SEC & NASAA Sign Agreement to Share Data on Intrastate Crowdfunding

The Securities and Exchange Commission (SEC) and the North American Securities Administrators Association (NASAA) have signed an information-sharing agreement regarding new rules to facilitate intrastate crowdfunding offerings and regional offerings take effect. NASAA is the lobbying group that represents state securities regulators.

According to the SEC, the agreement is intended to ensure that the new exemptions are serving their intended purpose of facilitating access to capital for small businesses. The SEC said that under the memorandum of understanding (MOU), federal and state securities regulators will be better able to monitor the effects of the new rules and also guard against fraud.

The MOU was signed by SEC Acting Chairman Michael S. Piwowar and Mike Rothman, Minnesota Commissioner of Commerce and President of NASAA.

“The agreement not only builds on an already productive relationship between the SEC and state regulators, it also offers additional insights and protections as we help companies grow and create jobs while providing new opportunities to investors,” stated Piwowar”

Rothman described the agreement as strengthening the relationship between state and federal regulators on helping SMEs while providing investor protection.

“Ongoing dialogue is essential to carry out our responsibilities going forward. With this MOU in place, we have an opportunity to share information that will bolster our efforts to support small business capital formation and prevent fraud,” said Rothman.

Under the new rules, companies will have more flexibility to engage in intrastate offers through websites and social media without having to register their offering with the federal government. Companies now can also raise up to $5 million per year through other amended rules, which could facilitate the development of regional offering exemptions at the state level to permit companies to raise from investors in a specific region. The previous limit was $1 million.

JOBS Act rules that enacted various forms of crowdfunding went into effect in 2015 and 2016.  New amendments to facilitate regional offerings went into effect in January and amendments to provide more flexibility for intrastate crowdfunding offerings will go into effect in April.

NASAA and the SEC have not always been aligned. Under previous leadership, NASAA filed a contentious lawsuit regarding updated rules created by the JOBS Act now called Reg A+.  The states attempted to block state pre-emption under Reg A+ by suing the SEC – a legal battle they inevitably lost.

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