For those of you who have been following the regulatory labyrinth that has followed in the heels of the JOBS Act, the perpetual questions du jour have been:
- What ever happened to Title III investment crowdfunding?
- What ever happened to Regulation A+?
And for those of you who have been following the JOBS Act very closely, there is also the question of what ever happened to Regulation A – the federal securities law exemption that was intended to allow small business to raise up to $5 million, without the cumbersome, and often fatal, “blue sky” merit review – the “broken” exemption that Congress was supposed to fix?
The answer, so far at least: not a whole lot.
Nearly two years after the JOBS Act was signed into law, with high hopes and expectations:
- Retail investment crowdfunding has been bogged down in SEC rulemaking, and the consensus of seasoned prognosticators is that if the final rules look anything like the proposed rules, crowdfunding will be “dead on arrival.”
- Regulation A + – The SEC issued proposed rules on December 18, 2013, and has since been met with an avalanche of scathing comments from state securities regulators, who have announced that they will literally be camped out on the doorsteps of the SEC between now and the end of the Regulation A+ comment period, March 24 – and, if necessary – on the courthouse steps, to challenge final rules – clinging to the 100 year old notion that the judgment of state securities regulators should trump the judgment of the SEC and the average retail investor.
- Regulation A – The SEC has hinted in the Regulation A+ proposed rules that it may consider proposing a rule to pre-empt offerings under $5 million from state blue sky review – but still no proposed rule to this effect. And with all of the pushback from state securities regulators on pre-emption of blue sky review for offerings between $5 million and $50 million – don’t hold your breath waiting for a rule from the SEC pre-empting smaller Regulation A offerings from state blue sky regulation.
To complicate matters even further, today is the first day on the job for a new SEC employee, Rick Fleming. If the name sounds familiar, it should. He has been the mouthpiece for the North American State Securities Administrators Association (NASAA) – at least until today – when he opens up shop inside the SEC as the “Investor Advocate,” courtesy of Barney Frank and Chris Dodd (remember Dodd-Frank?) – replete with an entourage of new staffers and lawyers.
So what’s next? Hopefully, JOBS Act 2.0. Perhaps the collective wisdom of Congress can land on the same page, and put in some fixes for investment crowdfunding, and “CrowdfundingPlus”, a mini-registration for both traditional and crowdfunded offerings up to $5 million, without the deadly blue sky review.
Perhaps Congress will be able to “jumpstart” the Jumpstart Our Business Jobs Act of 2012 before the 2014 election recess.
For a blueprint as to what JOBS Act 2.0 ought to look like, I suggest you read my article published today in Crowdfund Insider.
In the meantime, the wait continues . . .