SEC Requests Comments on Facilitating Capital Formation in Private Markets
On March 31, 2020, the Securities and Exchange Commission (SEC) published in the Federal Register the proposed rule Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private Markets. The agency states that the proposed rule provides amendments that will “simplify, harmonize, and improve certain aspects of the exempt offering framework to promote capital formation while preserving or enhancing important investor protections.” Since Congress passed the Jumpstart Our Business Startups Act of 2012, the SEC has introduced, expanded, or otherwise revised several exemptions from registration. The proposed rule seeks to fill gaps in and address the complexities of the existing framework of exemptions.
The proposed rule would affect all issuers conducting exempt offerings under the Securities Act, the Exchange Act, Regulation A, and Regulation Crowdfunding. The SEC has prepared and published an Initial Regulatory Flexibility Analysis (IRFA) for the proposed rule. The agency requests public comment on its IRFA, specifically on the following
- The number of small entities that may be affected by the proposed amendments;
- The existence or nature of the potential impact of the proposed amendments on small entities discussed in the analysis;
- How the proposed amendments could further lower the burden on small entities; and
- How to quantify the impact of the proposed amendments.
The comment period closes June 1, 2020.
See the video regulatory alert here.