The SEC is still on track and expects to meet the 270 day deadline to draft rules and enact Title III of the JOBS Act creating the new crowdfunding exemption.
As I wrote about before the July 4th holiday, on June 25th, in prepared testimony, Mary Schapiro told a U.S. House oversight panel that certain rule writing deadlines imposed by the JOBS Act “are not achievable.” In particular, the SEC could not meet the 90 day deadline to amend Section 4(2) of the Securities Act of 1933 and Regulation D promulgated there under, to eliminate the prohibition on general solicitation and general advertising in a Rule 506 offering, so long as all purchasers in such offering are accredited investors. “The 90-day deadline does not provide a realistic timeframe for the drafting of the new rule, the preparation of an accompanying economic analysis, the proper review by the commission, and an opportunity for public input,” she said.
However during the same prepared testimony, Mary Schapiro told the House subcommittee that the SEC expects to meet the December 31, 2012 to implement crowdfunding rules under the JOBS Act. Ms. Shapiro testified before the House Committee on Oversight and Government Reform. The Committee held two hearings during the week of June 25, 2012 to examine the implementation of portions of the JOBS Act to ensure the proper elimination of government barriers to small business capital formation and growth.
Schapiro’s Testimony
Ms. Schapiro testified that, “I don’t foresee not meeting this deadline. The staff is working hard on it, there are lots of rule as you know, we are working already on the Issuer disclosure requirements which are fairly straightforward, but also the intermediary and funding portal requirements of the statutory provision. It’s challenging, but I don’t have reason to tell you that we won’t meet that deadline.”
Ms. Schapiro also assured the Committee that the SEC intends to provide workable rules that would not price out small issuances. ”Our goal is to create a workable exemption,” she said. “Our approach is going to be to follow the language of the statute, but to create exemptions that will make crowdfunding work.”
Moreover, Ms. Schapiro indicated that the funding portal structure is coming together. “My personal belief is that the requirements to use an intermediary can be enormously helpful here because they can routinize a lot of the things that the people might be concerned that they may need to have lawyers to do for them, or accountants to do for them. It will give people some confidence that there is a regulated entity in this process somewhere. It also will make it much easier for entrepreneurs to navigate this exemption and its requirements.” When pressed by the Committee about concerns that the rules may price out small issuances, Ms. Schapiro replied “We will be very sensitive about costs.”
The Author
Attorney Laura Anthony,
Founding Partner, Legal & Compliance, LLC
Securities, Reverse Mergers, Corporate Transactions
Securities attorney Laura Anthony provides ongoing corporate counsel to small and mid-size public Companies as well as private Companies intending to go public on the over the counter market including the OTCBB and OTCQB. For almost two decades Ms. Anthony has dedicated her securities law practice towards being “the big firm alternative.” Clients receive fast and efficient cutting-edge legal service without the inherent delays and unnecessary expense of “partner-heavy” securities law firms.
Ms. Anthony’s focus includes but is not limited to crowdfunding, registration statements, PIPE transactions, private placements, reverse mergers, and compliance with the reporting requirements of the Securities Exchange Act of 1934 including Forms 10-Q, 10-K and 8-K and the proxy requirements of Section 14. Moreover, Ms. Anthony represents both target and acquiring companies in reverse mergers and forward mergers, including preparation of deal documents such as Merger Agreements, Stock Purchase Agreements, Asset Purchase Agreements and Reorganization Agreements. Ms. Anthony prepares the necessary documentation and assists in completing the requirements of federal and state securities laws and SRO’s such as FINRA and DTC for corporate changes such as name changes, reverse and forward splits and change of domicile.
© Legal & Compliance, LLC 2012
