congress was adamant about ending the ban on general solicitation, and to do so right away. But, he adds, Congress was also clear about verification, that the issuer had to verify the purchaser was accredited. What would be reasonable steps? Congress deferred to us on how this should be done. He commends staff on the framework they came up with. (I am missing something: though there was a mandate by Congress to come up with methods, so far it sounds to me like no methods are being prescribed. I'll have to look at Section 201(a) again - maybe a loose collection of suggestions satisfies the letter of the Congressional mandate.) But he, too, wishes that the Commission were today approving interim final rules, rather than proposed rules involving more delay.
7:34 AM Pacific
Commissioner Paredes is still concerned with the missing of the 90 day deadline. Not sure why he is bringing all that up. Oh, it's because he wants today's proposed rule to be an interim rule that has effect right away. He says, I think, that today's proposed rule was going to be an interim final rule, anyway, until the late switch last week.
7:27 AM Pacific
Commissioner Walter disappointed that release does not address comments, such as requirement that issuers file a Form D as a condition for using the exemption with general solicitation. I think she is saying there should be a pre-filing requirement, at least for the new 506.
7:23 AM Pacific
Will propose that Form D be amended to add a check-box, whereby issuer would indicate if it were availing itself of new subsection (c) of Rule 506. I wish I was firmer on what this new subsection (c) will say. Does this suggest there will be two Rules 506 - one like the one we use today, and the other a 506 for general solicitation? Joe Bartlett's "quiet" and "noisy," respectively?
7:20 AM Pacific
Sounds like issuers will have to come up with their own multi-factored balancing test for verifying the accredited status of the purchaser.
Factors might include amount of information issuer has about the issuer; the terms of the offering; how purchaser heard about it; and the amount of money to be invested by the purchaser.
Here are some of the reasons that the proposal will not prescribe methods:
- Proposing to require specific methods of verification would be not useful.
- "A prescriptive rule could be overly burdensome."
- A non-exclusive list could be viewed by market participants as a de facto list of requirements.
7:15 AM Pacific
I've been having connectivity issues. I've found a Starbucks parking lot and am using the wi-fi from the store to run the webcast.
7:00 AM Pacific
The SEC is meeting this morning to:
"consider whether to propose rules to eliminate the prohibition against general solicitation and general advertising in securities offerings conducted pursuant to Rule 506 of Regulation D under the Securities Act and Rule 144A under the Securities Act, as mandated by Section 201(a) of the Jumpstart Our Business Startups Act."
This is a big deal.
Last night I tried to cull out from recent JOBS Act and Reg D posts those posts which key on this topic. It's probably safe to say that Section 201(a) of the JOBS Act - just a few lines in a long bill - does more to put the startup ecosystem at risk, potentially, than any other provision of the law.