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Concept Release on Harmonization of Securities Offering Exemptions (Conformed to Federal Register Version)

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Concept Release on Harmonization of Securities Offering Exemptions (Conformed to Federal Register Version) Conformed to Federal Register version SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 210, 227, 230, 239, 240, 249, 270, 274, and 275 Release Nos. 33-10649; 34-86129; IA-5256; IC-33512; File No. S7-08-19 RIN 3235-AM27 CONCEPT RELEASE ON HARMONIZATION OF SECURITIES OFFERING EXEMPTIONS AGENCY: Securities and Exchange Commission. ACTION: Concept release; request for comment. SUMMARY: The Securities and Exchange Commission is publishing this release to solicit comment on several exemptions from registration under the Securities Act of 1933 that facilitate capital raising. Over the years, and particularly since the Jumpstart Our Business Startups Act of 2012, several exemptions from registration have been introduced, expanded, or otherwise revised. As a result, the overall framework for exempt offerings has changed significantly. We believe our capital markets would benefit from a comprehensive review of the design and scope of our framework for offerings that are exempt from registration. More specifically, we also believe that issuers and investors could benefit from a framework that is more consistent and addresses gaps and complexities. Therefore, we seek comment on possible ways to simplify, harmonize, and improve the exempt offering framework to promote capital formation and expand investment opportunities while maintaining appropriate investor protections. DATES: Comments should be received on or before September 24, 2019. ADDRESSES: Comments may be submitted by any of the following methods: Electronic comments: • Use the Commission’s Internet comment form (https://www.sec.gov/rules/concept.shtml); or • Send an e-mail to [email protected]. Please include File Number S7-08-19 on the subject line. Paper comments: • Send paper comments to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. All submissions should refer to File Number S7-08-19. This file number should be included on the subject line if e-mail is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s website (https://www.sec.gov/rules/concept.shtml). Comments are also available for website viewing and copying in the Commission’s Public Reference Room, 100 F Street, NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. FOR FURTHER INFORMATION CONTACT: Jennifer Riegel or Amy Reischauer, Office of Small Business Policy, Division of Corporation Finance, at (202) 551-3460; Timothy White or Geeta Dhingra, Division of Trading and Markets, at (202) 551-5550; or Mark T. Uyeda, Division of Investment Management, at (202) 551-6792, U.S. Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-3628. SUPPLEMENTARY INFORMATION: 2 Table of Contents I. Introduction...................................................................................................................... 5 II. Current Exempt Offering Framework ................................................................................ 8 Request for Comment......................................................................................................24 A. Accredited Investor Definition ..................................................................................32 1. Background ...........................................................................................................32 2. Implications Outside of the Regulation D Context ..................................................38 3. Accredited Investor Staff Report ............................................................................41 4. Comments on the Accredited Investor Staff Report.................................................42 5. Request for Comment ............................................................................................54 B. Private Placement Exemption and Rule 506 of Regulation D......................................60 1. Section 4(a)(2) of the Securities Act .......................................................................60 2. Rule 506 of Regulation D ......................................................................................63 3. Request for Comment ............................................................................................82 C. Regulat ion A ............................................................................................................86 1. Scope of the Exe mption .........................................................................................89 2. Disclosure Requirements .......................................................................................96 3. Solicitation of Interest.......................................................................................... 100 4. Relationship with State Securities Laws ............................................................... 101 5. Analysis of Regulation A in the Exempt Market ................................................... 104 6. Request for Comment .......................................................................................... 107 D. Limited Offerings — Rule 504 of Regulation D....................................................... 112 1. Scope of the Exemption ....................................................................................... 113 2. Filing Requirements and Relationship with State Securities Laws ......................... 115 3. Analysis of Rule 504 in the Exempt Market.......................................................... 116 4. Request for Comment .......................................................................................... 118 E. Intrastate Offerings ................................................................................................. 119 1. Section 3(a)(11) of the Securities Act ................................................................... 119 2. Securities Act Rules 147 and 147A ...................................................................... 121 3. Request for Comment .......................................................................................... 125 F. Regulation Crowdfunding ....................................................................................... 127 1. Scope of the Exemption ....................................................................................... 128 2. Disclosure Requirements ..................................................................................... 142 3. Relationship with State Securities Laws ............................................................... 147 3 4. Analysis of Regulation Crowdfunding in the exempt market ................................. 147 5. Request for Comment .......................................................................................... 149 G. Potential Gaps in the Current Exempt Offering Framework...................................... 154 1. Micro-offerings ................................................................................................... 154 2. Request for Comment .......................................................................................... 156 III. Integration..................................................................................................................... 158 A. Facts and Circumstances Analysis ........................................................................... 158 B. Safe Harbors .......................................................................................................... 162 1. Regulat ion D ....................................................................................................... 162 2. Rule 152 ............................................................................................................. 164 3. Abandoned Offerings : Rule 155 ........................................................................... 165 4. Regulat ion A, Rules 147 and 147A, and Regulation Crowdfunding ....................... 167 5. Other Integration Provisions ................................................................................ 169 C. Request for Comment ............................................................................................. 170 IV. Pooled Investment Funds ............................................................................................... 172 A. Background ............................................................................................................ 172 1. Interval Funds and Tender Offer Funds ................................................................ 174 2. Private Funds ...................................................................................................... 177 B. Pooled Investment Funds as Accredited Investors .................................................... 182 C. Retail Investor Access to Pooled Investment Funds that Invest in Exempt Offerings . 183 D. Request for Comment ............................................................................................. 187 V. Secondary Trading of Certain Securities......................................................................... 193 A. Resale Exemptions ................................................................................................
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