One of the mandates of the Jumpstart Our Business Startups Act (JOBS) is to open private placement solicitation to the public.
The SEC is meeting on August 22 to consider doing just that under an expanded version of its existing Rule 506 of Regulation D. But state regulators are worried that the SEC will fulfill the mandate without first asking for public comments on specific proposals.
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The ruling would radically change how these investments, which are considered to be high risk, would be offered. State regulators—specifically the NASAA—are concerned that the SEC might institute an interim rule that would not be retractable.
The NASAA also wants the SEC to do an analysis of the costs and benefits of any proposed changes. This would include the costs of losses incurred by lower-quality offerings that would now be allowed to be marketed under the new expansion of Rule 506.
It seems at times that so many new regulations have been mandated without determining how some might affect others. Perhaps that’s why comment periods
are so valuable and also why it could be viewed as a positive that only about a third of the new regs have been created and even fewer adopted.