The Securities and Exchange Commission (SEC) proposed Registered Offering Reform this past May. The rule change has been receiving comments with a deadline of today.
The goal is to make it easier for public firms, especially smaller ones, to raise money through a registered offering.
A key aspect of the proposal is eliminating state review for these offerings.
As the deadline for comments neared, a group of Republican House Representatives submitted a letter in support of the rule change. Championed by Congressman Troy Downing, the letter stated:
“This proposal will remove duplicative state registration and qualification requirements for these offerings. The reform will strengthen U.S. public markets, eliminate unnecessary costs and delays, expand investor access, and reinforce the SEC’s preeminent role in regulating national securities offerings, while preserving state anti-fraud authority.”
The Representatives declared that investor protections will remain in place, and that states still have the authority to investigate allegations of fraud.
Detractors of the proposal include the North American Securities Administrators Association, the group that represents state securities regulators, and other erstwhile investor protection advocates who see smaller investors as needing to be saved from their own decisions.
One prominent voice is ICAN, the Investors Choice Advocate Network, which strongly supported the proposed change as a “thoughtful, pro-investor reform.”
“It opens the public markets to the smaller, earlier-stage companies that today’s size-based rules quietly exclude; it gives ordinary people the chance to invest in those companies rather than watching the opportunity disappear into private deals; and it helps build genuine, liquid markets in small stocks. It accomplishes all of this while preserving the disclosure obligations, audited financials, and anti-fraud protections on which investors rely.”
ICAN aims to help smaller investors gain access to opportunities that they believe should be free to decide where to invest their money.